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Online tax preparation is easy, but is it secure?
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One thing is the same online as with the purchased software system. Because you file electronically, you'll get your refund sooner than if you mailed in a paper 1040.

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Do your homework
These advantages are luring new converts each year. If you're considering online preparation, it pays to be particular when choosing a Web-based system.

Rosenberg recommends going with established vendors, companies that have been providing online services or tax preparation for a "decade or two."

You'll also want to go with companies large enough to have the deep pockets needed to provide computer security and bug-free tax prep software. She recommends File Safe, H&R Block, Intuit's TurboTax, and TaxACT. These sites may be biggies, but they are by no means the only online tax prep providers. Dennis Schmidt, a professor of accounting at the University of Northern Iowa, maintains a Web page that lists links to various online tax preparation sites.

Also evaluate your abilities, says FileYourTaxes.com's Taluy. He says his site does a good job, but it's designed for people who have prepared their tax returns before, whether with software or pen and paper.

"If people don't know what they're doing, we urge them to go to a professional," Taluy says. "You need to have a certain level of competence before you can do-it-yourself."

Remember: the amount of taxpayer expertise required varies with each Web site.

You'll definitely want to know what security measures your prospective vendor offers. Reputable sites for electronic filing are registered with the IRS, Taluy notes.

Also look for sites that have been authorized by Web security organizations, such as VeriSign or TRUSTe. Sites with good security will announce that they use SSL (secure socket layer) protocols or that they use encryption. This means data is scrambled so hackers can't read it.

Try before you "buy"
Although most online tax prep sites work on the same interview principle used by commercial software, there can be differences. For example, H&R Block touts that it takes fewer screens to go through, and therefore less time to complete a tax return on its Web site vs. using Intuit's Quicken TurboTax for the Web. Block points to the numbers: 75 for its Web program vs. 154 Intuit screens for a typical two-salary, two-children household.

 
 
Next: Finding the right price.
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 RESOURCES
Picking the filing method that suits you
Finding the perfect tax pro
Replace your tax return "John Hancock"
 TOP TAX STORIES
June 15 filing deadline for some
Find the tax professional who's right for you
Coming up with tax cash
 

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