Cons: Activation procedures make it unuseable for many. Asked me to do calculations.
The Bottom Line: Intuit's leading market share product is in danger of losing its place due to poor implementation of activation and copy-protection schemes.
counsel's Full Review: Intuit TurboTax Deluxe for Tax Year 2002 Full Vers...
Much has been said about Intuit's new activation procedures for their software. Intuit has endured a great deal of criticism regarding this year's implementation of their copy-protection scheme. Much of it is deserved.
Copy Protection
As to the scheme itself, there's essentially two schools of thought: one, that by implementing their copy-protection and activation procedures, Intuit is being overly invasive and treating their customers like thieves, and two, that any company, including Intuit, has the right to protect their property and keep it from being used by people who haven't paid for it. As is the case in most difficult issues, each school of thought has its merits and shortcomings. I am going to speak as pragmatically as possible and avoid the philosophical implications for now.
Suffice it to say that, with some forms of valuable property we are already treated as potential thieves by vendors, merchants and bankers. The foremost example is with money, of course. Many checks and balances are placed on handling, using, trading and receiving different forms of money. It is a thing of value and if given to people who haven't earned it, or if it is copied (counterfeited), stolen or otherwise mishandled, certain grave consequences result. And, of course, try cheating on your taxes - or even inadvertently bollixing up your tax return - and you'll see even more grim forms of checks and balances landing on your front doorstep.
The fact is that these checks and balances are so ingrained in our psyche that we hardly notice them. We expect people to be protective of money. And we are protective of it ourselves, for the most part.
Intuit rightly believes its TurboTax software to be a thing of value to the company. In this instance, it has chosen to treat its software more like money than - well, like software in its traditional and "old-school" sense. In the days of yore, software was often freely made and traded, and viewed more as a means to an end than an end in itself. The end product of your work was the thing of value, and not necessarily the software used to accomplish that end. Open-source aficionados still believe - and rightly so, some would say - that software ought not be a proprietary thing and that users ought to be able to determine how best to accomplish their goals. Thus, open-source software is either free or low-priced, the code is available for viewing and/or modification to accomplish customized goals, and very few restrictions are placed on copying and distributing in its licensing agreements. The point being: the end product was the thing of value, and software was simply a tool to accomplish that end.
Coders of software are on both sides of the fence. Some say that their training, time and efforts ought to be compensated, that their work is valuable. Others offer their work freely and allow copying without any real restrictions.
But as is the case with other professions and crafts: medicine, oil exploration and drilling, law, and construction, just to name a few - the tools used to accomplish the goals in these fields have themselves become items of great value, and thus subject to strict auditing and control procedures to ensure that they are not stolen, copied, given to the wrong person or group, or counterfeited. The U.S. Patent office and Copyright Office were created to assist with the auditing and control efforts. And now, the Copyright Office is utilized by Intuit and other software companies to accomplish this same sort of control for their products. They regard their products as items of great value. Their value is diminished, and the company's bottom line affected, if the product is counterfeited or stolen. Software is viewed as a valuable tool more than a freely-traded commodity, and that's just the way it is.
Last year, Intuit sold just over 5 million copies of TurboTax, but over 15 million returns were filed using TurboTax. The conclusion is obvious - Intuit is losing lots of money. My position is that they have the right to protect the value of their product. However, as Oracle and other high-priced software companies are learning, the open-source software movement is creating a form of competition perhaps unanticipated in their formative years, and open-sourcers are doing it by creating products whose code is not secret or proprietary and is freely tradable and modifiable by and among its users. Open SQL is a prime example. Though it is not quite ready for prime time, it will be soon, and its current use and prospects for the future are worrying those who are used to getting $20,000.00 fees for installing and developing corporate databases.
I digress.
No, the pragmatic issue for me in all this is while Intuit has the right to protect the property of its product, it does not have the right, in creating its auditing and control parameters, to make the product unusable for its paid customers. As with the case of money, auditing and control ought to be mostly an invisible and unobtrusive procedure. And that is precisely what TurboTax's activation procedure is not. Its activation procedure was defective to the extent that I was unable to use the product on a typical, Internet-connected, home computer.
