Blurb: Today's tax preparation programs are more sophisticated and easier to use than ever before. But they are not for everyone.
Tax preparation pitfalls in an electronic
Almost three-quarters of the 23 million federal returns filed by Canadians for the 2003 taxation year involved the use of tax preparation software or electronic filing, and that number is sure to rise again this year. But are these technologies worth the money and time investment needed in order to use them?
To find out, this year I completed my returns and those of my wife using one of the most widely popular preparation packages available, Intuit's QuickTax. I purposely avoided asking the company's public relations department for help, so I would be forced to deal with the same challenges that affect the average user. To be fair, I have a bit of an advantage, because I worked many years as an accountant and I write regularly about tax issues. My verdict: using tax preparation software will cost most Canadians more time and money than completing them manually.
It usually takes me about a day to complete my wife's and my returns manually, but it took almost twice that using QuickTax. So why is tax preparation software so popular? I believe that it's because most people don't count a lot of incidental costs and time expenses involved in buying and using the software. To help you decide whether tax preparation software is right for you, I've listed about a half dozen pitfalls and hidden costs that I ran into.
Since the tax code changes all the time, you have to buy a new version each year. A better way of thinking about the dollar cost of using tax preparation software, is to calculate the expense over a period of five years. And forty dollars a year for five years works out to $200.
Time to buy the software
Learning time. One of the most important rules about computerizing an operation, is to never do so, unless the operation is understandable and easy to document. Canada's tax code is neither, worse, the regulations change each year.
That means tax preparation software users need to relearn both the tax code changes and the changes in the software every year. And since most users only fill out one or two returns each year, the learning does amortize well.
The help desk call center
The problem is that those long distance fees add up. You spend time on hold before you get an operator. Then the operator asks you a series of questions about seemingly secondary information such as your name, address and so on so they can "open a file."
But that first operator won't answer your questions. In fact you have to queue up again for a second employee, who ask the same information all over again before dealing with your problem. If the problem is not easily solved, you'll likely be put on hold to talk to still another employees.
The other problem is that the help line phone number is well hidden. When I began to run into trouble, I called the only number that I could find on my software box. After going through a voice mail relay, I finally talked to an operator who told me that I'd called the wrong number and that I'd have to start all over again.
Error Code QT 600
With QuickTax, the problem was "Error Code QT 600," which was the message that flashed on my screen when I tried to file my returns electronically. Even after all the bouncing around QuickTax's Web-site and their help desk, I was unable to resolve the problem.
Finally one employee helpfully E-mailed me instructions regarding a diagnostic software program that she said would help QuickTax's experts figure out what the problem was. The E-mail included six-step instruction sheet on how to download and run the software. She also told me, that they would get back to me without fail within 72 hours.
But I'd had enough. After spending two days, doing a job that last year only took me one day, I wasn't going to wait another three days, to find out if maybe they could get the software to work. So I printed out the returns and mailed them in the old fashion way.
Good for accountants
Tax pros have the time and energy to learn all the bugs of tax preparation software. They also have co-workers who can answer their questions, and they don't have to deal with the software companies' help desks. They also complete a lot of returns, so the amount of time they spend compiling them diminishes with each return. The average taxpayer reaps none of those benefits. As a result, the value of tax preparation software is far less clear.
Peter Diekmeyer (http://www.peterdiekmeyer.com/) is a Montreal based business writer.
|© 2005 Peter Diekmeyer Communications Inc.|