Money Blue Book

Review Of Free Tax Filing Software Options – TurboTax, TaxCut, and TaxAct

Tax day is a stressful and confusing time for many people as we scramble around with our W-2’s and 1040 forms, but it doesn’t have to be. Currently, there is a wealth of free tax filing resources available to help people like us with timely and accurate tax preparation, courtesy of organizations like the IRS and the U.S. government. Thus, even those those who do not have the extra financial means to afford premium tax software programs like TurboTax and Taxcut still have a wide selection of competent tax assistance programs at their disposal. Depending on their individual demographics such as age or income, and depending on the availability of other special status factors such as active duty in the armed services, certain taxpayers may even qualify for free federal government sponsored tax preparation assistance and free tax filing.

Free Tax Filing With IRS Free File Offers and Non Profit Volunteer Tax Preparation Services

The various free tax preparation and free tax filing services available can be broken down into two broad categories – offers that stem from the federal government’s partnership program to bring affordable partially subsidized tax filing services to lower income people, and offers that are provided by volunteer tax organizations funded by non-profit interest groups.

Taxpayers who wish to prepare and file their taxes electronically for free can take advantage of the “Free File” tax return preparation program provided by private tax vendors such as Turbo Tax, Tax Cut, and Tax Act, in partnership with the Internal Revenue Service (IRS). While the federally sponsored tax preparation and filing programs are indeed free for those qualified, the program costs are only waived for the federal income tax portion. Those who use the online tax services of an IRS “Free File” software provider must be mindful of the inevitable up-sell of the state income tax portion – in which the “Free File” tax software vendors offer the federal portion for free but try to sell you on paying for additional (and often necessary) state tax preparation. Marketing strategy has shone that loyal customers of a proven free software product have a tendency to return to the same familiar product again, even when they may not qualify for the original free trial version anymore. The hopes of these free tax software providers is to get you acquainted with their free federal tax filing programs today so that one day when your income finally exceeds the “Free File” qualification limits, you will be will more receptive to paying for the same service.

Be Mindful Of Inevitable Up-Selling For Paid State Income Tax Preparation and Filing

Oftentimes however, taxpayers using the services of the “Free File” software vendors are surprised by the last second add-ons, tax refund anticipation loan solicitations, and other marketing sales pitches. While there is no obligation for taxpayers to buy any of the products or services marketed by the “Free File” tax providers, because many times these convenient add-ons (for services like state tax form preparation) crop up so late in the free federal tax preparation process, they oftentimes leave the taxpayer with little choice but to pay the extra requested charges or face having to start the lengthy process all over again with another tax software vendor. However, despite the up-sell tactics used, there is nothing really outrageously deceptive or harmful with the practice of product up-selling in the case of “Free File” offers (especially for things like state tax return preparation) as they frequently do save the taxpayer time and hassle, particularly since the tax provider may be able to transfer all of the prepared tax data from the completed free federal tax forms to the paid state tax forms automatically for you. Furthermore, the state income tax form upsales usually only cost an additional $15-20 for electronic E-file. Of course, one probably ought to check his or her state’s taxation authorities to see if he or she can e-file or mail in state income tax return forms for free.

As always with utilizing online programs, particularly ones that will necessarily request confidential data and information from you such as your social security number, it’s important to be extra careful of the myriad of tax preparation scams floating around the Internet during tax season. Remember, when dealing with a tax preparation and tax filing firm, you are inevitably providing them all of the information they would need to fraudulently steal your identity. Always seek out a trusted and “Authorized IRS e-file Provider”, or stick to the popular “Free-File” tax vendors and verified free tax preparation services in the list I’ve provided below. Remember, it’s important to stay vigilant against tax scams and tax frauds to avoid succumbing to the dangers and headaches of identity theft.

Free Tax Filing Is Also Available to Qualified Low Income, Elderly, Or Active Military Personnel

Those  who are puzzled or confused by the “Free-File” online tax preparation options may consider seeking more personalized live tax help from free volunteer-based tax assistance programs. The most popular free in-person tax preparation programs for qualified taxpayers include the IRS’ Volunteer Income Tax Assistance Program and the Tax Counseling for the Elderly Program via the AARP organization. If you need guidance with your tax return or are not sure which tax credits or deductions to take, you may want to visit one of these volunteer tax assistance sites for some one-on-one tax prep help. Most of the walk-in tax centers provide full service tax preparation help for both federal and state returns with the help of fully trained community volunteers and sometimes professional tax preparers, however, they are best suited for straightforward and uncomplicated tax returns. Most of these community tax assistance organizations are also need-based and limited to certain types of people – such as lower income taxpayers, elderly folks, or active military personnel.

Below is a list of the verified and legitimate free 2009 tax preparation and tax filing resources I am aware of for tax year 2008. Please share your personal experiences with any of the the ones I’ve listed or have failed to mention:

1) TurboTax Free File Edition – Intuit’s TurboTax currently offers a free online edition of its popular tax preparation software to taxpayers who only need to file 1040EZ or simple straight forward 1040 tax return forms. The TurboTax free edition is designed for those who have simple tax returns and don’t need much tax guidance regardless of income level. If you have complicated child care expenses, mortgages, medical expenses, have made charitable donations, own stock investments, rental properties, or run your own business, you may need to upgrade to a paid premium edition of TurboTax. The TurboTax Free Edition doesn’t cover tax Schedules C, D, E, and F (required for taxpayers who own a business or have sold investments). Otherwise, those who have simple tax returns with just the standard deduction or a few basic itemized deductions, should take a test run of the TurboTax free version. At the very least you can try the program without cost and decide whether your needs are fulfilled by the free entry level version or whether you will require a more sophisticated software upgrade.

