A Financial Revolution 

March 06, 2006
Comparing Tax Software Packages
First, Old Niu beats me to the punch with his posts about spin offs. Now the Washington Post got ahead of me on comparing tax preparation software.

The article compares three popular tax packages: TaxCut, TurboTax, and TaxAct. Each of the packages provided different results - TaxCut calculated a return of $600, TurboTax: $588, and TaxAct: $175. So which package does the journalist recommend?

Certainly not TaxAct.

Between the other two, I found TaxCut more informative and, pardon the jab, a bit more intuitive. And don't forget the additional $12 in refund it calculated.

Based on my experience, I would agree with the journalist's assessment. I started out using TaxAct this year and I was not pleased with the final results. In addition, I found some of the language confusing and the documentation, well, lacking (then again, the software was free.)

I then used TaxCut. I've been a satisfied user of TaxCut for a couple years so I was comfortable with the user interface. While I still wasn't pleased with the results, TaxCut did a better job handling my bond investments and explaining the AMT calculations (did I get hit hard by that one!) I'd also give TaxCut better marks for handling my K-1 forms (from an investment club.)

I didn't have a chance to try TurboTax this year, but my cousin gave me the lowdown. She's an accountant and decided to try the software route this year. She wanted to compare TaxCut and TurboTax so she'd be able to recommend one or the other to her clients (why an accountant would tell her clients to use software and bypass her services is beyond me.) She started by doing her return by hand and then using each package. She found that TurboTax was close to her hand-prepared return while TaxCut was way off - indicating she owed money instead of getting a refund.

I don't know if there's a moral to this story other than a) nothing makes doing taxes fun and b) our tax code is so complex that software just can't handle it (maybe that's what my cousin was trying to prove!)

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