Taking The Tax-Preparation Software Plunge The deadline for filing tax forms is fast approaching. Two Californians have very different ways of doing taxes: Barbara Carter of Valencia has chosen to file online for the first time, but Sheldon Howard of Arcadia, a CPA, fills out paper forms — for all his clients.
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Taking The Tax-Preparation Software Plunge

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Taking The Tax-Preparation Software Plunge

Taking The Tax-Preparation Software Plunge

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From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.


I'm Melissa Block and its time for All Tech Considered.

(Soundbite of music)

BLOCK: With an economy in turmoil filing taxes will be a little different for million of Americans this year. Whether it's because of changes in employment or churnings and earnings there are always new complications and new high tech offerings enough to make filing your own taxes easier. Well this week's All Tech Considered segment focuses on computer tax programs. And we're joined now, as we are most Mondays, by Omar Gallaga who covers technology culture for the Austin-American Statesman. Welcome back, Omar.

OMAR GALLAGA (Technology Correspondent, Austin American Statesman): Hi, Melissa.

BLOCK: And there are more and more of these programs to chose from, right?

GALLAGA: Right. I mean they've been around for really long time. I mean, a lot of us at some point or another have gone to the store and bought a copy of Turbo Tax or H & R Block's Tax Cut, but now each of them has multiple versions depending on your tax situation. If you own a company or have houses there's all different versions of the softwares and also whether you're filing state taxes in addition to federal. But to complicate matters you also have online only versions of some of these software programs as well as some tax prep sites that are all online.

So deciding on which one of these to use, whether its software or an online tax prep can be a little taxing.

NORRIS: Yeah, yeah exactly. We're going to come back to some of the issues raised by these programs in a minute but first we're going to hear from reporter Sky Rohde who went out to learn about one of these programs.

SKY ROHDE: Barbara Carter, steered clear of the best known tax preparation software. She's a 42-year-old artist in Valencia, California. Carter was wary of the bad reviews she'd seen about some of the tax programs. A couple of those reviews led her to a program called TaxAct.

Ms. BARBARA CARTER: The most expensive version of it was like 20 bucks - that has like all the bells and whistles, and it allows you to e-file and everything.

ROHDE: Carter got a divorce last year. Filing taxes with her ex had been quite a process: multiple states, multiple K-1 forms, always filing extensions. And back then, the accountant always handled all that stuff.

Ms. CARTER: My own finances are pretty simple, and, you know, why not? Why not just do it myself? I can figure things out.

ROHDE: So late one night, Carter gathered together her financial information and downloaded TaxAct. She wanted to do her taxes on her own computer, rather than online, because that felt more secure. There were a few complications.

Ms. CARTER: You know, midnight, I'm running around my house, like, trying to find papers and looking at, you know, my inventory and things that I have…

ROHDE: Carter had kept all her receipts. She knew which paintings had sold, but she hadn't counted her inventory, canvases and frames, beforehand. Once she had that information, the software was fairly easy to use.

Ms. CARTER: It does say, okay, tell me this number. Now tell me that number.

ROHDE: Carter did have to calculate what percentage of her overall investment earnings came from U.S. bonds.

Ms. CARTER: That felt a little scary to me. I kind of felt like, wow, this isn't a number that's on the form. This is taxes, right? This is legal. You know, you don't want to mess around with it.

ROHDE: And in the end, the do-it-yourself approach gets the ultimate Barbara Carter stamp of approval. She says she'll file her own taxes again next year.

BLOCK: And Omar, we heard Sky Rohde there talk about security, for people who are preparing and filing taxes online, what did they need to know about protecting their information?

Mr. GALLAGA: Well, this is one of the situations where you want to make sure when you're filing the taxes that you're doing it in a secure computing environment. And a lot of things that we kind of neglect to do, we kind of put off like updating our anti-virus software or malware software or making sure you have a firewall running on your computer, making sure your operating system has the latest updates - all those things that we kind of put off, you definitely want to do them before you start doing your taxes, whether you're using software or doing it online and you also want to leave yourself plenty of time to do that.

