WASHINGTON — Consumers will have more tax preparation software choices than ever this year, including the entry of Microsoft into a market that largely has been dominated by Intuit’s TurboTax products. Many of these same companies feature tax preparation services on the Internet for a fee, or free to low-income people and those with the simplest returns.
H.D. Vest Inc. of Irving, Texas, is offering free online filing no matter how much a taxpayer earns.
“No company we know of has launched a program of this scale without enforcing salary or tax form limitations,” said Herb D. Vest, the company’s chairman and chief executive officer.
The tax software industry leader is Intuit, which makes TurboTax and MacInTax for personal computers and had about 70 percent of the market share last year.
The San Diego-based company had retail commitments for 1.9 million units when this year’s version was shipped in December; about 4.2 million taxpayers used TurboTax products last season.
“One in every five individual returns filed with the IRS was prepared using an Intuit tax product,” said Bill Campbell, the company’s chairman.
As the market heats up, Intuit is offering such perks as a rebate for free electronic filing with the Internal Revenue Service, a cut in prices and easier interaction between taxpayer and program.
Microsoft’s TaxSaver is the major new entry this year. It is similar in many ways to TurboTax and has such bells and whistles as video explanations of some tax laws, an on-screen calculator and bookmarks to easily move between forms.
Gayle Cruise, Microsoft tax product manager, said TaxSaver is aimed primarily at people who haven’t used tax preparation software before and at people who now use the company’s Money program and want it linked to tax preparation.
As for Microsoft’s delay in entering the market, Cruise said, “It was time spent figuring out the best possible tax product.”
Another leader is Kiplinger TaxCut, which is sold by the world’s largest professional tax preparer, H&R Block Inc.
This year, TaxCut is offering a “Refund Reward” feature giving customers their refund on a prepaid card accepted at the same businesses as MasterCard. Customers can qualify for discounts with partner businesses on such things as travel and automobiles.
“Our research shows that over a third of customers who anticipate refunds plan to use them for major purchases,” said Gene Goldenberg, Block Financial senior vice president.
Often, a taxpayer can get accompanying software for state returns. Using TurboTax, for example, people in 38 states can electronically file those returns as well. Microsoft, however, does not yet offer state software.
Intuit, Microsoft and Block all offer online tax preparation and electronic filing services for a fee, as do numerous other financial Web sites. Some of them are aggressively marketing loans to taxpayers who anticipate a refund, but these come with a fee or interest.
Still, Block spokesman Todd Ransom said 2.5 million of its electronic filers obtained a “refund anticipation loan” last year.
“It’s a matter of, do you want something right away, or can you sit back and wait for it for a while,” Ransom said.