The TurboTax online free edition offers an intuitive, interview format tax preparation process featuring data compatibility with Quicken and various personal finance spreadsheet programs, along with integrated electronic state filing (at an additional cost). TurboTax provides a list of all the tax schedules and tax forms included in the federal Free File Edition, and as you will note, most of the major forms such as Schedule A (for basic itemized tax deductions) are included under the free filing program. While TurboTax is indeed free for federal return preparation and filing, those of you who need to file a state return as well will have to pay a little extra ($25.95).

• TurboTax Freedom Edition – As a special promotion, TurboTax also offers free federal and state tax return preparation and e-filing to qualified taxpayers who either have an adjusted gross income (AGI) of $30,000 or less, qualify for the Earned Income Tax Credit (EITC), or can qualify as active duty military members with an AGI of $56,000 or less. Qualified taxpayers can prepare and file their federal returns for free with the TurboTax Freedom Edition. Freedom Edition participants may also qualify for free state tax filing as well if filed in a state that sponsors its own “Free File” state program. Free File Program states include: AL, AR, AZ, GA, ID, IA, KY, MA, MI, MN, MO, MS, NY, ND, NC, OK, OR, RI, SC, VT, and WV. Otherwise, if your state’s not included, you can still prepare and file a state return with the Freedom Edition for just $9.95. Still not a bad deal at all for lower income taxpayers who qualify. Although the TurboTax Freedom Edition supports the Form 1040 long form with itemized deductions in addition to the basic Form 1040EZ, it does not support tax situations that are uncommon to lower income taxpayers, such as complex investments, rental property, and royalty income.
• TurboTax Business (Free Download) - Those who operate their own small business, run a corporation, a partnership, or a multi member limited liability company (LLC) may wish to try out the free TurboTax Business Edition with free federal E-filing. Intuit is hoping that once you try their promotional product download (which is the same as the paid TurboTax Business version), you’ll come back to TurboTax for your future paid tax preparation needs.

2) H&R Block TaxCut Free File – HR Block offers a basic free online tax preparation software and free federal E-filing package with its TaxCut Free Federal Edition for those with simple returns, such as those who are filing 1040EZ’s or have run of the mill 1040’s. The TaxCut Free Federal Edition offers a simple tax preparation process via an easy to use, step by step tax interview with automatic error and anti-audit double checking. However, if you’re looking to import your prior year’s tax data or if you’re looking to get extra tax preparation guidance for your Schedule C, home mortgage, rental property, home office, or business expenses, you will have to go with a more premium TaxCut version instead. While federal income tax preparation assistance is indeed free with the TaxCut Free File Edition, adding a state income tax return will cost extra – an upsell added price of $29.95.

3) TaxAct Free File – While not as popular as TurboTax or H&R Block’s TaxCut, TaxAct has quietly competed well against the two tax preparation giants. TaxAct offers its own free federal edition for those who would prefer to do away with paid complete tax support in favor of free tax preparation and free E-filing. As always with free tax preparation programs, TaxAct’s free filing edition is best suited for those with basic, non complex tax returns. Free TaxAct supports all of the major tax forms (view list) including 1040 and 1040EZ with itemized deductions. The only major TaxAct features not supported in the free version are data importation and complex deduction calculators for those who run their own small businesses. Otherwise, the TaxAct free version functions just like the paid version, allowing you to prepare your taxes at your own pace and return to your saved work as needed until you are finished.

Cost-wise, your free federal E-file is included, but tacking on an additional state income tax return will cost $13.95 (which is still a lot cheaper than both TurboTax and TaxCut’s state tax preparation prices). If you’re filing both the federal and state tax forms together, TaxAct’s Free File offer is one of the cheapest deals around.

4) TaxSlayer Free Tax Filing For Active Military – TaxSlayer online tax preparation and tax filing is free for active duty military personnel. While the online TaxSlayer classic edition offers free federal and state tax preparation services for non-military civilians with downloading, e-Filing, and printing at $9.95 each, active military personnel get to enjoy both the tax preparation and filing for free. Active military servicemen and women also get to add multiple state returns with no additional charge. If you are not sure whether you qualify, please visit the TaxSlayer website and submit your military EIN number from your W-2 Form into the query box to see if you are eligible for free TaxSlayer services.

5) IRS Free File Program – Through a partnership between the IRS and a group of private sector tax software companies called the Free File Alliance, those whose adjusted gross income in 2008 was less than $56,000 may be eligible for free tax services. If your income was less than $56,000 in 2008, you may be qualified to select a free tax preparation and free tax filing vendor from the the IRS Free File website to process your tax paperwork for you. To participate, you’ll need to visit the IRS’ website, fill out a short tax related questionnaire, and get matched up with an appropriate free tax preparation company. Those who wish to know more can obtain a list of all the Free File Alliance companies here. Those who can meet the program’s income restrictive terms should definitely take advantage of this government sponsored offer.

6) IRS Free File Fillable Forms – The IRS Free File Fillable Form option is not a free tax preparation software, but the most basic way of electronically filing your federal tax return without charge. Simply put – the site’s just a series of blank tax forms. You simply select the tax forms desired, fill in your appropriate tax return numbers, and E-file for free. There are no income restrictions and the service is available to everyone. For those of you who know exactly what you are doing and prefer to do your taxes manually by hand (not sure why anyone would want to, in this day and age of computer assisted tasks), this is a free tax filing option to consider, especially for those whose high income limits would otherwise disqualify them from other free electronic tax filing alternatives. Do keep in mind that the IRS Free File Fillable Forms service is not the same as the IRS Free File Program. The IRS Free File Program offers free tax preparation with free electronic filing, while this one only offers free basic filing without the extra preparation assistance.

