One of the great technology marriages of the past 25 years — the merging of personal computing and personal tax-return preparation — may show some signs of fraying this new year.
The Dec. 23 announcement by the Internal Revenue Service that "taxpayers who itemize deductions on Form 1040 Schedule A will need to wait until mid- to late February to file" brought little joy to the estimated 50 million taxpayers who itemize. Moreover, those hoping to claim three types of tax deductions reinstated by the late-2010 tax bill, which the IRS labeled as a "state and local sales tax deduction, [a] higher education tuition and fees deduction and [an] educator expenses deduction," also would have to wait six weeks longer than usual to begin filing returns.
For some of us, this writer included, the extra six weeks will offer additional time to check and recheck everything, to make sure every "i" is dotted and every "t" is crossed. That's not a bad thing, per se, even if many of us were itching to pull the filing trigger sooner in order to get the money we effectively "lent" Uncle Sam back into our bank accounts faster.
More potentially frustrating, however, will be negotiating the maze of tax-related applications, boxed software and online services, as well as "refund calculators" available free for your hand-held phone or via a computer link on your Internet-connected desktop or notebook computer.
It pains me a bit to warn folks away from the TurboTax iPhone refund calculator app, because it's free, seemingly well done and not difficult to use. That said, unless your tax situation is about as "plain vanilla" as they come, don't expect to find anything resembling a decent guess at your refund.
Yes, you can enter your salary, federal and state withholding and mortgage interest deductions, and donations to charity. But did you pay a big legal or tax-preparation bill this year? Did you move? Do you have a home-office deduction? Don't expect to find any of these options in the hand-held app. Therefore, don't expect to get a reliable estimate of, well, your refund.
Online, the TurboTax estimating situation isn't much better. You don't have the user-specific options I mentioned above there, either.
H&R Block's online tax-refund calculator is a bit better, but it's still a rather confusing process, and it does not have as many deduction "inputs" as I would like to see. Ironically, TaxAct.com, which Block purchased last year, doesn't have a refund calculator at its site but rather wants you to begin filling in an online return in order to estimate your refund.
To me, what's painful about this is that none of these problems should exist, technologically. If TurboTax can come up with boxed and online programs for filers from simple to complex, its hand-held refund-estimating application and, most especially, its website, should oblige with similar options. Ditto for Block and TaxAct.com.
Last year's winner (in my view) for online tax preparation, CompleteTax.com, is back this year with a new site and new pricing (including free return preparation if you owe money, the firm figuring you shouldn't pay to find that out). However, I didn't find a refund calculator there, which I'd like to see.
Subject to the cooperation of TurboTax, which is part of Intuit, and H&R Block, I'll compare those firms' full online preparation services with CompleteTax.com and let you know which one delivered the highest verifiable refund.
Meanwhile, the idea of either a national sales tax (FairTax) or a flat tax rate, is rather appealing. In the case of the latter, as proponent Steve Forbes once said, you could fill out your return "on the back of a postcard." That would be a blessing for taxpayers, I believe, and allow all those software programmers to do something important, like develop the next killer Facebook application.
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