I found Turbo Tax in a lot of different stores around here. I think it's still the #1 tax software. I'm going to give TaxAct a try to see how it does. I already did my taxes using Turbo Tax, but decided to d/l TaxAct to see whether it gets the answers right. If so, I may use it as my primary next year. I'll post what I find after trying it out. I started it last night (but didn't finish) and a quick observation is that you have to go through a lot more screens to get something done. I also like the way TurboTax imports things from last year and uses them as a starting point. If you haven't changed employers, that can save some time. The way they prompt with last years' 1099s helped me realize I was missing one. If I had just entered based on what I had, I'd have missed one.

dave100: that's interesting and had to do some surfing. Cutting & pasting the whole article I found since this was quite readable and, Luddite that I am, my attemps at links go off into cyberspace. Don't throw away anything you've faithfully saved till now - quarterly statements, confirmations, etc. since the buy/sell, gain/loss tracking goes forward and it's still up to you to be able to track your dealings backward. Right? I have a couple of brokerage accounts as well as investments outside brokerages - no problem there as I can see. But I initially received, as a gift, a block of stock in our local power company back in the 70's. (I still have the initial cost basis, etc. paperwork). But I have always reinvested the dividends to purchase more shares and the new cost basis is, of course, reflected on the next statement. I've saved every one of these statements over the approx. 40 years in the event I'd ever sell some of it since any sale is going to involve a real mix of share price. I like hard copies of things; I don't do much online tracking. Consequently I have boxes of "important" investment papers all in good order. The beauty of it is my heirs will not be pulling their hair out trying to find things when THAT TIME comes. (We've done enough sifting in dealing with others' estates to have learned some valuable lessons.) The article: [Broker-dealers, mutual fund companies and fund custodians are updating systems to comply with the cost basis reporting requirements included in the Emergency Economic Stabilization Act of 2008. Brokers must begin reporting cost basis to the Internal Revenue Service and to taxpayers for trades beginning Jan.1, 2011; fund companies have until 2012 to comply. Custodians are not required to comply with the legislation, but they provide the technology as a service to their broker-dealer clients. For their part, wirehouses already track this data so the deadline is a non-issue for them. "The tech implications for cost basis are significant and if firms don't start now, they will never get it done in time," said Sean Cunniff, research director for brokerage and wealth management at Needham, Mass.-based TowerGroup. The aim is to guarantee full reporting of capital gains so the IRS receives its fair cut of investors' profits. Estimates from the Government Accountability Office and IRS put the amount of underreported capital gains at $7 billion to $11 billion per year. REDUCED TAX BILLS Ironically, because the technology allows for improvement of cost basis reporting, many advisers will be able to harvest losses more efficiently, reducing their clients' tax bills. Costs estimates for the enhancement range from $200,000 for a small, self-clearing broker-dealer to a multimillion-dollar expense for custodians, according to a participant who asked not to be identified. Systems within broker-dealers that require overhauls are the account transfer systems that interact with brokerage firms, as well as their order management systems. Historically, tracking cost basis has been a headache, a responsibility of investors who would have to dig through dusty old confirmations to determine the amount they paid for a stock or bond. For many firms, completing the fixes requires a multistep process that can frazzle the nerves of even the calmest, most experienced technologists. "This will take months just to scope out, and then you must build or buy a solution and integrate it with your current system," Mr. Cunniff said. "Then you test. Then you fix the bugs. Then you deliver." At Raymond James Financial Services of St. Petersburg, Fla., the battle to meet the deadline is under way. "We know it's a significant change and that's why we've started working on it already," said Josh Bohlander, senior manager in information technology. Hindering the project, however, are questions about how reporting should be done for wash sales, gifted securities, sales-load-basis deferral adjustments, and for fixed-income securities. "These are items not pinpointed in the current legislation," said Dale Skinner, a technology product manager with Raymond James. "We and the rest of the industry still need more clarification from the Internal Revenue Service on particular areas." Other firms are also waiting for the IRS to set a clear direction for the development effort. "We are still waiting for the IRS to make its final recommendations," said Teri Manton, a director in the product management and development group of Pershing LLC of Jersey City, N.J. Marjorie Qualey: Would like to see the IRS determine the format it wants the reports to use. "We still need to know exactly what format the IRS wants us to report it in," said Marjorie Qualey, vice president of product development and technology at Schwab Institutional in San Francisco. In response, a spokesman for the IRS said it was "continuing to work on the issue." Rather than build the upgrade themselves, some companies are retaining third parties to provide the software, an approach that OppenheimerFunds Inc. of New York pursued. "Due to the complexity of building this into our own systems, we decided that it made more sense to partner with [GainsKeeper]" to build this enhancement, said Christine Polak, vice president of operations at the mutual fund company, who declined to disclose the cost of the software. GainsKeeper, a provider of cost basis and tax software, is a division of Wolters Kluwer Financial Services in Minneapolis. Over the next two years, Ms. Polak will collaborate with the vendor to provide clients with cost basis data, in the form of their choice. Under the legislation, clients can select the way they want to report cost basis data to the IRS, such as the average cost basis or on a first-in-first-out basis. Although earlier attempts to pass the cost basis rules failed, Pershing assumed that passage was inevitable and began working on the project, Ms. Polak said. "The whole idea of these regulations isn't new to us; we are very well-positioned and have been working closely with [the Securities Industry and Financial Markets Association of New York and Washington] for several years now in planning for this legislation," said Ms. Manton. So far, the firm has developed a Form 1099 tax and year-end statement that breaks out gains and losses and addresses the bulk of the regulatory requirements, she said. Some broker-dealers, such as Cambridge Investment Research Inc. of Fairfield, Iowa, and Securities America Inc. of Omaha, Neb., receive cost basis information from their custodians, Pershing and National Financial Services LLC of Boston, respectively.] (Davis Jankowski, InvestmentNews, December 14, 2008)