7) Volunteer Income Tax Preparation Program (VITA) – The VITA program consists of a network of IRS sponsored tax volunteer sites that provide free tax preparation and free filing services to those people with low to moderate incomes, or those with limited English language abilities. Generally, the VITA sites assist taxpayers who have net incomes below $42,000 – individuals who are usually eligible for low income tax benefits such as the earned income tax credit. The certified tax preparation volunteers provided by the free program usually receive tax training to help prepare basic tax returns in places around the country. These free walk-in VITA centers are usually located in local community facilities such as libraries, elementary schools, shopping malls, and other neighborhood centers. While there is no comprehensive list of VITA locations available on the Internet, you can find your nearest VITA site by calling: 1-800-829-1040.

When I was in law school, I worked as a tax preparation volunteer through the VITA program and witnessed a great deal of care on the part of VITA volunteers. The VITA tax preparation volunteers may not always be the best trained to handle complex tax law issues, but they are generally fairly knowledgeable and very eager to help with basic tax cases.

8) AARP Tax-Aide Clinics (For Senior Citizens) - The VITA volunteer tax program’s sister companion is the Tax Counseling For the Elderly Program (TCE). Currently, the free tax assistance initiative for low income taxpayers with special attention to those 60 and over is being spearheaded by the AARP’s Tax-Aide program. Those who are age 60 or older with low to moderately low incomes may be able to call in and schedule an appointment for some free tax preparation and free tax counseling assistance. At any one of the AARP Tax-Aide locations, you’ll find trained tax preparation volunteers who can help you file your federal and state tax returns. Oftentimes, many of the volunteers who provide the tax filing assistance are themselves senior citizens affiliated with various IRS grant funded non profits. If you wish to find an AARP Tax-Aide center, please run a search with this online Tax-Aide finder tool, or locate your nearest AARP Tax-Aide site by calling 1-888-227-7669.

9) Low Income Tax Payer Clinics (LITC) - Low income tax preparation clinics are partially funded by the IRS and their goal is to provide affordable representation to low income taxpayers before the IRS in cases involving tax audits, tax appeals, tax collections, and federal tax litigation (usually for free or for a small nominal charge). The low income taxpayer clinics are usually operated and managed by non profit groups, law schools, or business schools with each independently evaluating prospective clients for program eligibility in terms of income limits and suitability.

When I was in law school, I participated in my school’s low income taxpayer clinic program as a law student where I assisted clients of limited financial means with their tax related problems. During my time in the clinic, I helped my clients resolve a variety of tax related issues including helping a few negotiate Offer In Compromise settlement negotiations with the IRS for lower fixed payments. For those who qualify, I highly recommend the low income tax clinics as a way to resolve more complex consumer tax issues affordably with the help of trained tax professionals. While tax clinics run by places like law schools are usually staffed by law students in training, such clinical programs are usually supervised by a fairly hands-on tax law veteran. In my case, while working at my school’s low income taxpayer clinic, I was supervised by a law school professor who was also a major partner at a prominent tax law firm nearby.

Review Of TurboTax and TaxCut Online Tax Preparation Software

According to some news statistics, more than half of all Americans hire a professional tax preparer to file their taxes. In this day and age, those kinds of stats frankly surprise me. I would have thought by now that the vast majority of Americans would have finally embraced the benefits of online tax preparation and the added cost saving advantages of utilizing do-it-yourself tax software products. Chalk it up to the continuous complexity of our marginal tax bracket system with all of its intricate income tax deductions and tax credit varieties or blame it on the tendency of people in general to outsource their financial responsibilities – but many people still stubbornly prefer to depend on professional tax experts to take care of their annual income tax filing obligations instead of doing it themselves.

For many people, filing income taxes is a painful, expensive, and dreaded task – but it really doesn’t have to be. While I’m not suggesting the filing of one’s income taxes will ever become an enjoyable experience (that will never happen), there are mitigating ways to make the process much more bearable. In the past, when April 15 tax day drew near, the only way to avoid having to flip open the bulky U.S. tax code or pour over the volumes of tax regulations and detailed tax commentaries, was to go out and pay $200-300 for an overpaid accountant or professional tax preparer to fill out the appropriate tax forms for you. But now, with the availability of very affordable discount tax preparation packages from major tax software developers like Intuit and H&R Block, and the prevalence of user-friendly and comparatively lower cost online tax preparation solutions like TurboTax, TaxCut, and TaxAct – preparing and filing your own simple tax returns without the pricey services of an overrated accountant is a very realistic option. With the help of top of the line tax preparation websites and software, filing your own taxes can be an easy and affordable experience. For those that qualify, there are even ways to file taxes online for free.

File Your Own Taxes With The Help Of Online Tax Software and Save Money

The process of preparing one’s own taxes, even with the assistance of highly automated tax software and online tax preparation programs, is a highly educational and financially empowering experience. In this age of advanced computer software and electronic E-filing via the Internet, there is little need to fiddle with paper income tax forms anymore. Unless your tax return involves complex business tax issues that require a tax lawyer’s legal advice, most ordinary returns can be prepared by the taxpayer without professional supervision or assistance.

Those that insist on hiring a local third party tax preparation expert to do the brunt of their taxes for them may be surprised to learn that many of these so-called tax experts frequently rely on the same tax preparation software tools to do your taxes that are freely available to you as well. As someone who attended law school with subsequent experience working as a volunteer tax preparer for low income people, I’ve witnessed this first hand in many cases. Oftentimes, when you hire a tax professional to prepare your taxes for you, all you are doing is paying a lot of unnecessary money for some lowly entry level tax preparation agent to perform simple data entry into a completely automated tax software program.

