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Higher price is biggest change in tax software

00:00 EST Saturday, February 01, 2003

It's tougher than ever to choose between the two dominant software programs for completing your income tax return, QuickTax and TaxWiz.

QuickTax is the perennial top-seller and the clear winner in usability, but it's always been the most expensive. Guess what? For the 2002 tax year, prices are going up.

Then there's TaxWiz, once the value leader thanks to a combination of a lower price than QuickTax and the fact that you could do unlimited returns and use the software on any number of computers.

Guess what? TaxWiz costs more this year than last, and it limits you to six returns done on a single computer.

Do these latter changes sound familiar? They should, given that QuickTax made similar adjustments last year.

Coincidence? Consider this: Since November, TaxWiz has been owned by the company behind QuickTax, which is the Canadian arm of software giant Intuit Inc.

There are still a few independent providers of tax software for individuals left, including GriffTax for people who use Mac computers and, an on-line product that does not come in a disk format like QuickTax and TaxWiz.

But there's no getting around the fact that Intuit has sewn up the market for tax software in this country.

For the 2002 tax year, TaxWiz looks pretty much the same as ever. The big modification is the integration of tax tips from the Dummies series of books.

The changes are much more striking when it comes to pricing.

Last year, TaxWiz offered an unlimited number of tax returns at a price of $19.99 after going through the hassle of mailing in a $10 rebate coupon.

With QuickTax moving to limit the number of returns customers could do to five, the TaxWiz people made a big deal out of the superior value they offered.

The new deal from TaxWiz: Up to six returns for a suggested list price of $24.99 after a $5 rebate.

TaxWiz's David Hazan said it's no longer economically viable for the company to offer unlimited returns.

He said there were cases of people preparing as many as 2,000 returns with one software package and then clogging the company's technical support line with questions.

Mr. Hazan said that figures compiled by the Canada Customs and Revenue Agency show that most households do fewer than five returns.

"We thought that by offering six returns, that was fair," he said.

In another move copied from the QuickTax playbook, TaxWiz now sells software that can be used only on a single computer.

Intuit's strategy seems to be to let TaxWiz take care of the cost-conscious and novice market -- the package says "designed with the beginner in mind" -- while aiming QuickTax at an audience that wants a more elaborate product and is willing to pay for it.

You'll actually find three new QuickTax versions out this year in addition to the standard edition. One focuses on the needs of investors, another on retirement planning and the other on small-business owners.

The QuickTax standard version has a suggested retail price of $29.95 after a $10 mail-in rebate, compared with last year's $24.95 after rebate. This is no strippo product -- it includes tax tips, a capital gains tax calculator and a "scenario analyzer" that lets you explore different tax options.

The new QuickTax editions cost $59.95, or you can get them bundled together in a "platinum" version costing $79.95.

Note that there has been a subtle change in the number of returns QuickTax gives you this year. Whereas last year the limit was five individual returns, this year the maximum is returns for six family members.

I haven't tested the new QuickTax versions yet to see if they're worth the premium price, but my usual thinking is that cheap is good when it comes to tax software.

Both TaxWiz and QuickTax offer unlimited returns for people with incomes below $25,000. Both also offer on-line tax returns, where you complete your return on a secure Web site. TaxWiz charges $12.95 for this service, or $16.95 for a spousal version that allows two returns.

QuickTax Web costs $19.95, or $24.95 for a spousal return. This year, there's an offer of a full refund if you complete your return and end up owing money to the federal government.

One other option for on-line tax filing is, which charges $12.95 for an individual and $19.95 for two spouses and dependent children.

QuickTax's move last year to limit the number of returns it offered generated one of the highest volumes of angry reader e-mail of any column I've ever written.

TaxWiz was the obvious alternative back then -- but it is no longer.

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