Online Help: Need A Tax Break? Surf The Net
If the arduous task of rendering unto Caesar each April leaves you looking to the heavens for divine intervention, fear not: Help may indeed lie in cyberspace. Anyone with a personal computer and a modem can now access the growing number of Web sites that offer everything from timely tax tips from experts to instant access to obscure tax forms. And if you're brave enough, you can even prepare and file your return right over the Internet.
Be forewarned, however, that there are limits to relying on the Internet to solve your tax woes. If you're ever audited, it's no defense to say you saw it on the Net. Nevertheless, the wealth of tax resources available on the World Wide Web may alert you to deductions, exemptions, and other strategies that could lessen your tax bite. But before acting on a tip from cyberspace, consider getting a second opinion from a tax pro.
SKIMPY INSTRUCTIONS. One of your first stops on the Infobahn should be the Internal Revenue Service's Web site--if you can get through the gridlock. The IRS site is surprisingly colorful, with a home page made to look like a supermarket tabloid. You can download every necessary federal form and schedule, as well as IRS bulletins and instruction books. There's also an interactive questionnaire that lets you determine whether you qualify for certain deductions, such as educational expenses. On the downside, the site is poorly organized, and it offers few instructions for neophytes who want to download forms. A bigger concern is access: On repeated attempts to visit the site in mid-January, before the height of the tax season, it still took days to get through. How will the site handle traffic in mid-April?
If it's just a tax form you need, bypass the IRS site and check out Taxing Times 1997, offered by Maxwell Technologies, a San Diego company. Maxwell offers every federal form you'll need in Adobe System's popular PDF format and even offers a handy link to Adobe's Web site if you need to download the necessary viewer. You'll also find links to every state tax office, most of which offer forms that can be downloaded and then filled in by hand.
If you're seeking professional advice, each of the Big Six accounting firms maintains a Web site with helpful advice on individual and business tax matters. Ernst & Young's offerings include mutual-fund tax-saving strategies, a list of the 25 most common tax-preparation errors, and 50 easily overlooked deductions--although details of each are skimpy. The best feature may be its Worldwide Executive Tax Guide, which provides one-to-two-page tax-code summaries for more than 130 foreign countries. If you're being pressured to transfer abroad, visit this site before you negotiate cost-of-living adjustments.
Advice and counsel are also available from The Tax Prophet, the site of San Francisco tax lawyer Robert L. Sommers. It includes answers to questions about everything from your spouse's premarital debts to early withdrawal from retirement accounts. Another Bay Area attorney, Marc W. Weissman, gives tips on estate planning, living trusts, and real estate tax matters (http://www.wwlaw.com/fye.htm). Weiss also offers to answer questions by E-mail, usually within 24 hours--and presumably offer further consultation for a fee.
As helpful as these sites are, they don't cover every tax issue. If you're left wanting, you may get your answer from the complete text of the best-selling J.K. Lasser's Your Income Tax 1997 (http://mcp.com/mgr/lasser/toc.html). Each chapter can be read on screen using the Adobe viewer--but given the small type, you'll want to print it out.
FAIR VALUE. And don't forget that the clothing and other household goods you gave to charity last year are worth something. For a $15 fee, consult Client Valuation Services' Web site. CVS's founder, William R. Lewis, is an accountant who has painstakingly compiled a database listing fair values for thousands of items commonly given to charity. Lewis argues that donors routinely underestimate the worth of their donations--a used men's suit fetches $70, for instance. He says clients often make back his fee several times over. If you're audited, Lewis vows to provide documents supporting his valuations. Previously available just to tax preparers in book form, the database is now available for downloading from the Web site.
After you've finished doing your research and have procrastinated long enough, the only task left is to prepare and file your return. Luckily, there's online help to find a preparer in your zip code. Intuit, the maker of TurboTax, maintains a database at its Web site (http://www.intuit.com), as does Drake Software at its "1040.com" site. But be aware that neither company vouches for the reliability of the names in its database, which consists largely of customers of the professional versions of their tax software. Given that there's little regulation of tax preparers, it's tough to vouch for the credibility of a preparer anyway. "Anyone can hang out a shingle and say they prepare taxes," says Michael Murray of Drake Software.
COMPUTATION. Do-it-yourself types can now file over the Internet. In what may be a harbinger of bigger things to come, Intuit and Parsons Technology Online (http://www.parsonstech.com) let 1040EZ filers prepare returns right on the Web site. Running the computations is free; both companies, however, charge $10 to have a return filed electronically.
A less well-known company, Universal Tax Systems in Rome, Ga., is going one step further. UTS, an outfit that sells tax software to preparers, has created a Web service called SecureTax that lets you prepare full 1040 returns online. Like Intuit and Parsons, UTS lets you calculate a return free, but it charges $10 to print a copy and an additional $5 to file electronically.
Intuit and Parsons say Web-based filing may be the wave of the future. They hope users will like the convenience of using an online program. And developers say such filing would enable them to incorporate any tax changes that might unexpectedly occur in February, as well as immediately fix any late-detected bugs of the type just discovered by the makers of TaxCut. For now, TaxCut users can download a software fix from AOL or the program's website: http://www.conductor.com.
But those advantages are now overshadowed by public concerns about data security, given recent well-publicized hacker attacks against supposedly secure Web sites. And both Intuit and Parsons are reluctant to support full 1040s--which use more forms and schedules, and apply to more filers--until the Internet matures. "What if everyone jumped online on Apr. 13 or 14 to prepare their taxes?" asks Renee George, a senior product manager at Intuit.
Once you're finished, you may realize you owe a big payment. Cursing the IRS, you ask: What if Steve Forbes had been elected President? Well, you can check for yourself at the Flat Tax HomePage, the creation of House Majority Leader Richard Armey (R-Tex.). Armey lets you see a mock-up of a flat tax return--you'll sigh at its simplicity--and allows you to compute your bottom line with a 17% flat rate.
These sites are only the tip of the iceberg. Frank McNeil, a San Francisco tax preparer, provides links to a variety of other Web resources (www.best.com/~ftmexpat/html/taxsites.html), as does University of Northern Iowa accounting professor Dennis Schmidt (http://www.uni.edu/schmidt/tax.html).
So let the Web help you prepare your taxes. Finding just a single extra deduction could cut your tax bill--and have you thanking your stars in cyberspace.
TAX TIP: The Internet can help solve many problems, but get a second opinion from a tax pro--or the IRS