Do Tax Apps on Mobile Devices Work Well?
A promotional video for TurboTax's iPad mobile app suggests that users can do their taxes while reclining on the floor, sitting in the lotus position or relaxing in a hammock. But given the complexity of the tax code, is this really a task you want to undertake from a prone position? And is it prudent to type sensitive financial information into a device that you might leave in the back of a cab?
Such is the promise and peril of tax apps for mobile devices. The rapid growth of iPads, Androids and other tablets has prompted the major tax software providers to develop apps that contain most of the features offered by their online programs.
Meanwhile, you can use your smartphone to track your refund, check your eligibility for tax credits or get help from the IRS.
Here's a look at what's available:
TurboTax for iPad
This application supports TurboTax's Deluxe, Premier, and Home and Business products. However, Deluxe is the only app you can download from the iTunes store. After that, you can upgrade if necessary.
You can download and try out the app for free. There's a fee to e-file and print your return. Prices start at $29.99 for a federal return. A state return costs $36.99.
As with TurboTax's online products, you can import financial documents from participating employers and financial institutions. If you used TurboTax Online last year, you can also import 2010's tax return.
Once you start your tax return on the tablet app, you can't transfer it to TurboTax online. If you start online, you can transfer the information to the iPad, but the process requires several steps. TurboTax recommends sticking with the device you start with, says spokeswoman Colleen Gatlin. Alternatively, users who want to switch back and forth can use their iPad browser to do their taxes on TurboTax online.
TurboTax's app stores your tax information on the device you use to prepare the return. TurboTax recommends using iTunes file-sharing to back up a completed return on your home computer. Before using this app, make sure your tablet is password-protected, Gatlin says.
H&R Block at Home
Our test drive of this iPad app got off to a rocky start: We couldn't find it in the iTunes store. We were finally set right after searching under HRB. (Block says it's fixing this glitch.)
This app allows you to prepare and file one federal tax return for free; a state return costs $29.99.
H&R Block's free edition doesn't include tax forms for more complex tax issues, such as self-employment income.
However, once you download the app, you can upgrade to the Deluxe edition, says Chris Jackman, senior product manager at H&R Block.
Preparing and e-filing a Deluxe edition costs $19.99 for a federal return; $29.99 for a state return.
Users who upgrade to the Deluxe edition can switch back and forth between the iPad and their home computers, Jackman says. This option is not available with the free edition.
Upgrading to Deluxe also allows you to import last year's tax return. However, to make this work, you need to use last year's user name and password when you create your iPad account.
Block doesn't store tax data on its iPad app. For that reason, you need an Internet connection to use the program.
TaxAct, the popular low-cost tax software provider, doesn't have a tablet app. However, you can prepare and file a federal tax return for free using your tablet's Safari browser, says spokeswoman Jessi Dolmage.
You can access any of these tax software programs on your tablet's browser. TurboTax has even built a Safari-based version of its online products, which may appeal to users who want to switch back and forth between their tablets and computers.
In general, though, the buttons and boxes are bigger — and easier to find — on apps designed for preparing and filing tax returns.
For the second year, TurboTax is offering SnapTax, a mobile application that allows taxpayers who file a 1040EZ to file their federal and state tax returns on their smartphones. This year, H&R Block is also offering a smartphone app, H&R Block at Home 1040EZ. Both apps allow users to import data by taking a picture of their W-2s with their smartphones.
You can download these apps for free. TurboTax will charge you $19.99 to file your federal and state returns; that price is scheduled to increase to $24.99 on March 24. Block is offering free filing from its smartphone app for a limited time.
Even if you're not comfortable doing your taxes on your phone, there are apps designed to make your tax preparation experience more enjoyable. Many are free. None of these will compete with Angry Birds, but here's a look at some useful apps:
•TaxAct Central: This app is designed to work as a companion to TaxAct's online software program. You can use it to check your e-file status, ask a question or get organized.
•EITC Calculator. This free app, provided by TurboTax parent Intuit, is designed to help low- and middle-income taxpayers determine whether they're eligible for the Earned Income Tax Credit. The IRS estimates that up to a quarter of eligible taxpayers fail to claim this credit, which is worth up to $5,700 this year.
•IRS2Go. Use this free app to check the status of your refund, get updates on the latest tax news, order tax return transcripts, or contact the IRS.
Security Remains Important
Smartphones and tablets allow you to dispatch mundane financial chores, such as checking your bank account or doing your taxes, while boarding a flight or waiting for your dinner companions to arrive. But these devices are also more vulnerable to loss or theft than your home computer. How to protect your personal financial information:
•Only download apps from reputable sources. Stick with apps from the iTunes or Android stores, says Derek Halliday, senior product manager for Lookout Mobile Security, which makes security devices for mobile phones. Don't use links from unknown sources to download an app, and check user reviews before downloading, he says.
•Use passwords to protect your mobile devices so if your phone or tablet falls into the wrong hands, the thief won't be able to see your personal information. Some new models also allow you to encrypt data on your phone or tablet, which provides an additional layer of protection, Halliday says.
•If you're absent-minded or constantly on the go, consider buying a product that will help you locate a missing device. You can also purchase products that allow you to erase information from a mobile device that's at large.