Tax Preparation Software: The Good, The Bad And The Ugly

The medium is the message, it’s sometimes said Think of
Franklin D Roosevelt and his “fireside chats” to the nation In
a pre-TV era, the radio was the perfect medium to “have a
conversation with the American people” He could get his
reassuring message right into folks’ homes, and become a part of
the family A different medium, for example a grandstanding
speech, wouldn’t have got the message across as effectively as
an intimate radio chat The medium most surely was the message
But let’s come back to the 21stcentury and something close to
all our hearts: tax preparation, or, to be exact, tax
preparation software Unfortunately, this particular medium
seems to be giving out mixed messages, although software
programmers and vendors would reassure us that we can complete
tax programs quickly and accurately, click “print” and produce a
tax return destined to meet the IRS’s requirements
Seems clear enough, so why the mixed messages? One of the main
criticisms levelled at tax preparation software is its
“one-size-fits-all” approach Its critics, businessmen in the
main, ask how it’s possible to condense an extraordinary number
of codes and regulations into a half-hour interview process
Irrespective of the claims made by software programmers, critics
point out that only the most general set of credits and
deductions can be incorporated into tax software, which means
that you’ll be the loser It’s these sins of omission, or the
questions they don’t ask, which work to your detriment and the
advantage of the IRS
Imagine this scene for a moment A medium is holding a séance
She’s trying to put you in touch with the other side who also
want to get in touch with you She’ll ask leading questions and,
reading between the lines, make statements general enough to
apply to anyone, but those present will interpret them as
applying to themselves as unique individuals A “plant” in the
audience will bolster her authenticity further and convince you
that the entire process will bring you good news from the other
side
How a charlatan operates in a séance is exactly how critics see
the operation of tax preparation software These programs are
designed for all businesses but with the same basic tax
deduction questions being asked, albeit modified slightly, in
every case You might think you’re being treated as a unique
individual as you’re asked to state the nature of your business
before beginning the interview process This isn’t the case,
however, even though software vendors try and plant in your mind
that, by purchasing their top-notch programs, you will be able
to check all credits and deductions
Believe that, say the critics, and you’ll get what you think is
good news in terms of credits and deductions But, as with the
self-fulfilling prophecy of the charlatan medium, you’re only
getting what you’re looking for You need to think “out of the
box”, and hire the services of a professional who really can
read between the lines to ensure you don’t overpay your taxes
So, the critics’ verdict on tax preparation software as a
medium? – “I’ll be getting in touch with my accountant”
For some folks, then, all tax preparation software is bad If
you think they’re good then you’re thinking yourself out of
thousands of dollars An active investor, running his own
business and having a substantial portfolio of stocks, might
disagree There are very good programs available, either web- or
PC-based, which can handle multiple entries very effectively
Only in exceptional circumstances, that is in unique tax
situations, would it be necessary to get a tax accountant to do
the job for you For investors, the software or medium is
essentially good, it’s more a question of “means well but not
quite all there”
If you’re filing straightforward tax returns, and perhaps you’re
in receipt of dividends from mutual funds and W-2s from your
job, tax preparation software is readily available to calculate
your returns quickly and accurately Your returns are
calculated, and you’re informed of any possible problems Good
tax software will enable you to e-file a federal and state
return for less than $16 You can happily tick the boxes as a
unique individual who’s not in a unique tax situation
Things can turn very ugly, though, when the tax preparation
software you’re using doesn’t provide easy-to-follow, in-depth
help for the new or relatively inexperienced tax filer The help
needs to be as jargon-free as possible, and a good program will
provide the necessary tools and capabilities enabling you to
complete the return accurately This means the program should
have helpful drop-down menus and icons, together with a quick
and easily-accessible online service The best-documented
programs should offer a combination of helpful customer service
and useful financial tax tips and advice
Unfortunately, using some of the free tax preparation software
available, suitable mainly for folks filing simpler tax returns
with adjusted gross income of $34,000 or less, can be a
self-defeating exercise While some are fast and easy to use,
with both interview-style and forms-based input, others are not
When you buy tax software the vendor often provides technical
support to the purchaser, but this key element is missing in the
free software Users of free software tend to be less
computer-literate and are, therefore, more likely to find things
turning ugly Their verdict on this indifferent medium? – “means
well but has lost the plot”
So, good, bad and ugly: the messages are mixed for tax
preparation software Take out the ugly, and most would agree
that this method of filing your tax return is fast, accurate and
practically error-free For some die-hards, though, this
software will never be the medium of choice for communicating
with the IRS

Tags | 21stcentury, audience, authenticity, businessmen, detriment, franklin, hearts, messages, omission, reading, result, return