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Online tax preparation is easy, but is it secure?
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But Scott Gulbransen, manager of corporate communication for TurboTax, says the figures don't mean the same thing to all taxpayers. "A few years ago we decided to use fewer screens, but customers complained because we had to put more information on each screen and they felt overwhelmed with information," he says. "So we added in more screens."

The bottom line: Find a site with which you're comfortable.

And find out what guarantees the site makes if there's a mistake on your return. "In our case, if we were to make a mistake, we could actually compensate both the interest and penalties that derived from our mistake," Taluy says.

Is the price is right?
Using an online site also won't bust your piggy bank. Most sites charge around $20 for basic preparation and filing, generally comparable to, and sometimes cheaper than, the similar computer software.

And now, thanks to a partnership between the IRS and commercial tax sites and software companies, many taxpayers may find they now can file online for free. Last year, almost 3 million taxpayers took advantage of the option. Though still far short of the estimated 78 million taxpayers the IRS predicted would be able to use the service, the agency says this initial foray into expanded online filing "has surpassed expectations." Some consumer advocates, however, question whether the process might lead to aggressive marketing of other financial products to free filers, as well as pose privacy concerns.

If you aren't eligible for free e-filing but still want to do your return online, it pays to shop around. Actual charges depend on what service you use and what options you pick. In some cases, upgrades could push your tax prep and filing to near $100 -- and that's on top of anything you might owe the IRS.

Also beware of hidden charges, Rosenberg warns. For example, find out before you commit whether there are additional charges for filing your return, in addition to helping you prepare it.

One of Rosenberg's friends went to a major online preparation site. The friend used some options and when she clicked to pay, she found out her bill was $200, not the $17.95 that she originally had been quoted.

Is online right for you and your return? Ultimately only you can answer that question. It all depends on what makes you most comfortable, how much expertise you have, and what your individual tax situation may be. A taxpayer with a very complicated tax return may be better off with some personal hand holding instead of a Web-based solution.

Ironically, even if you decide that online tax prep isn't for you, your return may still be Web prepared if you use an outside preparer. Many smaller accounting firms go online to "rent" the software on a site rather than buy it outright.

Jenny C. McCune is a contributing editor based in Montana.

Bankrate.com's corrections policy -- Updated: March 31, 2004
 
 
More stories by Jenny McCune
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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
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