Computers: The taxman cometh: Good accountancy software never makes mistakes and will not abscond to the Bahamas. Janet Swift looks at automating your tax return
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Your support makes all the difference.In April the tax returns start thudding onto doormats with the dead sound of a bailiff's knock. This is one of the few horrors of life that a personal computer can make simpler and less painful. There is now cheap and reliable software to help fill out the forms.
Quicktax for Windows gives guidance and encouragement - plus the confidence that the form has been completed correctly so there will be no repercussions. It is also able to predict the tax bill (or rebate) that can be expected, so removing a further source of anxiety.
If you have never previously trusted a computer to deal with your accounts then this might seem a risky step. But it is common and popular in the US, where four or five tax-preparation packages compete each spring. Intuit's personal finance program Quicken leads the market there.
In Quicktax what you see on the screen is a copy of a 1993-94 tax return, complete with the Inland Revenue's own guidance notes. The forms that Quicktax produces have been authorised by the Inland Revenue and when you have finished entering information, you can print out the entire form on plain paper, neatly completed by the computer, sign it and send it off to your tax inspector, avoiding form-filling by hand.
The small effort and expenditure you put into computerising your financial affairs will be adequately rewarded. The structured nature of Quicktax's interview may steer you to claim allowances you might otherwise have overlooked and may even reveal that you are eligible for a tax rebate. Completing your own tax return - or even making a first stab at it - could also save on your accountant's bill.
The computer takes all the chore out the calculations and ensures accuracy: as long as you enter the right figures it will work out the sums correctly. In the case of the tax return calculations range from the tedious - adding together interest on a number of different accounts - to the highly complex such as discounting the effect of inflation to discover the real increase in value of an asset when working out Capital Gains tax. Although the current version of Quicktax applies only to the 1993-94 tax return, you will not have to pay in full for the software for future years, but instead will be able to upgrade to the next version at a lesser cost. Equally the work you put in this year will not have to be repeated but will form the basis for future returns.
The best way for most people to use Quicktax is to go through its structured interview. First it asks for personal details - your name, date of birth, National Insurance number - then proceeds to complete all the sections of the return that are relevant by asking for Yes or No replies to straightforward questions like 'Do you have National Savings accounts or bonds?'.
When applicable, it asks for information about amounts of money received in fees, rent, interest, dividends and so on. For these answers you will need to consult statements received throughout the year, but again Quicktax helps you to decide what information is relevant and what you can ignore. You do not need to complete the whole task at one sitting and can break off at any point and resume when you feel stronger.
The program allows you to work on more than one return simultaneously, making it easy to decide how to allocate allowances and incomes between different family members. You can also use its 'What-if' option to try out the effect of deferring income or bringing forward expenditure without altering data already entered.
Its Tax Assessor feature is able to work out at any point what the likely outcome is going to be, giving you warning of an impending bill or alerting you to a rebate to be claimed. Before you submit a return use the Final Review facility to look for sections that have been mistakenly left blank and for any inconsistencies in the information supplied.
Finally let the Auditor check through your return for features the tax inspector might consider contentious - such as claiming disproportionate deductions. Quicktax can be used on its own or in conjunction with Intuit's already established personal accounts package, Quicken - recently upgraded to Quicken 3.0 for Windows. Anyone who has ever gone overdrawn at the bank or who has paid interest on a credit card is going to be better off with Quicken.
Quicken is a personal financial manager and differs from other accountancy software in being easy to use and understand.
The heart of the program is called the transaction register, but do not be put off by this terminology. It looks like a bank statement showing money going in and out of an account, but you can use it to allocate every payment or receipt to a category.
This means that you can build up a picture of where the money goes. The program makes record-keeping just as quick and simple as possible. Not only can it handle regular events such as monthly pay day and standing orders automatically; it also remembers the names and details of anybody you make payments to - and so making an entry usually only involves typing a few letters before the program completes the entry for you.
The introduction of the Financial Calendar and Financial Planning Graph in the latest version helps you plan your financial future and, by presenting a summary of forecast balances on individual or combined accounts, can enable you to avoid going into the red.
Forewarned, you may be able to defer payments or bring forward income to prevent such a situation. If you want you can also use Quicken to print cheques for you. This involves purchasing its special stationery, but it avoids all the problems of words and figures not agreeing on a cheque - it writes out the words for you - and it will warn you if writing a cheque is going to make you overdrawn.