Recent tax-law changes have made it difficult to deduct the cost of having a professional prepare your income-tax return. That's one reason why more taxpayers may decide to break with the past this year and spend a couple of hours feeding their financial data into a personal computer. Since actual prices for tax-preparation programs are about half of list, you can beat an accountant's fee--and maybe even find a few bucks in overlooked deductions.
More than a dozen tax packages are out there, but only five merit serious consideration by owners of IBM-type PCs (table). For first-timers with a typical corporate manager's return, there's no need to look beyond TaxCut from Meca Software--unless you live in a state not included among its optional $40 state tax-prep programs and you don't want to do the state return by hand. In that case, ChipSoft's TurboTax is for you. TurboTax has programs for all 44 states that levy an income tax. Both TaxCut and TurboTax also come in Windows-compatible versions. For Macintosh fans, the one to get is ChipSoft's MacInTax, which lists for $100.
When TaxCut was introduced four years ago under the name Ask Dan About Your Taxes, it set a new standard in tax software, turning jargon into simple English and offering tax-saving tips in a deft manner that makes preparing your returns almost enjoyable. Ever since, the best has only gotten better. But TurboTax, the longtime market king, has narrowed the gap dramatically, and this year, EasyTax (formerly Swiftax) by TimeWorks has emerged as a strong No. 3 challenger. Parsons Technology continues to hold down a solid spot among pennypinchers with its budget-priced Personal Tax Edge.
PENALTY PROTECTION. If your tax return is fairly complicated, you would be better off sticking with TurboTax or TaxCut. Their accuracy is unmatched, and Meca even guarantees to reimburse any Internal Revenue Service penalty stemming from a TaxCut miscalculation.
Although all five programs will perform flawlessly for most people, Laura Lou Meadows, a New York tax attorney who reviews tax software for PC Magazine, discovered that certain sticky situations will overtax several programs. For example, only TaxCut and TurboTax correctly handle a real estate partnership with both a passive investment loss anda passive rental profit. Take the do-it-yourself plungewith either of the top two and you can count on many happy returns.