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Tax software ready to rent

After a week's delay, Intuit is making a slimmed-down version of its TurboTax software available for rent from its Web site.

    After a week's delay, Intuit (INTU) will make a slimmed-down version of its TurboTax software available for rent from its Web site.

    For $9.95, 20 percent to 30 percent of U.S. taxpayers--those with simple to "moderately complex" tax returns--can use the tax preparation software and file their returns electronically. Users can try TurboTax Online for free, paying only when they want to print the return or file it electronically, the company said. Last year, Intuit offered only the simplest forms, 1040EZ, online.

    "We don't think people with complicated tax returns will be looking at Internet solutions," said Barry Saik, Intuit senior product manager.

    "We're going after regular, ordinary people, not people who already know about taxes," Saik said. "For a lot of products out there, you have to know a lot about taxes. We make it so people who don't know anything about taxes can prepare their own returns."

    TurboTax Online marks a major advance for the budding "rent-an-application" model, pioneered by several Internet service providers that offer Lotus Notes groupware for business users.

    At around $10, TurboTax Online also reflects a considerable price break for users--the full-featured version of TurboTax sells for $39.95 on Intuit's Web site, though retailers commonly discount that price. And Intuit charges $9.95 for its filing service, which sends the return directly to the IRS electronically.

    Intuit delayed the launch of TurboTax Online for a week to be sure it worked well with various Web browsers and could handle potentially heavy traffic, the company said.

    Intuit estimates TurboTax Online users can finish their returns in 30 to 60 minutes--after they have collected the relevant paperwork, such as W-2 forms and charitable contributions.

    The service uses an interview format to ask about income and deductions, then puts the data into the proper tax forms, makes calculations, checks for errors, and finally lets users either download a file to print or file the return electronically.

    TurboTax Online includes the basic forms 1040, 1040A, and 1040EZ returns. For 1040A, it offers schedules 1 and 2. For 1040, it supports Schedules A (itemized deductions), B (interest and dividends), and D (capital gains/losses), but not C (business income) or E (estates, trusts, partnerships). Users also can file Form 2441 (child and dependent care) and earned income credits.

    For an additional $4.95, California taxpayers also can file state returns. That software is priced at $24.95 for purchase.

    Although Intuit's TurboTax is the most popular tax software, the company is not the only tax software vendor that offers its product online. Secure Tax, NetTax '9X, and TaxLogic also offer online tax preparation. Tax preparation powerhouse H&R Block says it will have an online version of its Kiplinger Tax Cut software in mid-February.

    Saik cited TurboTax Online's interview format as differentiating it from competitors that simply make forms available for users to fill out online.

    Even so, the online offering is available only for users running Netscape Navigator or Internet Explorer, versions 3.0 or higher, on PCs running Windows 95 or NT. Users need Adobe Acrobat Reader to print their returns.

    Intuit doesn't have an online version of its Macintax tax preparation software. "We had to reduce the number of browsers we support," Saik said, because of the customization required for each.

    TurboTax Online uses secure sockets layer security for protecting data privacy.