|Online tax preparation is easy,
but is it secure?
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.
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
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,
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.