How do you file your taxes? (Americans)

[cbgg]

Hello American Mustachians,

How do you file your taxes?  Do you use a software product?  If so, which one do you recommend?  If not, why not?

Thanks! 

[tomq04]

I've used both turbo tax and tax act.  Depending on how "easy" your return is, the free edition is just fine.  If you have dozens of trades no one will fault you to pay the $8 to use the import feature.

If you run a business I would generally recommend you have a CPA review or complete your return, $200/hour is worth it to avoid the heartache of a return 99% of the time.

[Emilyngh]

I do them on paper, use Turbo tax to check my work (last I checked you don't pay unless you submit through them), and then paper file.

[dragoncar]

taxact.com

usually they offer me a deal for "deluxe" federal+state for $14

I've never used anything else, so I can't really compare.  If money was really an issue, I'd just do it by hand.  Not that hard.


Edit: As mentioned by Emilyngh, you can probably get away with FREE for taxact if you copy their work off the "preview" return and never actually efile.

[Spork]

I use turbotax deluxe and I use the locally installed software version.  The premier handles securities (and some more things) and while I have securities, I haven't ever found a need for more than what I used.  Most of the cost basis is now given to you verbatim on statements.
I mostly print out and file a paper return.

Reasons:
* mostly habit.  I'm used to it.  It re-imports last year.  The others are likely to be ok, too.
* turbotax online has had a couple of years they really screwed up.  Your returns were visible to anyone.  Oops, sorry.  I work in network security.  I hold a grudge.
* not filing online is, I think, marginally safer.  In the end they'll be scanned and be in a computer somewhere.  I think it is likely the electronically filed are marginally more accessible to hacker types.

[TLV]

Free File Fillable Forms - free with no income cutoff, as long as you don't need one of the very few forms that they haven't supported yet.

It's literally filling out the same forms as you'd do on paper, but submitted on the internet.

[Undecided]

In the past I have used Turbo Tax Home & Business and this year I expect to use Turbo Tax Premier (my wife has stopped operating her prior sole proprietorship). I've always been happy with them.

[nvmama]

I always check what our income for the year is first, because if it is lower, then we qualify for the free file through the IRS website and from there you have a pick of agencies.  We have used turbo tax and HR block and have liked them both.  If we have a higher income for the year then I do the free fill able forms on the IRS website.

For state taxes in MA they have free online filing for just about anyone, there are a few exceptions, that runs like a tax program does.

[Frankies Girl]

turbotax online and file for free.

[oldladystache]

Free File Fillable Forms - free with no income cutoff, as long as you don't need one of the very few forms that they haven't supported yet.

It's literally filling out the same forms as you'd do on paper, but submitted on the internet.

me too.

[Rural]

Used to do them all by hand, not a lot of fun with a sole proprietorship. Them my husband introduced me to Turnbotax. I use the local install Deluxe edition, have for several years. I obsessively check it for completeness and accuracy,but I've never found a mistake.

[b4u2]

I've used TurboTax but the last few years I have used TaxAct.

[Loretta]

Turbotax the last few years.  I access it through Ebates, so I can make a little $ off it. 

[southern granny]

I have used the Turbo Tax Federal and State for several years.  I love it.   I get it at Sam's Club, where it is $10 off right now.

[Nothlit]

I have used TaxAct.com (free version) for the past few years for my federal return and have no complaints. I usually have a W-2, a few 1099-INTs and 1099-DIVs, and some itemized deductions. Not super complicated, but I like doing it online rather than on paper.

For my state taxes, I use my state's (Massachusetts) Department of Revenue web site, which has a free e-file web app.

It seems like a lot of people are under the impression that you have to be under a certain income limit to qualify for free e-file. I believe that's only the case if you go through the IRS "Free File" program. But if you just sign up directly with TaxAct (and perhaps some other companies, I don't know) you can get free federal e-filing regardless of income. My AGI certainly exceeds the IRS Free File limit, but I've always been able to file for free with TaxAct.

[Jamesqf]

Paper - or rather, PDF files of forms which are filled out and printed.  I don't use tax software because AFAIK all of it only runs on Windows.

I also have had fairly complicated returns, with Schedules A,B,C,D,SE, and a bunch of ancillary forms.  I think the worst was a few years ago, when I lived abroad and the foreign tax stuff pushed it over 20 pages.

[dragoncar]

Paper - or rather, PDF files of forms which are filled out and printed.  I don't use tax software because AFAIK all of it only runs on Windows.

