Taxes 
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List of Free Tax Preparation Services

I bet the first thing you thought after you screamed “Happy New Year!” was how it was now time to do your taxes. (no? me neither) Unfortunately, it’s now February and it’s time to start thinking about doing taxes! Wheee! To help you along, I wanted to outline all the free resources you have for tax preparation. By this I mean I’m listing every single way I think you can get absolutely free tax preparation based on your financial situation. Some tax prep companies offer free tax filing if your situation is simple (1040EZ, or plain 1040), the IRS offers free tax filing if your adjusted gross income was under $54,000 in 2007 (it’s through third party companies), and some other companies offer free tax preparation for their customers as a fringe benefit. I’ll try to list them all. If I miss one that you know of (one that expands on the group of eligible taxpayers, we don’t need another company that offers free tax prep for the same groups already covered below), please leave a comment or email me and I’ll add to this list.

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 Taxes 
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I Am Filing An Amended 1040 Tax Return

Ahhhh, I messed up! Sometimes it pays to get a professional and just this past tax filing season I made a small mistake that turned into a minor inconvenience that, luckily since I caught it, didn’t get any worse than it could’ve. What happened was that I messed up my taxes and was underreporting my business income by a significant amount and so I had to file the awesome 1040X Amended Return form in order to repair the error (since it was in my favor, which is bad). The plus side is that I found it before the filing deadline so there will be no penalties.

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 Reviews 
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Free Tax Preparation Software – TurboTax Product Review – (A)

As promised, I am going to review TurboTax and, perhaps unfairly, compare it against TaxAct. I believe TurboTax did a more thorough job than TaxAct and it asked me questions TaxAct didn’t. I also have to admit that I have more faith in TurboTax because of the Intuit name (I used the full product last year, free after rebate), but it seemed as though TurboTax asked more questions than TaxAct. The amount I owe remained the same (the result of my side business no doubt) though, so TaxAct wasn’t “wrong”.

TurboTax’s interface was cleaner and nicer. It was also web-based, which may be a turnoff for some of you, but I liked it. I have high-speed Internet so a dial-up user with a questionable connection might be hesitant to use this.

One feature that was absent in TaxAct was the ability to import W2 information straight from your payroll company. Mine happened to be ADP, which was supported. This won’t be available for all users but a vast majority of companies use ADP for payroll processing so you’ll find it very convenient. Unfortunately, it asked for some verification information (SSN, Box A and Box 1 from the W2) and I couldn’t find Box A for the life of me so I missed out.

A great feature missing from TaxAct was a comparison of deducting sales tax versus state income tax (read more about it here). I live in Maryland (5%), which apparently wasn’t high enough to make the state sales tax deduction worth it based on the spending tables.

Some more differences? TaxAct never asked about a Roth IRA, to my knowledge, TurboTax did. Again that thorough-ness gave me faith my return was complete and correct. The entire process took about fifteen minutes, about the same as with TaxAct, and ended with some useful survey information. It showed how other filers in my general income bracket compared, in terms of taxes paid and deductions taken. I was paying more tax and taking less deductions, troubling but expected as I don’t own a home.

TurboTax asked me only once (to my memory) to purchase an upgrade. ONCE. TaxAct asked me what seemed like four times before I even entered in a number for my W2′s. When I clicked “Yes” for side business income, TurboTax suggested I upgrade because it had more features. I politely declined and it never asked again.

TurboTax also seamlessly, after asking permission, transitioned into the Maryland State return, which wasn’t free. I can probably do that one by hand relatively easily so I’ll go with that option. It did tell me how much tax I should expect to pay, so I have a double-check whenever I do it by hand.

Overall? TurboTax scored much higher than TaxAct. The interface differences weren’t significant but because TurboTax did the income versus sales tax comparison was reason enough to go with TurboTax. It’s a significant change in the tax code and TaxAct was remiss in not including it in their product.

Have some experience with either product? I’d love to hear about it.


 Reviews 
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Free Tax Preparation Software – TaxAct Product Review – (B+)

I finally decided to bite the bullet and give TaxAct (one of the free tax preparation resources out there) a try last night, despite registering for it a few days ago. All in all, my taxes took about 15 minutes to complete and it was a relatively painless process. The result was that I owe around $350 in taxes ($155 attributed to my side business), which made be a bit skeptical because that meant that the company I work for withheld an incorrect amount ($200 less). One problem with using a free product is that sometimes you doubt its correctness. (I’ve sinced used TurboTax and have confirmed the results, TaxAct was and is correctly calculating my taxes)

TaxAct was nice and quick, which I appreciated, but it kept asking me to upgrade to their Deluxe version for $15, which I didn’t appreciate. There was a stretch of about three or four screens where it asked me over and over again to upgrade. I suppose it’s a necessary evil because they need to make money but it was getting ridiculous. Then it would ask me to purchase TaxAct State a couple times and finally it would remind me that to e-File it would cost me. Printing out the forms was free though so I printed them out.

The program itself was good, but not as good as TurboTax in terms of navigation. After you entered in something you still had to navigate the mouse over to the Next button (instead of just hitting Enter) and to go back you had to hit the back button, no quick navigation to a specific screen. Then again, the program was free…

Overall, I was satisfied with the product, even if it asked me about a dozen times to buy a product, but I still am doubting it’s correctness. I think I’ll jump on one of those free after rebate tax product offers as a double check to see if things really are correct. Is it on par with TurboTax? No way. It scores a B+ in my book for moderate ease of use and it’s free-ness, probably an A- if it wasn’t for all the requests to pay pay pay. It doesn’t “look” as pretty as TurboTax and I just didn’t have faith in it. I would’ve rated TurboTax (last year’s edition, which would be doing 2003 taxes) around an A since I also got that for free after rebate.

If you have the time (15 minutes), give TaxAct a try. If you’ve already done your taxes and you paid for them, try TaxAct anyway since it’s free. If you get the same numbers, let me know. If you don’t, please definitely let me know. Also, if you yourself have used a free tax preparation product, let me know what you think about it and I’ll give it a try and see how it stacks up.

Update: TurboTax is also free… maybe I’ll give them a try tonight. (I did try them, review is available here) Also, I have no qualms about TaxAct’s accuracy anymore as TurboTax confirmed the results.


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