Very few people like doing their taxes. But this year's editions of Web-based tax-prep services make the annual chore, if not enjoyable, at least easier than ever to complete.

Nearly a decade after the first clunky offerings appeared, online tax-filing sites have become almost as sophisticated as their desktop counterparts. They update automatically to reflect changes in the tax laws, and they enable you to store, retrieve, and print your return from any connected computer.

Concerned about security? All these sites say they keep your data on secure servers in data centers with physical and software safeguards. But dialup users might want to stick with shrink-wrapped solutions: The process slows down considerably at 56 kilobits per second. (Read our reviews of top desktop tax software.)

I tried out the five most heavily promoted programs targeting mainstream tax filers -- CompleteTax, TaxAct Ultimate, TaxBrain, TaxCut Online Premium, and TurboTax Online Premier Investments.

Overall, I found TurboTax the best for filers willing to pay a premium for detailed help. TaxAct remains the low-price leader, while TaxCut holds the middle ground.

All five services participate in the Internal Revenue Service's Free File program that offers free electronic filing if your adjusted gross income is $52,000 or less.

To test these services, I enlisted the help of my dad, a CPA-certified pro who was initially skeptical of Web-based tax preparation. We invented data for a composite family -- a married couple filing jointly, with a freelance business, a kid in college, and a live-in widowed mother-in-law.

We discovered that it pays to shop around: Costs range from $16 to more than $100 for a single federal and state return (with desktop software, you can create and print multiple returns for free). The services also varied widely in their ability to import data from personal finance software or last year's return.

Both of us came away generally impressed with Internet tax filing. But we found that not all of the services are savvy enough to detect user error.

View the Tax Sites chart from the April 2007 issue of PC World magazine.

The Front-Runner

A mirror image of its venerable desktop counterpart, Intuit's TurboTax Online Premier Investments soothes headaches for tax dunces. I loved its comprehensive, detailed interview even though it posed lots of questions that did not apply. Tax terms were clearly defined, and "Guide Me" buttons also provided assistance.

The service linked our data to other relevant documents so that we wouldn't have to enter it again: For example, after we input the registration fee for an automobile used partly for the freelance business, TurboTax entered the nonbusiness portion on our itemized deductions.

New this year are the Deduction Maximizer Center, which let us scan more than 350 deduction and credit opportunities, and BasisPro, which eased the hassle involved in determining historical cost bases of multiple stock transactions. Our federal summary showed the results of what we entered compared with what we would get in deductions, and explained the difference.

But at $76 for federal and one state filing, TurboTax is pricey, and it's still not perfect. We couldn't view specific tax forms, and there's no progress indicator to show where you are in the process.

We could import personal-finance data only from Quicken 2005 or later.

TurboTax Premier includes a thorough Schedule C interview for sole proprietors; most of them can save the $25 premium for the Home and Business version and stick with the Premier version.

The Cheap Thrill

TaxAct ultimate offers good tax help, including links to relevant advice on each screen, yet costs only $16 for federal and state filing.


At $16 for a federal and one state form, 2nd Story Software's TaxAct Ultimate is the low-price leader. Its interview section is less customizable than TurboTax's, and the screens sport a distracting advertisement for getting an advance loan on a refund, but we liked the new interface, Q&A search, and program tutorial.

TaxAct's Tax Help was the second best in the group: Each page has relevant Q&As, a link to IRS form instructions, and detailed advice from J.K. Lasser's tax guide.

But like all other services we tested except TurboTax, it made us enter stock share values on a new screen for each transaction, even those involving the same stock.

We encountered interface glitches as well. After starting the interview for the home-office deduction, we decided not to take it, backtracked to the screen asking if we wanted it, and checked No. But the service retained all the data anyway, which we didn't realize until we saw our suspiciously high tax refund. Also, it was too easy to skip major deductions, such as on a home mortgage and state taxes.

However, TaxAct impressed my dad by telling us the dollar amounts we had to exceed before claiming certain miscellaneous deductions; plus, the service determined whether it was more worthwhile for us to file jointly or separately.

Middle of the Road

H&R Block TaxCut Online Premium works well for those with at least a little knowledge of the tax-filing process. A questionnaire lets you tailor your interview by selecting applicable areas--a handy time-saver. But my dad felt that the questions were too general to ensure that people with special situations--tax-exempt bonds, for example--wouldn't overlook important areas.

The interview, while mostly comprehensive and logical, occasionally stumbled. When we said our fictional family's college student lived away from home for nine months, TaxCut asked about custody arrangements--even though we'd stated we were married and filing jointly. Also, it said we could claim our live-in mother-in-law as a dependent, without mentioning the requirement that her income total less than $3300.

Still, TaxCut is well priced ($40 for one federal and one state return), and it lets you ask an H&R Block tax professional one question (by phone, e-mail, or in person) for free.

An Adequate Option

CCH, creator of CompleteTax, makes tax software primarily for businesses; but its online service for individuals is, sadly, a bare-bones affair.

Dad liked the self-employment section, which broke out questions on vehicle expenses and depreciable assets, and gave our phone the long-distance phone tax credit.

But CompleteTax was the only program that doesn't do part-year-resident tax returns, or ask for employer data on our 1099-MISC forms from freelance employers (while not required by the IRS, having this data on worksheets helps if you are audited).

The section on deductions fails to list all itemizable deductions, and it doesn't state that some expenses need to exceed a certain percentage of the filer's income to qualify.

On the plus side, help is solid--many terms were hyperlinked to explanations, and the "Frequent Questions" next to worksheets are mostly relevant. A progress checklist shows pages that are complete, incomplete, and not yet started--but links go only to sections, not the specific pages. And CompleteTax didn't tell us which line items produced tax breaks, or show a running "current refund."

The $39 price (for a federal and state return) is good, but other sites offer better value.

Pricey Form-Filler

Because TaxBrain charges $90 to $100 (more than any other service we tried) for our 1040 and one state return, we expected a dazzler of a service. Instead, we got pedestrian design, no as-you-go refund ticker, and few links to explanations or additional information. Live telephone support is free, but only until 4 p.m. PST on weekdays.

TaxBrain started by asking questions about our tax situation, and then listed all relevant forms and worksheets by their IRS name (W-2, Form 1099, Schedules A through D), putting check marks next to the ones we'd finished.

Because its online forms closely replicate IRS sheets, TaxBrain might work for those who just want to fill out their returns via the Web. A "preview return" link lets you inspect all forms, which can help you detect user errors.

But for $100 to fill out near replicas of federal and state forms, TaxBrain could at least provide more tax help and an easier-to-use interface.