When it comes to financial planning software, tax preparation is where the revolution started. Although basic money management programs have been around as long as personal computers have set on desktops, it was not until tax preparation software became widely used that the financial planning suites appeared.

It was the ease of the tax software that was its main attraction. Someone who had never done their own taxes could sit down at a computer, install the software, enter their W-2 and other information, and have their tax forms printed out in less than an hour – all for a price tag of less than $50.

Basics to Suites

One of the first tax preparation software packages was called TurboTax. It is still around today. The original packages computed federal taxes and gave the purchaser the option of buying an additional package for doing their state taxes, and – of course – the two were compatible and data could be imported from one to the other. TurboTax was quickly joined by Quicken, which has components that cover just about every aspect of personal and small business accounting, and other suites.

These days even such big names in tax preparation as H&R Block offer tax preparation packages. In fact, none of the software manufacturers would think of delivering a suite that did not incorporate tax planning into its make up. Of course, the actual tax calculating programs are offered separately since tax laws change each year (and they would not want to miss the change for offering that new $30 to $50 upgrade).

IRS Software

Even the Internal Revenue Service (IRS) – never known as a friend to the consumer – has gotten into the act. The IRS now offers its own tax preparation software called TaxACT and the best part is that it is free. The government is pushing the software in order to get people to file their returns electronically, a method that greatly reduces the cost of processing.

The IRS does charge up to $16 for software bundles that include state tax preparation options and $79 for a package aimed at professional tax preparers. In all the packages, the IRS includes a "free" electronic filing option. Overall, the IRS offers a number of different tax preparation packages, including specialized versions for small business and partnerships.