YOUR TAXES : PART FIVE: PAYING YOUR TAXES : PC meets IRS: Tax software : Aid for when you've had your fill of filling out forms

By RICHARD O’REILLY and LAWRENCE J. MAGID

March 15, 1987 12 AM PT

<i> Richard O'Reilly designs microcomputer applications for The Times. Lawrence J. Magid is vice president and senior analyst at Seybold Group, a computer consulting and publication firm. </i>

If you hate paying income taxes--and who doesn’t?--no computer program is going to turn it into a pleasurable experience. But a good software package can make the task a little less onerous, and some can point the way toward reducing your tax burden next year.

One highly regarded tax preparation program for IBM PC and compatible computers is TurboTax, published by ChipSoft Inc., while in the Apple Macintosh world, MacInTax from Softview Inc. is a clear winner. We’ll focus on these two programs and provide a brief overview of several others.

TurboTax, which sells for $65, opens with a personal data work sheet on the screen into which you enter basic information such as name, address, Social Security number, filing status, carry-over amounts from the previous year, how to apportion Schedule C (self-employment income) data and other details. Using this basic data, TurboTax automatically makes proper entries on the appropriate forms so that, for instance, each has your name and Social Security number on it.

From there you can reach a pop-up menu listing 28 tax forms and schedules into which you can enter data. Most are replicas of the standard Internal Revenue Service paper forms and bear the usual IRS designations such as Form 1040, Schedule A and so on.

It’s not just a matter of typing numbers into an electronic replica of the real thing, however.

For instance, all the mathematical computations are done for you automatically. If you want to expand an entry, TurboTax will add a “supplemental schedule” to the form in question. And, of course, any entry that depends on another form is automatically filled in from data on the other form, just as any line that is to be carried to another form is automatically carried.

Some of the forms are work sheets in which you answer questions to produce data needed to complete an IRS form. A good example is the depreciation work sheet, where you are asked to describe the item, the year and month put into service, percent of business use, depreciation type and other questions that allow TurboTax to calculate the “cost basis” and depreciation according to IRS rules.

At any point within the program, a pop-up calculator can be called to the screen to do the kind of quick math often needed to make an entry. It uses the IBM PC’s numeric key pad without your having to use the NumLock key, thus making it extremely easy to use. The results of such a calculation will be automatically transferred to where your cursor was resting in a form when you called up the calculator.

The bottom line on TurboTax is that it relieves you from having to make redundant entries.

Several other features deserve mention. There is a “what if” work sheet in which you start with your current tax situation and then rejigger the numbers to see what effect a change has on your taxes. You can award yourself more dependents, file singly instead of jointly or give yourself a $10,000 raise in salary and instantly find out what it means to your bottom line.

The program also has a tax-planning feature that allows you to make estimates of your 1987 taxes under the new law. A “note” function lets you attach notes to yourself tied to any form in the program.

When it comes time to print the forms, TurboTax provides preprinted Form 1040s that you can roll into your printer. These forms are approved by the IRS, which has set stringent rules on what it will accept. The remainder of the forms that compose a tax return can be printed by TurboTax on plain paper using any printer.

Separate state tax packages are available for California and 25 other states for $40 each.

Our favorite Macintosh tax program is MacInTax from Camarillo-based Softview Inc. The program takes full advantage of the Macintosh’s graphic capabilities so that what you see on the screen and what you get on paper look just like the official IRS forms. Using on-screen replicas of IRS forms provides a familiar interface for anyone who has ever filled out a tax return. To date, MacInTax is the only personal computer tax program that actually generates an IRS-approved 1040 on Apple’s laser and dot-matrix printers.

The federal tax version has a suggested price of $99. The California supplement--the only state version available this year--sells for $45. The program works with any Macintosh but will require some disk swapping for systems with one drive or the old 400K single-sided drives.

The first time you start the program, MacInTax displays a window with information on which form to file. This helps determine whether to file a 1040EZ, 1040A or standard 1040. We evaluated the program using the standard 1040.

You select the appropriate form and, within a few seconds, your screen looks like the top part of a 1040. You fill in the blanks as if you were completing the form by hand.

