If you hate paying income taxes--and who doesn't?--no computer program is going to turn it into a pleasurable experience. But a good software package can make the task a little less onerous, and some can point the way toward reducing your tax burden next year.
One highly regarded tax preparation program for IBM PC and compatible computers is TurboTax, published by ChipSoft Inc., while in the Apple Macintosh world, MacInTax from Softview Inc. is a clear winner. We'll focus on these two programs and provide a brief overview of several others.
TurboTax, which sells for $65, opens with a personal data work sheet on the screen into which you enter basic information such as name, address, Social Security number, filing status, carry-over amounts from the previous year, how to apportion Schedule C (self-employment income) data and other details. Using this basic data, TurboTax automatically makes proper entries on the appropriate forms so that, for instance, each has your name and Social Security number on it.
From there you can reach a pop-up menu listing 28 tax forms and schedules into which you can enter data. Most are replicas of the standard Internal Revenue Service paper forms and bear the usual IRS designations such as Form 1040, Schedule A and so on.
It's not just a matter of typing numbers into an electronic replica of the real thing, however.
For instance, all the mathematical computations are done for you automatically. If you want to expand an entry, TurboTax will add a "supplemental schedule" to the form in question. And, of course, any entry that depends on another form is automatically filled in from data on the other form, just as any line that is to be carried to another form is automatically carried.
Some of the forms are work sheets in which you answer questions to produce data needed to complete an IRS form. A good example is the depreciation work sheet, where you are asked to describe the item, the year and month put into service, percent of business use, depreciation type and other questions that allow TurboTax to calculate the "cost basis" and depreciation according to IRS rules.
At any point within the program, a pop-up calculator can be called to the screen to do the kind of quick math often needed to make an entry. It uses the IBM PC's numeric key pad without your having to use the NumLock key, thus making it extremely easy to use. The results of such a calculation will be automatically transferred to where your cursor was resting in a form when you called up the calculator.
The bottom line on TurboTax is that it relieves you from having to make redundant entries.
Several other features deserve mention. There is a "what if" work sheet in which you start with your current tax situation and then rejigger the numbers to see what effect a change has on your taxes. You can award yourself more dependents, file singly instead of jointly or give yourself a $10,000 raise in salary and instantly find out what it means to your bottom line.
The program also has a tax-planning feature that allows you to make estimates of your 1987 taxes under the new law. A "note" function lets you attach notes to yourself tied to any form in the program.
When it comes time to print the forms, TurboTax provides preprinted Form 1040s that you can roll into your printer. These forms are approved by the IRS, which has set stringent rules on what it will accept. The remainder of the forms that compose a tax return can be printed by TurboTax on plain paper using any printer.
Separate state tax packages are available for California and 25 other states for $40 each.
Our favorite Macintosh tax program is MacInTax from Camarillo-based Softview Inc. The program takes full advantage of the Macintosh's graphic capabilities so that what you see on the screen and what you get on paper look just like the official IRS forms. Using on-screen replicas of IRS forms provides a familiar interface for anyone who has ever filled out a tax return. To date, MacInTax is the only personal computer tax program that actually generates an IRS-approved 1040 on Apple's laser and dot-matrix printers.
The federal tax version has a suggested price of $99. The California supplement--the only state version available this year--sells for $45. The program works with any Macintosh but will require some disk swapping for systems with one drive or the old 400K single-sided drives.
The first time you start the program, MacInTax displays a window with information on which form to file. This helps determine whether to file a 1040EZ, 1040A or standard 1040. We evaluated the program using the standard 1040.
You select the appropriate form and, within a few seconds, your screen looks like the top part of a 1040. You fill in the blanks as if you were completing the form by hand.