In 2003, Intuit outraged millions of TurboTax users with a Microsoft-style antipiracy scheme that prevented multiple use of the tax-preparation program that NPD Intelect says enjoys a 71-percent retail market share. A single-use activation code was built into all versions of TurboTax 2002, so the software could only be activated on one computer. Customers had to plan on printing or e-filing their returns from the same machine, too -- not always easy when a PC fails or pertinent tax details must be transferred from an office to a home computer.
In response to furious customer feedback, Intuit pledged last May to remove product-activation technology from its tax-year-2003 programs. The company expanded its software license agreement so customers can use TurboTax 2003 to prepare returns on multiple PCs, as well as complete returns for family members as well as themselves.
The result of Intuit's change of heart is reflected in comparable sales of TurboTax software through the end of January: Unit sales are up 15 percent over last year. Will those buyers be delighted or disappointed? We took a look at the top-of-the-line TurboTax Premier Home & Business ($80) to find out.
Bits and Pieces
The TurboTax lineup starts with the $30 Basic edition, which includes a mail-in rebate coupon for free electronic filing of one federal Form 1040. The $40 TurboTax Deluxe throws in download of one TurboTax State product, along with on-screen tax guides, video advice, and IRS publications and a Law Advisor that flags changes and opportunities based on this year's tax laws.
Stepping up to TurboTax Premier ($60) gets you IRA, 401(k), and retirement-planning help, as well as advice on stock, bond, and mutual-fund sales and tips on depreciating and refinancing rental property. Premier Home & Business is the top choice for anyone who wants handle both personal and sole-proprietor (Schedule C) filings with one comprehensive product; it offers extra guidance such as home-office deduction and depreciation tips for the self-employed, the ability to prepare W-2 and 1099-MISC forms, and a few other goodies discussed below.
If you happen to use Intuit's QuickBooks or Quicken (or Microsoft Money), all versions of TurboTax make it easy to import pertinent data. But Premier Home & Business goes beyond this convenience with the option of importing data from third-party payroll services or financial institutions (assuming, of course, you have secure access to delineated tables of data from such sources).
It All Adds Up
All TurboTax programs use a five-part interview that demystifies the process of preparing a tax filing. In part one, you answer basic questions about yourself and your company; from there, TurboTax asks questions in plain English instead of tax jargon. For instance, rather than asking if you received a Form 1099-G, TurboTax inquires, "Did you receive a state or local tax refund during 2003?"
After you've entered personal data and income information, interview step three seeks out deductions that are applicable to your situation, asking about life-changing events such as an addition to the family or retirement plans. In step four, TurboTax starts doing the calculations for you, using all the latest tax laws.
Since some state and federal tax forms are inevitably made available after Intuit (and its competitors) burn their CD masters, it's a good idea to update your copy of TurboTax right away when you first install the program. We did not, so were prompted to complete the update midway though preparing our sample return. The prompts are painless enough, but you'll want to avoid our example and update the software before you get started -- we ended up fetching 17 updates, which took about an hour to download and install over our dial-up connection.
Finally, in part five, TurboTax looks for ways to reduce your taxes by scouring the return for deductions and credits you might have overlooked. The Home & Business edition offers an expanded interview for preparing Schedule C filings, with extra guidance to simplify often-confusing terminology.
Help Is on the Way
There's also a "Home Office Expert" that provides knowledgeable advice for reporting home-office expenses and taking advantage of all the deductions to which you're entitled; we learned how specific home improvements, for example, could really impact a home-based business return.
TurboTax Premier Home & Business guides you step by step through calculating and reporting the depreciation of business assets, and automatically determines the most advantageous depreciation method. The software also easily prepares W-2 and 1099 forms for employees and contractors, performing all the calculations and printing IRS-approved forms on plain paper. TurboTax can also take care of printing Form 1040ES and quarterly payment vouchers.
An "Expense Expert for Business" details which expenses you're allowed to claim in areas ranging from travel and advertising to insurance and vehicle costs. It also warns you which types of deductions are not allowed and which might trigger an IRS audit.
If you get stuck during tax preparation, Home & Business provides access to an extensive business-tax library that includes both IRS business publications and author Fred Daily's Tax Savvy for Small Business book.
The fact is, not all tax-preparation programs are created equal. Every year, all those frantic filers choose TurboTax for a reason: Making complex tax laws appear uncomplicated is what Intuit's package is all about.