I once filed using online software. By the time I filled in all the info, I could have done it by longhand. I didn't trust the results, so I figured it out anyways. If the IRS is going to call me, I want it to be my mistake and not some online software. I think it depends on how complicated your return is. And, yes...... there are free programs.

Actually, for certain income guidelines the state version of TurboTax and several other places is also free. I downloaded and used TaxAct and did the free e-file but I wish I would have waited and used TurboTax for everything. Could have prepared and e-filed Federal, State and my property tax refund all in the one program. Couldn't find a way to just e-file the state version though and since I had already filed the fed I just downloaded the computer forms from the state and did those. My return is fairly simple these days. The big difference I found is that the TaxAct can be downloaded and done on the computer where TurboTax must be done online. Online is much slower and clumsy. But in the end it would have been worth it. I did print the TurboTax version to a file and compared it to the TaxAct version and the one I did. They were all the same. But then, they should be. And not to nitpick, but the paper forms cost me 3 stamps to mail, plus paper and toner to print (I guess the other option is to drive somewhere to get the forms at $3.19/gal I needed since they mailed the wrong ones), while e-filing the federal in reality cost me nothing. Even the electricity can't be considered since it would have been on anyway. So which is "truly free"? Now there is one thing that I don't really understand is paying $15 or so to e-file! OK, you get your refund a few weeks early, but that's a pretty high cost to get it IMO. I really did like TaxAct. Very simple and straightforward. Very user friendly. TurboTax wasn't bad but nowhere near as user friendly. For people who are nervous about doing taxes they probably would find TaxAct much easier to use. I was so impressed, I even considered splurging and buying the state version for the $13 or $14, whatever it was. But then I used the computer form and thought that would really be an extravagance to do that. Plus I learned my lesson. Next year, I'll try TurboTax first if it's still free. And use TaxAct as the second opinion.