The screen display could be described as an “intelligent form.” Whenever information is entered, the computer automatically uses it to fill out as many blank lines as it can. For example, after you enter the first names of your spouse and children, MacInTax calculates the number of dependents.

If you need help, you place the cursor on the line in question and click the mouse button. A help window pops up with information about that line.

Several lines on the 1040 require either calculations or balances from other forms and schedules. Rather than having to hunt for a work sheet or form, you simply click the mouse on the right side of the line (where the data is normally entered) and a form, schedule or work sheet appears.

For example, Line 7 is where you enter your total wages. Clicking on that line causes the program to display a W-2 summary work sheet, where you can enter wages, withholding and Social Security information. That’s the last time you’ll need to enter that information. The program places the sum of your wages on Line 7, and the information is carried forward where it is needed on your 1040 and other forms.

Line 12 of the 1040 asks for business income or loss from a Schedule C. Clicking that item brings a replica of a Schedule C for each of your businesses. As you fill out the schedule, there are lines that require calculated data. Clicking on those lines brings up another work sheet. When you’re done, the program adds up the numbers and places them on the proper lines.

The same procedure applies for each line of the return, all the way down to the end. When all data is entered, the program calculates your taxes and enters the amount owed or the amount to be refunded on the appropriate lines.

You can print any selected form or work sheet or ask the program to print all work sheets. Load plain paper into your laser or dot-matrix printer and the program prints out your form. Because it is creating elaborate IRS forms, the printing process can be quite slow. A typical return could take half an hour on a laser printer or an hour on a dot-matrix.

A perennial best seller among tax software is the Tax Preparer from HowardSoft, priced at $250 for the Apple II and $295 for IBM PC and compatible computers.

Marketed since 1979, HowardSoft says the Tax Preparer is written for “the novice tax preparer” with a step-by-step manual that “gives detailed explanations and examples to guide the user through the myriad of IRS forms and schedules.”

The Tax Preparer is billed as a “fully automated” package that guides the user through the intricacies of tax preparation. It also includes a calculator, unlimited itemizing, built-in record-keeping ability and 22 forms and schedules.

This year’s edition includes the new tax rules, allowing users to produce model returns through 1990. Included are the appropriate tax tables and schedules, standard deductions and personal exemptions. The program quickly reveals the effect of eliminating a host of previously allowable deductions.

For individuals and sole proprietors, Double Eagle Software Inc. is offering the Tax Advantage for the fifth year. Priced at $59.95, versions are available to run on Apple, Atari, Commodore and IBM PC and compatible computers.

Tax Advantage supports the basic Form 1040 and major schedules and forms for depreciation, income averaging, the alternative minimum tax and others.

The approach is simple and straightforward. Instead of displaying a facsimile of the tax form on your screen, Tax Advantage presents a series of questions to answer or blanks to enter. You don’t see the data in its traditional format until you print it out.

A separate California state income tax version of the program is available for $44 by mail from Double Eagle.

Simon & Schuster, publisher of J. K. Lasser’s popular book “Your Income Tax,” has produced a software program by the same name. Versions are available for the IBM PC and Apple II ($69.95) as well as Apple Macintosh ($79.95) and Commodore 64 ($49.95). All versions, except for the Commodore, come with the 352-page Lasser tax guide. As you use the program, the screen refers you to the appropriate section of the book, should you need further information.

The program begins by conducting an “interview” and, based on your answers, tells you what forms you need to fill out. Those forms are then included in the “choose a tax form” option on the main menu. Like other programs, data from the forms and schedules is automatically carried over to the 1040.

Remember that you, not your software or your tax professional, are ultimately responsible for your return. Although the agency has had its own computer problems, the IRS is not forgiving, despite your tales of flaky software or accidentally deleted files.

TAX SOFTWAREMore information on these tax software packages is available from:

TurboTax ChipSoft Inc.

4901 Morena Blvd., Suite 801

San Diego, Calif. 92117

(619) 581-2233

MacInTax Softview Inc.

4820 Adohr Lane, Suite F

Camarillo, Calif. 93010

(805) 388-2626

The Tax Preparer HowardSoft

1224 Prospect St.

La Jolla, Calif. 92037