So instead of shelling out $300-400 for what often amounts to nothing more than glorified data entry, why not strive to perform this simple task yourself? The reality is that the vast majority of income tax returns do not require the expensive services of an accountant or tax lawyer to prepare – most can be performed efficiently and accurately from the privacy of your own home.

Comparing The 2009 Online Tax Preparation Software Versions Of Intuit’s TurboTax and H&R Block’s TaxCut For Tax Year 2008

The tax preparation market is filled with hundreds of choices as competition for your business is very stiff. However, sitting at the very top are two of the most established and expertly developed online tax software products – online and desktop brands that have withstood the test of time and consumer review scrutiny – Intuit’s Turbo Tax and H&R Block’s TaxCut. Together, TurboTax and TaxCut enjoy the biggest market share among consumers looking for an affordable online and software driven tax preparation alternative to hiring an expensive tax professional. While TurboTax is the preferred choice for most people, with TaxCut being a close runner up second, they are very similar and both offer the same primary benefit – the ability to do your own taxes, conveniently, accurately, and affordably.

TurboTax and TaxCut are similar in so many ways that consumers frequently get the two confused and can’t decide which of the two popular tax preparation software packages offers the best tax preparation deal. Overall, you can’t go wrong with either one of the 2009 versions of Turbo Tax or TaxCut for tax year 2008 as both products have already gone through a tremendous amount of research and development, and subjected to numerous product testing upgrades. Both tax software products offer all of the tax filing features you’ll need to generate accurate returns and file your taxes electronically without hassle. Both TurboTax and TaxCut also feature top notch user-friendly designs that walk you through the income tax preparation process, without requiring you to deal with the the complexity of income tax law. With the ability to automatically save your carryover tax information for future year’s tax returns as needed, it’s important to pick a favorite online tax preparation brand and stick with it as you’ll likely end up going with the same online tax preparation company again year after year, due to brand familiarity.

While I highly advocate taking advantage of online TurboTax or online TaxCut for your tax preparation needs, there are still those who shun the Internet in favor of the less identity theft-prone traditional desktop software versions. The biggest difference between filing your taxes online vs. software used on your computer – is who holds your personal confidential data. Do you trust Intuit (the maker of TurboTax) and H&R Block (the maker of TaxCut) with all of the details of your life and personal finances? If you think their websites and databases are 100% safe from data theft, then stick with the more versatile and convenient online route – otherwise, buy the desktop software versions. Personally, I overwhelmingly prefer going with the online option as I have full confidence in the abilities of these reputable software makers to keep my online information safe and secure. Both products have been around for many years and both are run by legitimate companies with tremendous financial and professional backing. Besides, the ability to archive info online and import your prior year’s tax data automatically onto the following year’s tax forms as needed is an extremely convenient and invaluable bonus for me. Importing the previous year’s tax data automatically cuts down on data entry mistakes and gives a tax reference point during the interview questions for the current year’s tax return. Both TurboTax and TaxCut also offer support for importing data from other financial software packages such as Quicken 2009, QuickBooks, as well as Microsoft Money.

In terms of features, both TurboTax and TaxCut were designed with tax newbies in mind as both software tools provide a significant amount of hand holding and pre-chewing. For the benefit of tax beginners, both programs walk you through the various tax topics using a very easy to understand interview process, breaking complicated tax topics such as tax deductions, sole proprietor income, and capital gains income into more manageable bite-size steps. Having used both TurboTax and TaxCut before, the experience with filing your online taxes with either one can be likened to an actual question and answer interview with a live tax preparation expert. As the online program moves you along subject by subject, your various answers to its direct questions will cause relevant numbers to be automatically dropped into the correct fields on your tax form as required. Both Turbo Tax and Tax Cut also feature a handy federal and state income tax refund counter display that cycles up and down as you proceed along the tax interview process, updating you on where you stand refund-wise at all times. Stumped by a particular tax issue or want to get into the nitty gritty about a particular tax subject? Both TaxCut and TurboTax feature helpful tax explanation tabs throughout the entire tax preparation process for those that want to learn more about the relevant tax regulations behind the interview questions.

When you’ve completed the step by step consumer friendly tax interview, both Turbo Tax and Tax Cut offer a free error checking feature that scans your completed tax return for potential tax errors or possible accounting issues that may trigger a tax audit flag (such as clerical mistakes like indicating a stock purchase or sale on a government holiday when the stock markets were closed). Having an automated system effortlessly scan your tax return for mathematical and preparation errors beats having to double check your own tax numbers manually if you were doing things by hand. Both tax software programs also offer audit risk assessments and provide a comparison of your tax numbers to the U.S. averages, an interesting feature for those who like to know where they stand in relation to the population at large.

The bottom line is that both Tax Cut and Turbo Tax crunched out the same exact tax refunds when supplied with identical information, based on my own tests of both programs. Both tax preparation software algorithms proved to be highly accurate and very user friendly. Most of the slight differences between the two programs are primarily graphically based and center around how the respective websites lay out their tax interview content. TurboTax gets a slight edge in this department as it’s a bit easier to get started with and get going for the first time user of online tax preparation software, but the differences in comparison to TaxCut are rather minimal.

Both TaxCut and Turbo Tax come in separate online basic and premium business editions, with TurboTax differentiating its editions by taxpayer-type, and TaxCut differentiating its editions by the level of tax advisor support desired. Cost-wise, TurboTax is the more expensive tax application between the two top choices, but in my opinion, its online program is a bit more well put together and performs sleeker than its biggest competitor, TaxCut. If you are a new beginner to online tax preparation programs, I’d recommend trying out online TurboTax over HnR Block’s online TaxCut software due to TurboTax’s slightly more user friendly and more graphically intuitive website interface. However, both are equally capable of helping you prepare and file your taxes accurately without breaking the bank.

