Editor's Outlook: The Pitfalls of On-Line Tax Preparation
Historically, I have used TurboTax on-line and this year I also tried out the on-line version of H&R Block’s TaxCut service. Both programs walk you through an exhaustive array of potential deduction scenarios to help you minimize your tax liabilities. However, I was shocked by the end results for my Illinois state refund. I would have been willing to live with a minor difference between the two, but they were off by a factor of 10, with TurboTax offering the higher refund.
I went back through the steps for both programs multiple times with no change in the outcome. Finally, I discovered that TurboTax was applying some deduction or credit for consulting work, based on my 2007 taxes. Adjusting for this brought the TurboTax-calculated refund more in line with that of TaxCut, although they still did not match.
While this isn’t intended to scare people away from using computerized tools for investment analysis or financial planning, it does illustrate that we cannot blindly rely on the output such services provide. I will continue to use TurboTax going forward; I will just be paying careful attention to what it tells me in the future!
Technical Analysis Comparison
At this writing, the major market indexes are at 12-year lows. As we watch our portfolio values dwindle, we wonder: How low will it go? With the Dow now below 7,000, I have stopped guessing and hoping where the bottom may be.
The notion of support or resistance levels is one of the principles of chart analysis and technical analysis. Technical analysis attempts to forecast future price movements of a security or index based on the examination of past price movements. Support and resistance levels are driven by the forces of supply and demand. Support is the price level where it is believed that demand will be strong enough to prevent prices from falling further. As prices fall, investors become more inclined to buy and sellers become less inclined to sell. One can only hope that stock prices have fallen so far over the last several months that they are now attractive enough to sustain consistent buying and that prices, as well as market indexes, continue to move upward.
The comparison article beginning on page one examines the top technical analysis and charting Web sites for individual investors. With these sites, you can create charts to help identify potential support and resistance levels for a given index, stock, mutual fund or perhaps derivative. If you want to take your analysis to the next level, you may wish to make use of technical indicators—mathematical manipulations of price and volume data that may help to identify shifts in supply and demand—buying and selling—which may also point to future price movements.