TaxCut - Home - TaxCut Federal
This year I purchased TaxCut Home (Federal and State) and TaxCut Business (LLC Partnership). I normally use an accountant to prepare my taxes, but for various reasons this year it made sense to try using software, with later review by an accountant.
So I had extensive exposure to one of two non-professional tax preparation packages. I chose TaxCut because of past poor experiences with Intuit software in general and with TurboTax in particular. Intuit's reputation for poor quality products has been well deserved.
I can say two things with some confidence:
1. TaxCut is no worse than TurboTax. If you have a relatively simple personal return it will probably work and may be worth the bother.
2. My experience was miserable and a great waste of time.
For my purposes personal tax preparation software is fundamentally broken and is likely to stay broken. It's broken in terms of
1. Defect rate.
2. Missing functionality (grossly incomplete help functions).
3. Missing interview components (esp. in the AMT domain)
4. Missing documentation, manuals, orientation, etc.
5. Gross errors in the application "model", in particular linkages between data entry fields and calculation fields.
So, it's broken for my purposes. It's probably broken forever.
That's the interesting question. On the face it, this is yet another market failure. But why has the market failed to deliver a working product at an any price? (The "deeper why".) Ten years ago this software worked reasonably well. Here's my best guess -- all of the following working together:
1. The AMT: The tax code has become cruftier and more complex every year. The AMT, however, is a quantum jump in complexity. Personal tax software couldn't keep up without a large investment in additional coding and documentation.
2. Piracy: Tax software is routinely pirated. One copy serves dozens of users. This does not incent publishers to produce a quality product. We're in a vicious circle though -- poor quality software angers those who buy the software; sharing/stealing it is cheap revenge. When Intuit tried to insert copy protection in 2003, they added a buggy copy protection scheme to buggy software --- and thoroughly enraged their customers.
3. Market shrinkage: My gut feeling is that a lot of people who used financial software have given up on the entire domain. Each year fewer of the people I know use Quicken or Microsoft Money. The reasons are complex, but usability, quality, and poor customer service are common themes. This shrinking base spills over into the tax software domain. Stock options and the AMT factor drove many users to accountants in the 1990s, and they're not returning now.
4. An unhealthy industry? I wonder, without any evidence at all, if the publishers of this software have a business model that serves customers. Does H&R Block make money on TaxCut, or is it a loss-leader to feed their tax preparation service? Does Intuit make a good profit on TurboTax, or are they squeezing the dollars on a failing revenue stream?
The last bit of sad commentary -- will any president ever have the right mixture of courage, idealism, and desire for personal annihilation required to reform the US tax system? I'm not talking about paying LESS in tax, rather about removing the bizarre AMT kludge while closing loopholes and raising upper income tax rates to compensate. I'm ok with paying more taxes (assuming a government that would use the money wisely, as in NOT the current regime), but there are MANY ways our tax code could be made cleaner and simpler even without radical revisions.