Installation.
Installation of TurboTax proceeds more-or-less normally until time for "activation." Which is to say, an install wizard popped up, I accepted the defaults, and files were placed on my hard drive - until activation time. That's when Intuit's new auditing and control procedures are invoked. Activation involves getting on the Internet and receiving some sort of signal from Intuit's servers that yes, this is TurboTax, it is paid for, and here is a code that will let it work on this particular computer only. In my case, Intuit was never able to get the information from my machine to its servers, and so, of course, I never got my activation code.
Tech Support.
Intuit's "tech support" consisted of conscripted (and who knows, probably independently contracted) phone drones who follow a flow chart script on a computer to assess difficulties and suggest solutions. Oh, and they're available Monday through Friday, from nine to five their time. I strongly advise you to adjust your installation schedule accordingly, and don't do it on a Sunday night as I did.
Anyway. Their actual knowledge of the product and its operation is highly suspect. When I gave them my product number and error messages, they told me that "they didn't see that here" - speaking of the error I told them about.
"See 'that?'" I said. "What are you looking for?"
"I'm looking for what the computer says to do next. It doesn't show the error you described. I'm going to have to give you a different phone number. Take this number down, but I'll transfer you now."
Transfer commences. Silence . . . then a dial tone. I was disconnected, which meant I was going to have to wait on hold again. So I call the new number, get placed in a queue, and wait for twenty minutes. Finally, I get another drone. We try different combinations of activation codes and registration numbers, both of which are required to activate the pay-for-online software they mail in to you if you're one of their "premium, loyal customers." None of the numbers work. Finally, he gives me the ultra-secret generic, activate-anything code that's supposed to work no matter what. It still doesn’t work. He suggests that I have a faulty Internet connection. I note that it was not so faulty as to prevent my payment from reaching their company during the installation process. After more and numerous attempts, he then decides, to their credit, to overnight me another paid Deluxe version. We were on the phone about an hour and a half, got nothing done, and I was going to have to wait another day.
I arrive from home after work the next day. The new version installs quickly enough, but even the paid version requires activation via the Internet. Bing-bong: same dialogue box error, same situation - my new, overnighted software is unusable. It was after five p.m., so the expert drones weren't available.
While I was able to receive web pages, email, chat and other typical Internet services on my home system, on the off-chance that there was some mysterious Internet gremlin, heretofore unaccounted-for by my mediocre detection skills, that was preventing the Intuit servers from talking to my machine, I took the software to work and attempted an installation on my work system with T1 Internet access. Plus, another session with the flowchart drones was repugnant to me.
So, the next day, I take it - and my previous return, saved on a floppy - to work. And bingo, it slides onto the machine like old Tony Llamas on cotton socks. What the heck…?
All right. It only took four days to get a workable installation.
So I took my floppy, which had my old return from my home machine, and stuck it into a directory on my work machine so that TurboTax could suck the information from it. And so it does.
Final note on activation as of March 26, 2003: If Intuit does not make their activation procedure more seamless and transparent, H&R Block's product, with no activation procedure, is going to suck a heck of a lot of market share away from TurboTax (as they already have this year).
And on May 15, 2003, Good Morning Silicon Valley had this to report:
"Intuit announces TurboTax will drop anti-piracy feature
SAN FRANCISCO (AP) - Intuit Inc. will dump an unpopular anti-piracy feature from its top-selling TurboTax software, reversing course on a measure that turned out to be more trouble than it was worth.
The company disclosed its change of heart Wednesday with the release of its earnings for the three months ended April 30 -- Intuit's busiest quarter of the year.
Although the company's sales and earnings for the period surged from last year, the improvement wasn't as dramatic as Intuit promised investors three months ago.
Management said its projections were undercut by a sluggish economy, the Iraq war and a frosty response to TurboTax's new anti-piracy feature, called 'product activation.'"
So there.
Program Operation.
