The ink on tax attorney Daniel Caine's Harvard diploma was barely dry when he decided, five years ago, to take down his shingle and concentrate on developing a new kind of computer program. It would simplify tax-time chores by putting a tax adviser--in the form of a so-called expert system with built-in tax smarts--at the beck and call of any taxpayer with an IBM-type PC.
The result was Ask Dan About Your Taxes. Unveiled in early 1988, Ask Dan set a new standard in tax-preparation software. Its valuable tax advice, written in conversational English, made tax software more than just a series of spreadsheets resembling IRS forms. Several rival programs are striving to measure up. But they aren't there yet. Caine's ongoing work--called TaxCut since Meca Software licensed the marketing rights in 1989--remains one of a kind. If you're shopping for your first tax-prep software, look no further.
TaxCut's only major drawback is a paucity of optional companion programs that pluck data from your federal return to fill out a state tax return automatically. Meca offers just 10 such programs, covering the more populous states. If you live in some other state and must have a state tax program, your top choice by far is TurboTax, the perennial best-seller from ChipSoft. It has extra-cost software for every state that imposes an income tax.
CATCHING UP. While TaxCut and TurboTax stand out over all other tax-prep software, their advantages may not be so clear-cut next year. Several other programs show substantial improvements: Especially notable are SylviaPorter's RapidTax from Dac-Easy, and for extremely budget-conscious taxpayers, Parsons Technology's Personal Tax Preparer. Both seem to have taken a lesson from the features that make TaxCut so easy to use.
RapidTax has a couple of things going for it. One is a "regional" state tax module, with programs that handle returns for several adjacent states. This should be handy for commuters who work in one state and live in another. Also, RapidTax will take a joint federal return and split it into two separate individual returns to see if that will save a few bucks.
Personal Tax Preparer is much cheaper than the others--$50 list, vs. $75 for TurboTax to $90 for TaxCut. Discounters peddle TaxCut and TurboTax for around $50, the Parson's program for about $30. Parson's program neatly imports data from Parson's MoneyCounts home-finance program, which can eliminate a lot of keyboarding. Its only equal in this regard is TaxCut, which can extract information wholesale from Meca's Managing Your Money. Virtually all tax-prep programs will pluck data from Quicken, the most popular home-finance package, but the process can get tedious: Usually, the numbers must be transferred one at a time.
MacInTax, which runs under the Windows 3.0 operating environment and offers true-to-life on-screen images of IRS forms, also has been spiffed up by Softview. Last year's molasses pace is noticeably quicker, although still sluggish next to TaxCut and TurboTax. And this year's J. K. Lasser's Your Income Tax, which comes with a 500-page tax guide of the same name, is far friendlier. When you're in doubt and press the "help" key, not only does an explanatory window pop up but there's also often a cross-reference to the book.
As improved as the second-tier programs are, TurboTax has been upgraded even more. And if imitation is the highest form of flattery, TaxCut gets high praise indeed from TurboTax: The program now dispenses plain-English instructions in addition to regurgitating IRS legalese. Conversely, TaxCut has added the IRS instructions for those who want to double-check the expert system's advice.
HOTLINE. TurboTax's changes are hardly limited to TaxCut imitations. For example, after you polish off one operation, the screen flashes the "logical next step." And while TurboTax's help features aren't as friendly and comprehensive as TaxCut's or RapidTax's, ChipSoft makes up for that via its customer-service telephone reps. The company has just installed a million-dollar telephone system that is able to handle more than 6,000 calls a day. During tax time, it's even staffed on weekends.
For deeper insights into tax-prep programs, check the Feb. 26 and Mar. 12 issues of PC Magazine. There, Laura Lou Meadows, a Harvard-trained tax attorney, reports on some obscure idiosyncrasies she uncovered while testing eight programs. One example concerns the limits on tax-shelter deductions, which are reported on Form 8582. J. K. Lasser's program won't calculate this limit, but at least it tells you so. Timeworks Inc.'s Swiftax, on the other hand, tries to fill out Form 8582, but it either goofs or bombs.
Overall, the big news is that Dan Caine's fresh approach is catching on. The major contenders are converging on TaxCut, narrowing what was once a wide gap. If you learned to use one last year, there's probably little to gain by switching. But for a first-time user, TaxCut is the top choice.Otis Port