Review Of Intuit TurboTax Online 2008

Compared to H&R Block’s TaxCut, Intuit’s TurboTax program offers a slightly more graphically pleasing and informatively complete tax preparation experience. TurboTax also offers greater in depth tax explanations and extra hand-holding guidance as you work your way through its tax interview process. Where TurboTax really shines however is in the area of automated data importation. Unlike HR Block TaxCut, TurboTax allows you to import tax data and payroll information directly from employers who use ADP, PayChex, or ProBusiness, which according to software maker Intuit, covers more than half of all U.S. employers. This is not a feature that is currently supported by TaxCut. While not an absolute deal breaker for those who like TaxCut, it is a pretty significant bonus in favor of TurboTax, at least in my opinion. A search through web reviews will also review a nearly unanimous agreement that TurboTax is indeed an overall better online product than TaxCut, if only by the slimmest of margins. At least one reviewer, PC Magazine, has selected TurboTax 2008 as its editor’s choice as the number one online tax service provider for 2009.

TurboTax 2008 comes in a multitude of editions including the free edition, the deluxe edition, the premier edition, the home & business edition, and the feature-filled business edition for corporations, partnerships, and limited liability companies (LLC). I recommend taking a look at the provided TurboTax price comparison chart to find the right tax package for you.

• TurboTax 2008 Free Edition - Intuit’s free online tax preparation package is appropriate for those with simple 1040 EZ tax returns. While the federal edition is indeed free, the state portion will cost extra.
• TurboTax 2008 Deluxe - Most popular version – used by the vast majority of people. It’s targeted at those in the middle ground with some degree of tax complexity, such as those who own a home, have made donations, or have some medical expenses to deduct. Best of all for returning customers, this version permits data transfer from the prior year’s return.
• TurboTax 2008 Premier - This TurboTax version helps you with maximizing deductions and is specially suited for those who own stocks, bonds, mutual funds, and most notably, rental properties.
• Turbo Tax 2008 Home & Business – Specially geared towards the income tax and deduction complexities of sole proprietors, consultants, independent contractors, and single owner LLC businesses.
• TurboTax 2008 Business - This package is the most full service complete version, designed for those who run a corporation, a partnership, or a multi-member LLC business.

Price-wise, TurboTax is more expensive than TaxCut, but I think the higher quality cost is worth the higher comparative price – which is why I use TurboTax to handle the bulk of my online tax preparation needs. As a heavy user of Quicken 2009 and Quicken Online products, I prefer sticking by the same software maker who designed these products as I anticipate greater future cross compatibility some day.

Review Of H&R Block TaxCut Online 2008

Brought to us by the popular U.S. tax preparation chain, H&R Block’s TaxCut is a worthy online tax preparation alternative to TurboTax. TaxCut offers a highly similar user-friendly tax preparation experience as TurboTax with the same hand holding help and customer friendly explanations during the entire tax preparation process. However, TaxCut’s biggest selling point perhaps is its lower product cost and online editions geared towards providing extra live tax adviser support. Tax Cut product editions are generally a bit cheaper compared to their TurboTax edition counterparts but they offer nearly the same features, including data importation functions and the ability to automatically download data from prior tax returns into the current year’s tax forms. One of the only significant features offered by TurboTax that’s not provided in TaxCut is the ability to import 1099, 1098, or W-2 tax data automatically from a database of employers without resorting to manual data entry. This is certainly a very convenient feature offered by TurboTax not available in TaxCut, but one has to wonder if this online perk is worth TurboTax’s much higher comparative price.

While on the whole, TaxCut’s online interface, online tax descriptions, and help search features are not as aesthetically pretty or extensive as that offered by TurboTax, these rather mild and slight drawbacks do not detract from the fact that H&R Block’s TaxCut program is a very user-friendly and accurate online tax preparation tool. Those wanting more extensive live tax advisor support from a real person may want to consider H&R Block’s TaxCut program over TurboTax, as TaxCut is backed by a greater network of actual brick and mortar tax preparation branches.

TaxCut’s various editions are broken down based on the level of customer and live tax advisor support desired – ranging from 1 free included session of tax advice, to unlimited support from a live tax professional agent from one of H&R Block’s many tax preparation offices.

• TaxCut 2008 Free Edition – The Free edition is the most basic online TaxCut package – best suited for those with simple 1080EZ tax returns. While this product supports most income tax forms, you will get very little guidance or assistance in filling them out.
• TaxCut 2008 Basic – The Basic version supports the same tax forms as the Free edition but with this edition, you can transfer data from past TaxCut tax returns and even import data from rival TurboTax.
• TaxCut 2008 Premium – The Premium TaxCut version offers the same features as the Basic level edition, except it also throws in an “Ask a Tax Adviser” session with a live H&R Block tax preparation professional. This edition is recommended for most taxpayers as it offers the option to ask a live agent a more complex tax question for free should the need arise.
• TaxCut 2008 Signature – With the nearly full service TaxCut Signature edition, you will get all of the tax preparation assistance you’ll need in the form of unlimited tax advice from an actual H&R Block professional who will not only personally review and edit, but also sign and e-file your return for you.
• TaxCut 2008 Online Office – With this complete full-service tax preparation edition from H&R Block, the company will do all of the tax preparation work for you. If your income tax return or financial situation is pretty complex, this edition may be recommended.

Tax Cuts, Social Spending, and New Jobs – But What About Stimulus Checks?