Now, I've used TurboTax for tax years 1996, 1997, 1998, 1999, 2000, 2001 - and this year the Deluxe version for 2002. Even discounting my activation woes, whether I'll continue to use it from now on is questionable. There's good points and bad points. Here they are:
When you install TurboTax, one of the first things it does is offer to connect you to the TurboTax web site to get the updates and program patches with the latest tax information and deduction eligibility information since the date of the program's release. Given the volatility of federal and state tax law I strongly advise that anyone using TurboTax get the updates, even though the program offers to let you skip that step.
Once you've entered your initial I.D. and family info into TurboTax, subsequent installations grab that info off your hard drive (provided you haven't deleted your previous returns from your computer) and stick it into your current return information fields. If you haven't moved or changed jobs, this saves a lot of time. Even if you have, you still save a lot of time, especially if you have kids. Ever had to dig up all the kid and spouse information and enter it? Birthdates, Social Security numbers, spouse occupation and employer ID info - TurboTax looks for previous returns and imports all the information into your current return. That's nice.
Once the information is entered or retrieved, you're taken through a step-by-step process, entering information for your W-2s, 1099s, and any other income or losses you may have. This information is stuck into the right place in the tax form. And TurboTax keeps a running total of your return or tax due as you enter the info.
Specifically, you're advised to gather up all your tax information - W-2s, 1099s, all those vague little things you got in the mail from the bank or investment companies "for tax purposes" - before you begin filling out your return. TurboTax will ask you to enter information from these documents. A new wrinkle, which is very nice, is that I was allowed to download all our W-2 information this year from our respective payroll companies. If your payroll company participates in that downloading program, you'll be able to get all your W-2 info loaded straight into TurboTax via the Internet. That saved me a lot of data-entry time, though I did go through and make sure that all the information was placed in the right boxes after the download.
Now. There's a certain peace of mind obtained when - as you go step by step through its tax return wizard - TurboTax realizes that because you have Abnormal Income you need to fill out Form Whatever-Dash-Zero Nine, or because you have 7 kids you're entitled to the Childrearing Trauma Deduction. Or this Deduction So-and-so and that Deduction So-and-so. Whatever. In other words, it thinks of these things for you by reason of the way and the order it asks you the questions necessary to complete your return.
OK, there's no "Abnormal Income" or "Trauma" classifications (that I'm aware of, but who knows what the tax gurus have done this year) - but you take my meaning; the program will recognize when something out of the ordinary needs to be done and the logic tree will jag to the side and have you start filling out the proper Form or deduction information. It will even take you through mini "tests" to see if you're qualified for certain deductions, or whether you ought to itemize or take the standard deduction.
My peace of mind was greatly traumatized this year, however, because of the way TurboTax handled my Schedule D information - that being the employee stock purchase plan stuff we cashed in on last year to make the down payment on our home.
TurboTax has no way of knowing whether your employer includes nonqualified employee stock purchase information on your W-2 form. If it IS included (as part of your W-2 income), then naturally the tax ramifications are a lot different than if you have to show your 1099-B info as additional income - resulting in additional taxes. TurboTax told me to call my employer and find out about this. Imagine my joy when the payroll rep said "Well . . . I think it is." God help me.
Worse than that - we made multiple purchases over a period of years, with the stock's fair market value and actual purchase price differing each time. But we sold it all at once, meaning all the stock sold for that day's market price. Instead of asking me the total sale price and making computations from that, TurboTax told me to take each purchase and calculate the percentage of that purchase price against the entire price, and enter the total price multiplied by that percentage in the little square.
Now just a damn minute. I did not go through four days' worth of installation of a product designed to do tax calculations to be told to pull out an adding machine. I have all the relevant figures: grant date, grant price, date of purchase, purchase price, FMV price on the date of purchase, date of sale and FMV sale price. TurboTax can, and should, ask me for those figures and do its own steenking calculations. It didn't, and that's bad. Computers were invented to do calculations - not to tell the user to do them. I'll summarize how this was handled at the end of the review.
Moving on. As you proceed through the tax return-generation process, possible errors and inconsistencies are brought to your attention by TurboTax. You can stop the wizard and turn around to an earlier part of the process at any time to make any additions, corrections or deletions. The total return or tax liability shown on the screen is updated as you add new information.
