When doing any year-end tax planning, it's useful to have a draft of your federal and state tax returns so you can analyze the impact of making various year-end tax moves.
TaxACT is available online, and using the deluxe version I was able to draft out federal and state taxes for 2011. The full version of the state tax module wasn't available for the two states I tried out, but TaxACT did have a state tax worksheet and produced a calculation of state-level taxes. I especially like TaxACT's what-if planner (found by clicking the Next Year tab, then starting the Tax Calculator). This presents my drafted out taxes in one column, and provides two additional columns that can be used to project federal taxes for current or future years, and allows users to input different variables for various income and deductions.
TurboTax is also available online, and using their deluxe version I was able to draft out a federal return, but I wasn't able to draft out a state return. This is unfortunate, because it's really helpful for people to know if there's any tax owed to the state as paying additional state taxes now can produce a federal tax deduction. I was not able to find a what-if utility in TurboTax. So if you're going to use TurboTax to help analyze the impact of year-end tactics, you'll need to keep track manually of the tax impact of various changes you make to your draft return.
H&R Block At Home is also up and running. Unfortunately, their Schedule C module "isn't ready yet," so I was unable to run a draft calculation of a self-employed tax return. The state modules I attempted to access likewise were not available. I was able to draft out a federal return, however, for a taxpayer with W-2 income. I wasn't able to find a what-if utility in H&R Block At Home.
Of the top three software providers, TaxACT here provides the most usefulness for drafting out federal and state tax returns and provides the opportunity to conduct what-if analysis.
I also used TaxACT and found it easy to use. This year, they also are allowing users of the “free” software to print out a 1040 which I used to take to my CPA for our year-end review. I wasn’t able to print out the Schedule C, but that’s because the IRS hasn’t released the final version of the 2011 form yet.