A second economic stimulus package for 2009 is on the way and from the looks of things in the news, it appears newly minted President Barack H. Obama and his Democrat controlled House of Representatives and U.S. Senate are determined to ram the lucrative spending proposals through the legislative meat grinder no matter what, much to the chagrin of skeptical and deficit-weary Congressional Republicans.

As Congress debates the wisdom and intricate details of the current version of the 2009 economic stimulus package, it’s clear that something needs to be done very soon to jumpstart and save our suffering economy before we spiral into a full blown economic depression. The unemployment rate is rising fast and everywhere you turn, there seems to be a never ending stream of unemployment and layoff news being announced everyday. The stock market has already shed more than half of its value since its peak in 2007, and billions to trillions of dollars worth of wealth have already been eliminated from the economy. Major banks and financial giants like Citibank, Bank of America, and JP Morgan Chase, once the financial pillars of our economy and the lifeblood of our credit industry, are now clinging onto U.S. government bailout money for dear life – hoping to still be in business at the end of every quarter.

With its almost limitless resources, it’s clear the federal government must intervene somehow and put this broken economy and financial system back on track to prosperity. But the question is – what should be the government’s role in all of this? More specially, what method should the government take to effectively jump start the economy to life again and ease the suffering on Main Street and Wall Street? Should the 2nd economic stimulus package continue to focus directly on sparking consumer spending by featuring a second round of free stimulus checks to consumers – perhaps for amounts much higher than the previous 2008 economic stimulus checks? Or should the plan this time around focus more on longer term indirect measures like job creation, infrastructure investment, and tax credits?

Current 2009 Economic Stimulus Package Focuses Less On Stimulus Checks – And More On Job Creation, Infrastructure Projects, and Tax Cuts

Before Barack Obama was elected president and during his 2008 Presidential election campaign, he supported implementing additional economic stimulus measures in 2009 – and even whispered at the rumored possibility of a second round of stimulus checks for taxpaying consumers in 2009 before tax day.

Whether a second stimulus check was a real possibility or not, the mere mention of a second round of stimulus payments and the prospect of getting more free government money certainly made my greedy ears perk up, but much of my optimism and enthusiasm were quickly dashed when Obama finally came into power. Almost immediately, he signaled a different stimulus proposal shift that favored a more multi-pronged approach of using tax cuts, tax credits, and pet projects, rather than relying on the 2008 economic stimulus check tactics of his predecessor, George W. Bush. Instead of just distributing free bailout money to the masses and hoping the funds will naturally trigger a huge surge in consumer spending activity to put the economy back on its feet again, Obama’s stimulus package focuses more on middle class tax cuts and massive increases in government spending to fund various infrastructure investments, green energy projects, financial aid to states, and social education initiatives – designed to create jobs and put people back to work.

The current 2nd economic stimulus plan laid down by President Obama for 2009 is a whopping, super-sized $825 billion economic rescue package containing staggering spending initiatives and ambitious tax cuts, and sprinkled with dozens of pork-based proposals and suspect social initiatives within hundreds of pages of legislation. The current package contains $300 billion worth of aggressive construction projects designed to improve the country’s  infrastructure and create millions of new artificially generated jobs in areas like health care, renewable green energy, school upgrades and repairs, and transportation related improvements. The package also contains about $200 billion worth of state social assistance provisions designed to help keep state sponsored health and unemployment programs well funded – to offer a measure of cushion for those people who have been recently laid off due to the economic down turn. Along with the state assistance portion are other safety net type provisions to help fund and keep afloat local food stamp programs, food banks, state sponsored health care, and governmental health insurance plans for those suddenly unemployed.

The other primary feature of the current Obama economic stimulus plan is the series of tax cuts and tax credits offered to qualifying individuals and small businesses. Under the tax cut portion of the stimulus deal, small businesses suffering losses because of the economic downturn and recession would receive more favorable tax loss write off terms.

For individuals, the current 2009 economic stimulus package offers pretty generous tax cutting proposals. The plan highly favors low and middle-income working families since the idea is that these income groups are more likely to spend and invest their tax savings rather than save the money. In terms of stimulating the economy, increased consumer spending is good, and consumer saving is bad. Nicknamed the “Make Work Pay Credit” by President Obama, the proposed tax credit is supposed to reach close to 95% of workers, and benefit even working tax filers without any tax liability – typically very low income workers. Here is a basic overview of the stimulus plan’s Make Work Pay Credit:

• Middle Class Tax Credit: Under the plan, there would be a tax cut amounting to $500 a year for individuals, and $1,000 for couples. The economic stimulus would be issued in the form of a tax credit, and would be limited to those making $75,000 or less ($150,000 or less for married workers filing joint tax returns).
• Low Income Tax Credit: For low income taxpayers, there would be an increase and expansion of the Earned Income Tax Credit to provide a refundable tax credit for low income assistance. The expansion would affect even working tax filers without any actual net tax liability – typically very low-income workers – and allow them to potentially qualify for free stimulus tax refund credits.
• Child Tax Credit: For those who have children, a temporary increase in the child tax credit would result in larger tax refunds.

Should The 2009 Economic Stimulus Plan Be Re-Written Or Re-Packaged To Contain Major Provisions For A Second Economic Stimulus Check?

It’s too bad the eventual 2009 stimulus plan probably won’t contain another round of hefty stimulus check payments to ordinary consumers like the ones that were dished out last year. While the 2008 stimulus tax rebate wasn’t much (only a few hundred dollars in my case), some additional government handouts in higher dollar denominations would still have been greatly appreciated by individuals like myself and put to good use. Plus, as an American consumer who embraces the virtues of capitalism, I feel I would have made a better decision for myself as to how best spend my portion of the stimulus money pursuant to what’s in my own best capitalist self interest.

