Preparing your taxes online?

Take note of these tips and traps

Last updated: February 2013

If you're among the millions of converts to do-it-yourself tax software, you might be ready for the next step: Online tax preparation. There are dozens of Web-based programs that will help you electronically prepare, store, and file your tax returns, either free or for a relatively modest charge.

Fortunately, all of those services are easy to use. They guide you through the tax-prep process or, if you're experienced, let you skip to the topics that relate to you. Most don't charge you anything until you file. If you have the time and inclination, you can test as many as you'd like to see which one delivers the greatest tax savings. Consider these points before you try one out:

Check what the site supports. Most sites provide Form 1040 and Schedule A for itemized deductions, but they might not handle more-specialized forms, schedules, and topics. For example, ezTaxReturn.com says that it does not cover foreign income, royalties, depreciation, farm income, adoption expenses, and conversion of traditional IRAs to Roth IRAs, among other subjects.

Make sure the site can handle your state taxes. At e-file tax returns.org, for example, filers pay from $19.95 to $29.95 to prepare and file a state return, but the site doesn't support every state's tax forms.

Check online complaint sites. You can search sites such as Ripoff Report and Pissed Consumer. Or plug the company’s name into a general search engine such as Bing, Google, or Yahoo for more information.

Check the site's price list. Many sites charge to send you a printed copy of your return. Some charge for filing an extension. And prices for online tax prep can go up closer to filing deadlines.

Avoid pop-ups. Some tax-prep sites assault you with solicitations to upgrade to pricier services. But if you qualify for the IRS Free File program, you're guaranteed a pop-up-free ride. This year, your household must have an adjusted gross income of $57,000 or less to use one of the 15 participating online tax-prep providers. You must enter through IRS Free File to use them.

Consider the cost

Popular services including H&R Block At Home, Jackson Hewitt Online, Liberty Tax's e-Smart Tax (formerly CompleteTax), TaxACT, and TurboTax all offer databases of tax tips and facts you can access for free. For more specific answers to your tax questions, they offer various services for a fee, including e-mail, online chat, or online forums (registration required).

Jackson Hewitt Online has a tiered help system. It offers free, unlimited 24/7 e-mail access for general inquiries with its free, Basic  software; adds unlimited live chat for immediate answers to specific questions with its $26.95 Deluxe product federal tax-prep product; and adds unlimited phone support with its $44.95 Premium federal tax-prep product. Premium also gives you assistance from an enrolled agent in the event you're audited.

Users of H&R Block At Home Online Free, Basic, Deluxe or Premium; or H&R Block At Home Software Deluxe, Premium, or Premium & Business can get one free session of live, personal tax advice with a tax professional. Its Premium Federal and State software, currently $64.95 as a download, offers one free session with a tax expert. H&R Block’s Best of Both, $79.95, promises year-round unlimited tax help; once completed, a tax pro will review, correct, sign, and e-file the return for you (a state return costs extra). H&R Block specifies no time limit to the calls.

TaxACT includes phone support for tax-related questions with its Deluxe edition ($9.95 online, $12.95 as CD or download) and its bundled, Deluxe and State edition ($17.95 online, $21.95 as CD or download). For anyone else, the phone support costs a flat $7.95.

TurboTax's phone or chat session with a tax expert is free year 'round, though there are limits regarding the topics covered. TurboTax Free Edition customers only can access live chat; business customers only can access phone help.) TurboTax says at 20 minutes, the expert “may terminate the communication” if the taxpayer appears to be unnecessarily stretching out the call or abusing the service. The service is available from 6 a.m. to 5 p.m. Pacific time.


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