Learning from TaxACT 1 – Step by Step

Taxes are complicated. That being obvious said, I have been generally impressed with how in many areas the tax office and the tax software walks you through the process. It can be better though. Case in point, here is my experience with a particular part and how it might be corrected. I have a friend using TaxACT online Deluxe to do their 2009 taxes. She receives oil royalties from mineral rights in Oklahoma. The oil companies withholds taxes and sends them to the Oklahoma. She lives in Texas. I walked through the “Step by Step Guidance” and I found no place to enter the taxes that were withheld in Oklahoma. After several email exchanges with TaxACT Taxpayer Support Services I received the instructions below:

To enter state withholding: 1. Log into your TaxACT Online return or start your TaxACT Desktop program 2. Click on the ‘Federal Q&A’ tab 3. Click ‘Form 1099-MISC’ to expand the section and then Click ‘3-Other Income’ 4. Select ‘Form 1040’ and click ‘Continue’ 3 times

It appears that the Step by Step instructions left out several steps. The problem is actually a little bigger than leaving a step out. It looks like there is a conceptual problem here. In the tax act software the original questions are arranges based on what you want to (update royalty information) but at some point in the logic you choose the form that the data goes into . Because during the walk through I chose royalty income which led me to the federal form for royalty income  which had a section for taxes paid but did not have a place for state tax withholding. they don’t collect the data. I had to know to enter the remaining data not collected in the 1099-Misc for selecting the 1040. In effect the usability kept me from valuing their produce. They expected me to think in terms of where the data should end up in the final destination when they should be focused on how the customer thinks about the information. The step by step led me away from where to put in my data instead of to it. This is a tricky situation though as you have several levels of users. Experienced tax preparers know where they want to put the data. Even in a few cases I knew where I wanted the data to go but could not find where to put it because that section was by the source.

I would suggest:

Refactoring the interface to clearly separate the process into three different paths; by Destination, by Source, and by category. To do that you would need to have mapping between all the possible sources and destinations and categories. It might also be good to ensure that you can jump from one path to another. The current interface seems to switch back and forth assuming a certain path. For example I choose that I received the information on the 1099 form (Source) then I have to choose royalties from the list (category) then it asks me which form I am putting it on (destination) which is ‘Schedule E, Supplemental Income and Loss’. Some of the data from this source goes on several other forms including the Oklahoma tax form. There is no way to directly access the Oklahoma form (destination). You must fill out the state withholding on the 1040 (another destination) which you must access through the 1099-Misc (a source).  I have to understand all three (sources, categories, and destinations)  to navigate the step by step.

What did we learn?

The goal of this blog is not to be a tirade against bad companies. This blog is a too to convert real world failures to learning opportunities for everyone. In this case we really need to get into our customers shoes and not just one. You should create several identities and think about what they know and what they are looking for. From the side of a developer or a tax prepared the existing process may seem correct and reasonable. From what appears to be a large swath of customers it is down right frustrating. Do you have any other suggestions to making the customer experience better? You can try out the TaxACT website for free at TaxACT.com . I would like to see your opinions in the comments below.