I also have had fairly complicated returns, with Schedules A,B,C,D,SE, and a bunch of ancillary forms.  I think the worst was a few years ago, when I lived abroad and the foreign tax stuff pushed it over 20 pages.

You can definitely get tax software for Macs.  Or use an online version.  You know, like, if you cared.

[grantmeaname]

Free File Fillable Forms - free with no income cutoff, as long as you don't need one of the very few forms that they haven't supported yet.

It's literally filling out the same forms as you'd do on paper, but submitted on the internet.

Me three.

[rocksinmyhead]

Free File Fillable Forms - free with no income cutoff, as long as you don't need one of the very few forms that they haven't supported yet.

It's literally filling out the same forms as you'd do on paper, but submitted on the internet.

hmm! I didn't know about this option. might do that this year. I have extremely simple federal taxes... I have used TurboTax in the past but I think I always ended up with the standard deduction anyway.

[nordlead]

I use TaxAct Deluxe + State. My taxes aren't complicated and I could definitely do them for free on paper or efile, but the time savings of having them fill out everything but the current years numbers is just too convenient.

[smalllife]

You can definitely get tax software for Macs.  Or use an online version.  You know, like, if you cared.

Judgy much?  "You can definitely do your taxes on paper.  Or do free fillable pdfs instead of paying for it.  You know, like, if you cared."   People care about different things, whether that be complete control and understanding or putting numbers in an online software for maximum ease.  Doesn't make anyone care more about their taxes than anyone else.

[rubybeth]

I use TurboTax online, whichever edition it recommends to me each year based on the deductions I'll be claiming. It's also nice to be able to log in and print forms from previous years.

This year, it recommended the cheapest version for filing state tax forms, last year it recommended the Deluxe version, but then there was a snafu for Minnesota filers who put $5 into a pool for political candidates, so everyone who suffered from that issue got a refund of whatever we paid for using TurboTax, and that included us.

[Ashyukun]

Not the most Mustachian way (but then I am VERY new here...), but since buying my house I've always had mine done professionally by a local guy with a small tax business. The first year I had them done, I went through and did everything myself in TurboTax and figured out what I'd get back and then went in and had the tax guy do them and found that even after subtracting the fees for him doing the taxes found that I was getting more back than what I would have gotten with doing them myself. These days I don't generally get a lot back but that's because (with some advice in how to best accomplish this from the tax guy) I've been able to heavily tweak my withholdings so I'm running as close to even as possible so I have more money in my pocket throughout the year and am not giving the government an interest-free loan until getting a refund.

[mpbaker22]

Taxact - Basically the same as turbotax, but you don't have to pay for them to advertise all over my financial accounts, EG mint, PNC, etc.

[Undecided]

You can definitely get tax software for Macs.  Or use an online version.  You know, like, if you cared.

Judgy much?  "You can definitely do your taxes on paper.  Or do free fillable pdfs instead of paying for it.  You know, like, if you cared."   People care about different things, whether that be complete control and understanding or putting numbers in an online software for maximum ease.  Doesn't make anyone care more about their taxes than anyone else.

Whatever. James said that he didn't use it "because" it doesn't run on Macs, as far as he knows, and if Dragoncar's right (he is) that it's available both for macs and via web browser, that seems like a ridiculous reason.

[Spork]

Paper - or rather, PDF files of forms which are filled out and printed.  I don't use tax software because AFAIK all of it only runs on Windows.

I also have had fairly complicated returns, with Schedules A,B,C,D,SE, and a bunch of ancillary forms.  I think the worst was a few years ago, when I lived abroad and the foreign tax stuff pushed it over 20 pages.

I am a unix nerd, too.  I run it on a windows VM.  This is the only reason I have the VM and I boot it once a year for this purpose.  ...but if paper works for you, there's probably no reason to go to this effort.

[nawhite]

I get mine done professionally by a local CPA. Costs $200-300 depending on specifics and takes 45 minutes of sitting on his comfy couch and chatting. It took me a while to realize the benefit of having an Accountant do your taxes. The benefit does not come from them finding magical deductions that will save you money. If you see them once per year, then TurboTax will figure everything out just as well and be much cheaper.

The benefit of getting taxes done professionally comes when you show up in September not when you show up in March. You can PLAN your deductions and get a much better return the following year. I've sat down with my accountant multiple times throughout the year and that is what saves me FAR more than the $300 I pay.

