Consider Tax Software

Drinking castor oil, walking on hot coals... These are some of the activities many of us prefer to doing our taxes. CBS This Morning Money Editors Ken and Daria Dolan have a few tax software recommendations that may make the experience a little less distasteful.

Otherwise, using a computer program can take a lot of the pain out of doing your taxes.

What They Can Do

• The programs check your math and make sure you put the numbers in the right boxes on the various forms.
  
• They "red flag" any deductions that might trigger an audit.
  
• You can use them to file electronically, which means you'll get your refund faster - in 2 or 3 weeks or less versus 4 to 6 weeks if you file by mail.

What You Should Consider

• Can your computer handle the software? Some packages require pretty powerful PCs.
  
• Does the package have all the forms you need? It should include state income tax forms, which may cost extra. If you've previously used tax or financial programs on your computer, some packages can use that data.
  
• There are lots of discounts and rebates out there, so never pay list price.

Comparing Turbo-Tax And Taxcut

Both of these well-known software packages have interactive question and answer formats that walk you through the tax forms. After you've completed the necessary forms, the programs will make sure nothing is left out or overlooked. They also thoroughly review your return, alerting you to missed deductions and checking for entries that could trigger an audit.

• TurboTax answers 2,000 of the most commonly asked questions, has an excellent IRA planner and allows you to quickly jump from one part of your return to another with a single click. But it's the most expensive software package - $50 for the deluxe edition - and sometimes there are so many options on the screen that you risk information overload. If you need technical support, the phone call is not toll-free.
• This year's version of TaxCut is a big improvement over previous versions. It wastes less screen space and asks clear, sharp questions. It's now comparable in quality to TurboTax and a little cheaper, at about $40. This program has a superb search feature for all sorts of tax information on capital gains, education credits, and other issues. It's especially good for Roth IRAs. The screens are less cluttered than those of similar programs. Registering all the personal information does take a lot of clicking and a lot of time. However, once it's in, it's great.

Other Programs Worth Checking Out

• A new program called TaxAct can be downloaded free off the Internet ($10 for the deluxe version) and is available in CD-Rom form for $18. It's very good for basic tax returns.
  
• There is a Web-only program called SecureTax.com which costs $10-$15 to use. But in general, Web-based tax preparation programs are not as sophisticated as software packages. Only TurboTax is almost identical in the store and Web versions.

Consider Electronic Filing

• Electronic filing is faster, and you get proof that the IRS actually received your return.
  
• The accuracy rate is greatly improved, from about a 20 percent error rate for paper returns versus a 2 percent or less for returns prepared by the software.
  
• If you file electronically, you can authorize the IRS to debit your bank account on a particular day, say April 15. Or, you can pay with a credit card by calling a toll-free number.

By Ken and Daria Dolan
©1999 CBS Worldwide Corp. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed