Monday, January 23, 2006

Tax Filing Options: A Mini-Roundup

For several years I have been a faithful Taxcut user. Last year, after purchasing an iMac I was pleased to see that they offered a version that ran on Mac OSX and happily plunked down my $96.80 ($40.94 of which I received back in rebates) for what was becoming an annual ritual of spending $55+ on filing my taxes (yes, I know it's tax deductible).

Imagine my surprise when I realized TaxCut didn't even release a Mac OSX version this year. I suppose from a business standpoint it did make sense because the online version is operating system independent, but then why bother to brew a whole Windows version only to give it away for free anyway? But I digress.

My point is that I had to shop around for a new, Mac OSX compatible, option for calculating and e-filing my taxes. And with all this "free" software floating around I was determined to do it for far less than $55 this year.

The first thing I noticed is that if you have an Adjusted Gross Income (AGI) of less than $50,000 there are MANY options that are completely free. If you don't know what your AGI is, you can probably create an account at one of the services and use them to calculate your AGI (ex. I started my taxes at Turbotax.com - input my W-2 and 1099's but have not been charged because I have not printed or e-filed my return). Once you know your AGI, you can use the IRS e-file wizard to guide you toward free filing options for your circumstances (AGI and State). If you do not qualify based on AGI, read on...

I thought the big names were being quite affordable until I started calculating the cost to e-file a state return in addition to my federal, even though several offered a "combo" deal on e-filing both. I have not catalogued every pricing option but I have focused on an AGI greater than $50,000 who needs to submit a 1040 (I'm a homeowner claiming itemized deductions) along with a Massachusetts state return while using Mac OSX to calculate and e-file both returns. All Windows-only options have been discarded (TaxCut and TaxAct downloadable software basically).

Your mileage may vary, due to your needs, I just urge everyone to shop around before plunking down any money. Here's what I found:


ProductFed OnlyState OnlyBoth
Taxcut Online Premium$19.95N/A$44.90
TurboTax Online Essentials/1040EZ1$9.95N/A$34.90
TaxEngine$19.95$19.95$29.95
TaxAct Online StandardFREE$20.90$12.952
TaxSlayer Web$9.95$9.95$9.95
eSmartTax Standard
(before 2/15)
FREE$9.95$9.95
Notes:
  1. When I started gathering this information, TurboTax was calling this product "Essentials" and they have since changed the name to "1040EZ" -- this implies that only the 1040EZ form is available with this option, but I can find no indication that the 1040EZ cannot be used to submit a 1040. This seems like a marketing attempt to steer 1040 submitters at the next tier up which is $10 additional for the federal return. If anyone can clarify this please leave a comment...thanks!
  2. This pricing was pretty unclear. They have an "ultimate bundle" for $15.95 that definitely includes both federal and state and both e-filings and apparently a whole other host of things you probably don't need.

Obviously there are more products out there, since this is a mini-roundup it's just what I deemed interesting. Feel free to comment below and point us all at competitive offers.

So far, I have only started to try TurboTax Online. Since you only pay when you file or print, I have entered the information I have so far to estimate my taxes. Once I have all my information (should be by 1/31...right?) I intend to actually file with eSmartTax before 2/15 and take advantage of their early bird special. I'm expecting a bit of a federal refund, so I want to file as soon as possible using direct deposit so we can all see that purple bar inch to the right!


Resources:

8 comments:

  1. Thank you for listing cheaper alternatives to TurboTax, which I have been using for several years. Every dollar saved helps alot.

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  2. Wow, thanks for compiling this! It's awesome. If I come across any coupons or deals, I'll let you know!

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  3. w00t!

    we're stickin' it to the man!

    maybe...

    at least we will save money filing.

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  4. Good work on this handy list of online tax filing options.

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  5. I am really upset with H&R Block. I have been using Taxcut since Jaguar came out. I even sent them feedback about how to improve the program. Instead of improving it they killed it. Oh well. At least Turbo Tax for Mac is still around. (I don't ever plan to file online. I want a local file that I can open anytime I like and also import into the next years return. It came in handy when the IRS sent me a notice that they were "correcting" my 2002 return in 2004!!)

    Thanks for the post. You should do this every year, because every year (since 2002) I have googled for info about tax prep on Mac and your blog was the first one I have ever found to be really specific as to options and pricing.

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  6. It seems worth noting that if you purchase one copy of TurboTax desktop software that it can legally be used on multiple computers and multiple returns (as stated in the TurboTax FAQs). The Mac and PC versions are on the same CD even. I suppose they know that there are all kinds of free avenues for creating the return but that most folks will efile with whatever tool they used to create the return. So they can just get their $ from the efiling fees. Although I'm not sure if there is a charge for the state tax return software. In any case, the $40 for the federal tax prep software can be spread over several returns. I plan to report back after all our submissions are done what the final overall cost was and list the number of returns we filed with it. --AP

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  7. Another program you may want to try is CCH CompleteTax (completetax.com) this company also has the leading tax prep software for the professional market; and CompleteTax can handle basic tax situations to investor and small business taxes. At $24.95 for federal and $9.95 for state tax prep, it's a lot less than some of the other options (especially because there are no hidden fees) and an all around good value.

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