Some interesting ideas which came from my accountant:
- Condensing charitable giving and property taxes from multiple years into the same year to maximize my deduction vs just taking the standard deduction.
- routing money through a 529 plan to pay for "living at home" college expenses that otherwise aren't deductible (saves state taxes)
- A much better understanding of what the IRS considers "business expenses" (its way more than I thought)
- I changed jobs to one with a vastly different salary mid year and he, for free, figured out what I should put for my exemptions at the new job to make the total tax due actually equal what was taken out. (Imagine you double your salary in July. If you put the standard amount of exemptions, they will take money out as if you made the higher rate all year long. At the end of the year, your actual income will be much lower than your "salary" at the new job and thus you will have overpaid and can expect a big refund. I don't like the government having an interest free loan from me if I can help it)

Pay for a tax preparer but then show up throughout the year, not just in February or March. Its definitely worth it.

Not to mention the guarantee that he has my back if I ever get audited.

[Ashyukun]

Not to mention the guarantee that he has my back if I ever get audited.

That's definitely one of the reasons I have mine done professionally, it's nice not having to worry about it. It is also nice knowing that when I get married shortly after tax season that he can advise me on how best to adjust things to take advantage of it tax-wise (or minimize the damage...).

[Thegoblinchief]

Tax Act, but our taxes are simple right now.

Once we have a bigger investment portfolio, I will probably hire someone or at least have my brother check them over (he's a CPA).

[cynthia1848]

We use a CPA.  More value add - DH has 3 different businesses, we employ a nanny, we have partnership interests, etc.  Even with all the complexity, estimated taxes, etc., last year I think we paid $900.

[Jamesqf]

You can definitely get tax software for Macs.  Or use an online version.  You know, like, if you cared.

Yeah, I could get tax software for a Macintosh, but then I'd have to buy a Mac to run it on.  Not cost effective, I think.

As for the online versions, the ones I've looked seem much harder to use than the simple PDF forms.  I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

[dragoncar]

You can definitely get tax software for Macs.  Or use an online version.  You know, like, if you cared.

Yeah, I could get tax software for a Macintosh, but then I'd have to buy a Mac to run it on.  Not cost effective, I think.

As for the online versions, the ones I've looked seem much harder to use than the simple PDF forms.  I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

Well you said it runs only on Windows...  MacOS not Windows.

[nawhite]

I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

Makes me dream for Tax policies which don't require Billions to Trillions of dollars spent on tax preparation and the IRS. I feel like even the downsides of a flat tax may exceed the negatives of a tax preparation industry. Anybody volunteering for VITA this year?

[dragoncar]

I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

Makes me dream for Tax policies which don't require Billions to Trillions of dollars spent on tax preparation and the IRS. I feel like even the downsides of a flat tax may exceed the negatives of a tax preparation industry. Anybody volunteering for VITA this year?

No money is needed for tax preparation.  Just a pen and your brain.

[Undecided]

I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

Makes me dream for Tax policies which don't require Billions to Trillions of dollars spent on tax preparation and the IRS. I feel like even the downsides of a flat tax may exceed the negatives of a tax preparation industry. Anybody volunteering for VITA this year?

No money is needed for tax preparation.  Just a pen and your brain.

Right. Vanguard doesn't have to spend any money to prepare those forms it is legally required to send out. The public partnerships I'm invested in don't have to spend any money to prepare those forms they are legally required to send out.

[nawhite]

I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

Makes me dream for Tax policies which don't require Billions to Trillions of dollars spent on tax preparation and the IRS. I feel like even the downsides of a flat tax may exceed the negatives of a tax preparation industry. Anybody volunteering for VITA this year?

No money is needed for tax preparation.  Just a pen and your brain.

And the salary of the person at the IRS who has to check your work because it is possible for you to lie or mess up.

[ketchup]

You can definitely get tax software for Macs.  Or use an online version.  You know, like, if you cared.

Yeah, I could get tax software for a Macintosh, but then I'd have to buy a Mac to run it on.  Not cost effective, I think.

As for the online versions, the ones I've looked seem much harder to use than the simple PDF forms.  I really miss the Swiss income tax forms: simple Java program, half a dozen screens to fill in, and you're done.  Half an hour, maybe.

Well you said it runs only on Windows...  MacOS not Windows.

Pretty sure he runs some flavor of Linux.

I used H&R Block online last year, because I was eligible to completely file for free with it.  This year I used it again, out of habit.  I think I had to pay a few bucks to file IL taxes, but federal was still free.  It was pretty painless.  My taxes aren't too fancy yet.

[the fixer]

I still do my taxes by hand with the fillable PDFs. I may use the online fillable forms this year, though, to save a stamp.