You don't want be back against the wall on your tax deadline and dealing with computer issues before you even do that. So you want to give yourself plenty of time to do that and you also definitely don't want to this at the free public wi-fi at the coffee shop. You want to be on a secure, preferably wired network. If you're on wireless network at home you want to make sure you have some security installed on your wireless network.

And also, we've been hearing a lot of this year about some fishing scams and emails that people are getting purporting to be from the IRS or from tax prep companies asking for private information or asking you to open an attachment. You definitely want to avoid all that. The anti-malware company BitDefender has posted a list of tips to combat these scams and to protect your data and we're going to be posting links to all of that stuff at the npr.org Web site.

NORRIS: Omar, if people are going to the IRS Web site to get help, information forms - how easy is that site to navigate?

Mr. GALLAGA: Well, given what we go through most of the time with our taxes, you would think the IRS Web site would reflect that, that it would be kind of cluttered and confusing and difficult to navigate, but they've actually done a pretty gob job organizing the information on the main homepage. And the most requested forms to download and printout are right there on the top left hand side ready to grab from there.

Unfortunately though, like, I did a couple of searches - for instance, I was looking for what are the approved tax prep software packages that the IRS recommends and when I tried to do a search for that I came up with all kinds of random pages that seemed to have nothing to do with what I was looking for. So the homepage - pretty tight, pretty navigable but other pages you might run into problems if you start searching beyond that.

NORRIS: Well not everyone is jumping on the online tax bandwagon. We're going to hear again now from Skye Rohde. She's going to tell us about one man who's set in his ways.

ROHDE: Sheldon Howard(ph) is Old School - capital O, capital S. He's 73 and works as a certified public accountant in Arcadia, California, northeast of Los Angeles. He's been a CPA for 54 years, and he's done my taxes for last few of those. So what makes Mr. Howard Old School, check this out.

Mr. SHELDON HOWARD (Certified Public Accountant): If I have to print a return and then change it for some reason, it doesn't train me to use the program. I may as well do it all by hand if I have to do it half by hand.

ROHDE: You heard right: by hand. Sheldon Howard fills out every tax form for every one of his clients using his own pen. Yes, he tried some of the computer programs but he found glitches. It's not that Mr. Howard is technologically challenged. He's just adamant that a computer is a tool, and it ticks him off that some of the CPAs he knows have tried to blame their mistakes on their computers.

Mr. HOWARD: It's like a typewriter, okay? Nobody in the world would have said, you know, blame their typewriter for making a mistake in a tax return, you know, when they used typewriters in the old days. It's a wonderful tool but it's the tool and you're the brain.

ROHDE: Sheldon Howard says the Franchise Tax Board here in California sees him as an exception.

Mr. HOWARD: They said that if I did any of my tax returns with computer but did the rest of them by hand, I'd be penalized for preparing the ones by hand. So since I prepare them all by hand, I don't get any penalties.

ROHDE: And says, Mr. Howard that isn't going to change anytime soon.

Mr. HOWARD: I'm going to keep on doing it the way I'm doing it. That's all. It suits me fine.

BLOCK: That's accountant Sheldon Howard talking with Sky Rohde. And Omar, for people unlike Mr. Howard to do want to work online on their taxes, where would they send them?

Mr. GALLAGA: Well, I'll be posting links not only to the IRS.gov Web site but also to a lot of resources that we found, kind of testing out this year's crop up tax software and online services. There's sites like Cnet, PC world and Mac World. They've done a really god job this year doing all the leg work testing them out, putting them through their paces and letting you know which software is the best value, what you're getting for your money and which is the most reliable. So we'll be posting links to all of those at npr.org/alltech.

NORRIS: Great. Thanks a lot, Omar.

Mr. GALLAGA: Thanks very much for having me.

NORRIS: Omar Gallaga, covers technology culture for the Austin-American Statesman.

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