Tax Preparation Software: The Good, the Bad and the Ugly Word Count: 950 Summary: The pros and cons of using software to complete your tax return. Keywords: tax, software Article Body: 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 21st.century 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.