Dan Appleman: Kibitzing and Commentary

My personal blog

As an active software developer, I know that technology advances rapidly. My nose is rubbed in that fact every day as I work to keep up, catch-up, and occasionally learn something new. It therefore leaves me somewhat bemused when I am surprised by huge changes in technology in areas that I don’t focus on daily. Intellectually I know they must be changing, but I’m too busy to pay attention to them, and when I do – I discover all sorts of surprises.
For many, many years tax preparation time was a routine – buy the latest edition of TurboTax, do my taxes and send them in. The only big change was switching to e-file from paper returns some years ago.
But this year that was shaken up. I was about to buy TurboTax when saw that for some reason this year’s version was getting one star rankings on Amazon.com. What could have happened? I wrote about this in my gadget column in “TurboTax takes a wrong turn- will TaxCut become the #1 tax software“.
Because that price increase (since reversed) would have doubled my costs, I started looking for other options for the first time in many years. One of the things I found was that there were numerous online options for doing taxes. What seems to have happened is that the IRS was planning its own free online filing system (it’s far less expensive and far more accurate for them to process an electronic return than a paper one). Tax preparation software companies got together to oppose this and created the “Free File Alliance” to try to protect their revenue. The way they do this is by using their free filing options to upsell other features -and to charge for filing state returns. Though officially this free filing is limited to incomes of $56,000, in fact many of the vendors don’t abide by this – neither TurboTax, TaxCut or TaxAct mention any income restrictions.
So, to my surprise, instead of reviewing the tax preparation software packages, I found myself first reviewing the free online services (See Free tax return software reviewed: TurboTax vs. TaxCut vs. TaxAct).
What really floored me was TaxAct. Their free edition could even handle my return (which is moderately complex). And the upgraded version is only $9.95. Now, I wouldn’t actually use it for my return – I find standalone software has other features that are important to me (something I’ll discuss when I review the software packages) – but it demonstrates that there has been some real progress in the area of tax return software that I had been completely oblivious to.
Makes me wonder what else I haven’t noticed recently….