Overall, I think President Obama’s administration is probably right in its revised efforts to focus more on job creation, offering greater tax cuts, and enhancing safety net protections to help suffering Americans survive the economic downturn for the long term. Offering greater financial assistance to struggling state unemployment programs (many on them on the verge of running out of funds), and stimulating growth with more job building projects is a proven way to stabilize the markets and improve consumer sentiment. However, I’m still a bit disappointed that the President and Congress have not explored the prospect of an enhanced second stimulus check further.

At least for now, President Obama’s administration seems to have given up on the idea of using government stimulus checks en masse again to jump start the economy. Instead, Obama’s advisers have indicated that they would prefer searching for viable ways to get government stimulus money into the hands of American taxpayers quickly that would not require or duplicate the tax rebate checks of last year. Apparently the $150 billion spent in 2008 in the form of stimulus payments to consumers proved to be quite an economic failure and pointless exercise of futility in terms of actually stimulating the economy to any extended degree. But perhaps the reason it didn’t work properly the first time around was because too little money was given out to substantially change consumer spending habits to forcibly inject money back into the economy again (simply compare the $150 billion spent last year to the $800 billion-plus worth of spending being proposed for 2009).

Perhaps The Problem With The First Stimulus Checks In 2008 Was That They Were Too Little To Make Much Of An Impact

I have mixed feelings about the prospect of yet another around of direct stimulus checks to consumers. On one hand, I understand that there are many struggling American families getting hammered by higher living  costs, and suffering from the ills of unemployment and layoffs. However, I’m not entirely convinced that the idea of handing out free money to families will really solve all of our economic woes and jump start the economy at its core. But yet I still wonder if perhaps we gave up on the idea of stimulus checks too early and that maybe, the concept is still workable. Maybe the amounts issued in 2008 were simply to small to change anyone’s spending habits as initially intended – after all, only about $150 billion was spent in 2008, when the current 2009 economic stimulus proposal’s already ballooned to a whopping $850 billion.

I know when I received my tax rebate stimulus check in early 2008, the check only amounted to a few hundred paltry dollars – not really enough for me to go on a greedy spending spree. So instead of spending it and doing my part to stimulate the economy, I ended up doing what most people probably ended up doing with their tax rebate check – putting the money in a bank and depositing it into a high yield savings account. Of course, my plans for the money would likely have been very different if the amount wasn’t something low like $300, $600, or $1,200, but rather something as high as $10,000. If the stimulus check issued to me was indeed worth upwards of $10,000, I would very likely have saved a small portion of it but ended up plowing a sizable portion back into the economy by spending it on major expenditures like a new wide screen plasma TV set, new home appliances, or even a new car.

What If The Entire Economic Stimulus Bailout Package Went Towards 2nd Stimulus Check Payments? Would This Actually Stimulate The Economy?

Almost all polls among ordinary American consumers show overwhelming support for a second stimulus rebate check. After all, who would really oppose it? Who would be opposed to receiving free stimulus check money. Think the prospect of getting a second stimulus check worth as high as $10,000 as a consumer bailout is impossible? Well it’s probably unlikely, but it’s not out of the realm of financial or budgetary possibility, at least based on the fiscal numbers alone.

On CNN Money, a very interesting question was proposed in regards to the bank bailout and economic stimulus packages. If instead of bailing out these credit crisis-stricken banks (who probably deserve their fates due to the risky mortgage bets they greedily placed into subprime loans), we just gave all of the bailout money to taxpayers in the form of a massive consumer cash stimulus. How much would we each get if the entire current economic stimulus proposals were issued out to consumers as a second round of stimulus check payments? The second important question to ask is – would this actually stimulate the economy for the necessary extended period of time to get it going again?

To arrive at the figure, CNN Money took the total amount of the bank bailout package of $700 billion and added that to the proposed 2009 economic stimulus spending estimation at the time of $819 billion – resulting in a total bailout package of $1.519 trillion (that is quite a staggering figure). Dividing that number by 156.3 million, the total number of U.S. workers who filed federal income tax returns in 2008, that number equaled $9,718.49 per U.S. taxpayer, or roughly the equivalent of a juicy $10,000 cash bailout payment for each qualified tax payer. Now that’s stimulus with oomph! With $10,000 in our pockets in the form of instant windfall economic stimulus checks, it’s very likely that the tremendously high amount would be sufficient to incite a major change in spending activity than a measly $600 check ever could.  People would probably go out and actually start stimulating the economy by buying cars, purchasing TV’s, paying for college studies, and going on vacations.

As a dose of devil’s advocate inspired reality though, while it’s very possible that $10,000 checks in every working taxpayer’s hands would probably send the economy skyrocketing, it’s also possible the growth could be short lived and not actually get to the true root of our current economic problems. The massive surge in consumer spending probably won’t do much to solve the lingering fundamental issues surrounding our current credit crisis, which centers around a failed banking system and a failed home mortgage lending market. But then if repairing the banks and injecting confidence back into our home mortgage and credit lending markets are our primary objectives – I’m not sure the current economic stimulus proposals by President Obama, which are focused more on tax cuts and job creation and most prominently, aggressive social spending programs – will actually accomplish those goals. At least for stimulus checks, they could be able to help alleviate some of the immediate economic suffering being felt by ordinary consumers – many of whom are fighting to stay alive, with a great deal currently resorting to desperate emergency fund measures like 0% credit card offers, balance transfers, and risky high interest payday loans.

I’m curious as to everyone’s opinion on the wisdom of a second stimulus check (if it ever happened). What’s your take? Would substantially higher stimulus checks of $1,000, or possibly even as high as $10,000, actually encourage you to spend the money (thereby stimulating the economy) instead of merely saving the amount or using it to pay down debt? How would your decision compare to how you actually spent your previous 2008 tax rebate stimulus check?