Even when everything is laid out before you like this, there are going to be certain terms - read: "tax gibberish" - that are beyond the comprehension of the best of us (CPAs don't count). That's why I thought I would prefer the Deluxe version of TurboTax - the CD contains video clips of recognized financial experts who translate the unintelligible gibberish into less cryptic gibberish, so that we might have a vague idea of the thought processes churning about in the halls of the tax regulators.
Like they say: you don't wanta be around when they're making sausage or tax regulations. But I digress, once again.
When you're done, the program prints out the completed return for mailing, plus a copy for your records. It also gives you the option of filing the return electronically. Electronic filing involves some additional cost, but given the hassles of getting all the paperwork stuffed in an envelope, postage bought and slimed on there, and then waiting an extra length of time before you get your return, most people will decide that the few extra bucks to file electronically is worth it.
TurboTax is available in State and Federal return versions. I'm from Texas, and have no state income tax (note my smirk), so I use the federal version only. If you start using TurboTax, I believe you'll have a difficult time going to another method of filing your return, provided your return is more or less straightforward. It really beats trying to fill the cursed thing out by hand.
As I noted before, however, perhaps Schedule D matters are too unusual for TurboTax. When I finished following the program's Schedule D instructions, TurboTax reported that we had a rather hefty tax liability. This surprised me, and after followup calls to the payroll service and searching tax advice sites online, I went to a tax preparation specialist. Whereopon, I was informed that "TurboTax messes this Schedule D stuff up all the time," and for a small additional fee, most of my tax liability was wiped out and my return was properly prepared. The specialist knew certain things that I - and apparently TurboTax - did not about how 1099-B income was reflected on a W-2 form.
And that brings me to another issue. TurboTax's warranty specifies that it will pay all penalties and fees associated with an incorrect (meaning, presumably, underestimated) assessment of your taxes. But what if the program causes you to overpay? You sure ain't gonna get an audit if the IRS gets something extra (or, I should say, the liklihood is significantly decreased). And unless you double-check with a tax professional, you'll never know that you overpaid. What warranty protects you in that case? We would have overpaid in the amount of about $1,000.00. Most people would deem that level of performance to be unacceptable. I do.
There is a new product called "TurboTax Deluxe Investor" which is designed, purportedly, for people who have more investment information to include with their return. The problem is, however, that no specific threshold or bright line is provided that tells you just how much investment information or activity is necessary before you ought to switch to this product - or whether it could indeed have calculated the Schedule D entries any better than the Deluxe version. Given that the Deluxe version queries you and ostensibly "handles" your Schedule D stuff, the decision to go to the Investor version becomes even more problematic.
System Requirements.
Processor: Pentium (200 MHz and above) Operating System:Windows® XP, Me, 2000, 98, 95, NT 4.0 (Service Pack 3 or higher). TurboTax for Windows won't run on a Mac using Windows emulation software. Memory: 32 MB of RAM. Modem: 28800 bps is required for Internet connectivity to obtain product updates and to complete electronic filing (or, in my case, only a T1 connection did the trick).Browser: Microsoft® Internet Explorer 5.5 (or higher) and Media Player 6.4 (or higher) are required to access online features, obtain product updates, view videos and complete electronic filing. These programs are included on the TurboTax CD and will be installed with the TurboTax program if they aren't already on your PC. CD-ROM Drive: 2X CD-ROM drive (4X CD-ROM recommended). Hard Disk Space: 65 MB for TurboTax program. Up to 80 MB of additional space required if Microsoft Internet Explorer is not already installed. Printers: Any Windows compatible inkjet or laser printer.
If your tax return isn't too terribly unusual or you aren't too terribly rich, I can still recommend it for you. I'm not terribly rich, but apparently my return is now sufficiently unusual for me to consider another means of filing - mainly, our tax practitioner who saved us a bundle this year.
If you are terribly rich, a $10,000 invoice was generated when you clicked on this review. Contact me for payment instructions. Advice is my stock in trade, after all.
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