This year, tax savings get real: Rates are down, tax-deferral opportunities are up, and deductions have more flexibility. Of course, the new rules make tax preparation more complicated, as well.

The Web can provide a shortcut through IRS paperwork, speeding you to your refund. A tax preparation site is available for every budget. Such services are (mostly) easy to use, and electronic filing has been shown to increase accuracy and reduce refund turnaround time from weeks to days.

Hands-On Overview

I prepared returns in the premium versions of TurboTax for the Web from Intuit Inc., H&R Block Inc.'s Online Tax Program, and TaxAct Online by Second Story Software. I also briefly checked a few less-traveled sites such as CompleteTax.

None are perfect, but they're definitely friendly enough and complete enough to meet the needs of most taxpayers. You can log on and off at any time day or night, and (except for a few state-specific questions) your state return is prepared while you answer questions for your federal return.

In general, you pay only a third to half as much as you would preparing and e-filing your taxes using the same providers' packaged tax software--and you don't have to juggle rebate coupons. Preparing and e-filing both federal and state returns can cost as little as $16, and you don't pay until you're ready to e-file or print.

Unlike packaged software, though, a Web service lets you file only one person's return for the price. And unless you used the same site last year, you should expect to enter most of your tax data by hand; tax sites don't accept prior-year data from each other or, in most cases, from personal finance programs such as Intuit's Quicken and Microsoft Corp. Money. Importing electronic data from your financial institutions is still very much a work in progress. Oh, and doing your taxes over dial-up can be sl-o-o-o-w.

But tax Web sites are cheap. Particularly if you're a wage earner with a straightforward return, they're the most painless way I know to make the annual stroll across the coals. The feds encourage e-filing, too.

TurboTax for the Web

TurboTax for the Web 2002 offers the biggest variety of versions, all of which employ Intuit's extremely thorough and thoughtful interview. The higher-priced editions include a unique year-to-year comparison of your deductions, as well as best-of-breed investment and retirement-planning tools. I thought the extras interesting, but not really essential to the job at hand.

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