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An early peek at tax apps: TurboTax and TaxCut

Here's what the new Intuit TurboTax and H&R Block TaxCut offer for filing returns for 2007.

Although taxes aren't due until April, many people like to get an early start in step with the new year. Services from the two most popular digital tax-prep brands are available to try or buy, although state forms won't trickle in until mid-January.

As e-filing and online tax preparation become more popular, boxed applications and their Web-based counterparts offer most of the same tools and interface elements. As a rule of thumb, online products are ideal for one filer, while installed software can handle a bigger household. Although there are no revolutionary changes to TurboTax and TaxCut from what we could tell, here's a quick list of what to expect.

  • A new embedded peer support system, Live Community, resembles Q&A services such as Yahoo Answers.
  • The new Audit Risk Meter flags potentially problematic claims. For instance, divorced parents may not know that a child can only be claimed for a credit by one of the parents. A new audit support center steps through managing one of the four types of IRS audits.
  • Its Deductible, formerly a separate install, is now integrated within the software. It displays eBay market values for donated items, and it offers cost basis analyses.
  • Prices haven't risen, from the free edition to the $75 Home & Business for the desktop, e-filing included in all.

  • H&R Block adds help for people in the military who may need to wrangle with foreign income, combat pay, and moving expenses.
  • Search capabilities are improved.
  • Prices range from $15 for online Basic to $90 Home & Business for the desktop.
  • Includes tech support with H&R Block tax advisers. TaxCut continues to offer free telephone help with a tax adviser for those who are later audited by the IRS.

These services are sometimes so similar that last year our Editors' Choice award went to TaxCut for best tax application, but to TurboTax for best online tax service.

It would be wise to be online when you open one of the apps from a hard drive, because Intuit and H&R Block will continue to add downloadable updates in the coming months. Anyone worried about the Alternative Minimum Tax can expect any upcoming changes to the tax code to be reflected in the updates. We'll publish full reviews early next year.