After months of waiting and checking my mail box regularly like a little kid waiting for his video game to arrive, I was finally relieved to discover a little envelope from the United States Treasury yesterday – my long awaited 2008 Economic Stimulus Payment check had finally arrived! Cha-ching (punctuated with a few obligatory fist pumping motions).

Actually, about a week ago I had already been given written notice that the check was on its way. I received one of those pointless waste of paper junk mail letters from the Internal Revenue Service (IRS) letting me know that I was entitled to an economic stimulus payment check as provided by the Economic Stimulus Act of 2008, and to expect its arrival in a week or so. The letter also provided a simple breakdown of how the federal government calculated my small time stimulus payment.

But what was the point of sending this predecessor letter out to let me know this? Why is the IRS and federal government so oblivious and wasteful when it comes to wasting millions of dollars on paper and delivery costs to send out these pointless letters? Why not just combine the calculation breakdown letter with the actual stimulus rebate check that I received yesterday rather than sending them separately on different weeks? The financial savings for the federal government could easily have been several million dollars. Especially since we are now in an economic recession and the government keeps griping and raising issues about needing to balance the budget, and even some of the presidential candidates like Barack Obama keeps talking about raising taxes against those with higher incomes to pay for more federal government programs, why not practice some fiscal sense now by adopting real cost cutting techniques? The government’s habitual wasteful spending activities truly baffles me sometimes.

How My Economic Stimulus Tax Rebate Was Calculated

While I had hoped to receive my economic stimulus rebate via direct deposit, because I filed my 2007 tax return through TurboTax and actually owed a sizable amount of taxes, I was not able to provide my bank account routing numbers on my tax return for direct deposit purposes. Thus I was one of many who had to wait for my economic stimulus check to be mailed via the postal service.

Taking a look at my rebate, here is how my actual stimulus payment was broken down, in case you’re wondering. Because my adjusted gross income on my reported 2007 federal income tax return was above $75,000, the IRS reduced my stimulus payment by 5% of the amount of my adjusted gross income exceeding $75,000. As such, with my single filing status starting qualification amount of $600 increased by $0 for my lack of qualifying children, but reduced by $230.25 for the adjusted gross income limitation, my final calculated stimulus payment turned out to be only $369.75. It’s not a whole lot, especially since the cost of living in my D.C./Maryland suburban neighborhood is pretty high, but I suppose every little bit helps me pay the bills in the grand scheme of things.

How I Plan To Spend My Economic Stimulus Check, and Its Impact On My Future 2008 Tax Return

I’m obviously elated to receive my tax rebate check finally after all these months, but after looking at the relatively small amount, it sort of leaves me wondering, how is this small amount of money really supposed to stimulate the economy to any significant degree? While the check is certainly free windfall money in the sense that I wasn’t really expecting it or planning for it until recently, the amount isn’t really large enough for it to be good for much.

I considered several financially smart as well as a few fun but reckless ways to spend my tax rebate, now that I have it in my hand. Here are the choices and possible options I came up with:

1. Use the economic stimulus payment to help pay my rent – The downside is that with a pricey monthly rental obligation of $1,425.00, this small economic stimulus payment isn’t likely to make much of a dent in my case.
2. Deposit the small stimulus rebate into my high APY savings account to earn interest and help build up my backup emergency fund – I usually try to keep at least enough liquid cash in my savings account to last 6 months. I advocate more emergency fund savings than most, but I think this offers greater peace of mind. In this recession, you never know what unfortunate events may strike when you least expect it – everything from out of the blue vehicle repair charges to sudden unemployment necessitating the need to file for unemployment insurance benefits.
3. Save the stimulus rebate for retirement and contribute the amount towards my Roth IRA retirement fund. This is a good way to plan for the future. Great for you, but not so good for the economy (at least for the present time).
4. Pay off debt – While this sounds like a logical choice, other than my usual monthly revolving credit cards bills that I always pay off in full, my 0% APR balance transfer credit card arbitrage funds, and my very low interest student loans, I don’t have significant debt that demands my immediate attention to speak of. I think I’ve done a pretty good job of managing debt.
5. Spend the money and actually help directly stimulate the economy by injecting it back into the stream of commerce – Possibilities include using it for discretionary entertainment reasons like spending it on expensive movie tickets or even just using the amount to pay for necessary driving expenses brought about by spiraling high gas prices.

After much thought, I decided to deposit the amount into my high yield savings account like a good grasshopper (or was it the ant) and save for a rainy day. Why change my frugal savings minded personality just because I came upon some windfall money? I’m the type of person who would probably still drive around in a rain storm for a free car wash to save some money as a force of habit even after winning a lottery for millions.

As for the taxation aspects of the economic stimulus payment, due to the terms and nature of the Economic Stimulus Package, recipients of the tax rebate such as myself will not have to report the amount of our stimulus payments as taxable income on our 2008 federal income tax returns. The amount is indeed free money and not something we will have to pay back or pay taxes on. Furthermore, if any recipient also received any other federal benefits or federally financed benefits, those benefits generally will not be affected by any stimulus payment received as well.

Where’s My Economic Stimulus Payment? Ask The Almighty IRS

For those of you who are still waiting for your stimulus tax rebates with bated breath, you should utilize this handy IRS stimulus rebate tool to locate the status of your economic stimulus payment. It should be able to answer your most pressing tax rebate question. To use the online tool and verify your identity, you’ll need to provide your social security number, your filing status, and the total number of your exemptions.

If you still are not able to obtain a satisfactory answer, you may want to visit your local Taxpayer Assistance Center for help or call the IRS via the Rebate Hotline at 1-866-234-2942 for updates.