I have married filing jointly taxes with a sole proprietorship plus the expected dividends and capital gains/losses of a Mustachian. Also HSA contribution and SEP IRA. My business expenses are extremely low because of the nature of my business plus my inability to deduct business use of my home so I can use Schedule C-EZ. The most difficult tax conundrum for me this year will be moving between states mid-year, one of which has an income tax.

It's really not hard, I just read the instructions. I also got a $2 book at Goodwill on small business tax deductions. I learned today while doing Form 8889 that even though my wife didn't have an HSA for 2013, I think I can contribute the full family limit into MY HSA because we were on a family HDHP for the second half of the year. Sweet!

If I owned a moderately sized house where I could have a home office I might get a CPA. But I've also heard that hiring someone doesn't save you time, you still have to do all the recordkeeping and receipts. A tax preparer's only advantage, then, is if he/she can do a better job than me.

[nawhite]

But I've also heard that hiring someone doesn't save you time, you still have to do all the recordkeeping and receipts. A tax preparer's only advantage, then, is if he/she can do a better job than me.

I used to think of hiring someone this way too and I was wrong. Of course you can fill out a form just as easily as they can. But that's not what you pay them for. You pay them so that you can show up in June and say "I want to get the nice version of X because that would be better for my business but I can't afford it without a deduction. Can I take a deduction on it?" Or any number of other questions so that you can PLAN your taxes for the following year. "Doing your taxes" shouldn't be a thing you do once in March and then don't think about again until next year. It is something you should think about all year long and have a multi-year plan for. A CPA or other tax professional will help you with that.

Tax professionals (even pretty bad ones) are worth much more than they charge, but only if you take advantage of TAX PLANNING and not just tax preparation.

[BlueMR2]

Paper.  A relative of mine is an accountant and does them that way for me.  Mine are too complicated for any of the free products (can't even file electronically for free, cheaper to mail it in).  Tried the pay software route one year, wasn't happy with it.  Wasn't worth the money.

[freeedom]

Turbotax

[smalllife]

Tax professionals (even pretty bad ones) are worth much more than they charge, but only if you take advantage of TAX PLANNING and not just tax preparation.

What information do tax professionals have that the publicly available IRS guidelines do not?  I've seriously thought about it for one time questions regarding planning, but every other profession I've done that with my before-hand research has been more thorough than their knowledge or specialized books/references. 

[tomq04]

@smalllife

Technically none.  What they do have is a title (which you seem to scoff at, probably rightfully so).  That being said as I am going through the CPA process right now, no Joe Blow can fake his way through the process.  A CPA is truly one of the hardest working, most dedicated, and decent advocates you can have in personal finance.

That being said, growing up my dad did his own taxes, and I do my own.  When a CPA gives you advice, it will have been researched and independent, they MUST disclose any association they have with advice given to you (commissions etc).  A tax accountants goal is to get the most accurate return filed possible, they can't perform magic to inflate your refund, but with proper planning as mentioned in earlier posts they can certainly help plan for the best circumstance going into the following year.

[grantmeaname]

The IRS is the least favorable and most biased place you could possibly go for tax advice. It's like the farmer asking the fox how many chickens he can keep for himself.

[dragoncar]

The IRS is the least favorable and most biased place you could possibly go for tax advice. It's like the farmer asking the fox how many chickens he can keep for himself.

Except if the farmer keeps the wrong number of chickens, the fox eats the farmer.

[Spork]

The IRS is the least favorable and most biased place you could possibly go for tax advice. It's like the farmer asking the fox how many chickens he can keep for himself.

Except if the farmer keeps the wrong number of chickens, the fox eats the farmer.

Holy crap, that's one big ass fox.  (I picture a Monty Python Rabbit of a fox.)

[smalllife]

@smalllife

Technically none.  What they do have is a title (which you seem to scoff at, probably rightfully so).  That being said as I am going through the CPA process right now, no Joe Blow can fake his way through the process.  A CPA is truly one of the hardest working, most dedicated, and decent advocates you can have in personal finance.

That being said, growing up my dad did his own taxes, and I do my own.  When a CPA gives you advice, it will have been researched and independent, they MUST disclose any association they have with advice given to you (commissions etc).  A tax accountants goal is to get the most accurate return filed possible, they can't perform magic to inflate your refund, but with proper planning as mentioned in earlier posts they can certainly help plan for the best circumstance going into the following year.

You and I must be talking to different CPAs then, I come across my fair share of duds in my line of work.  I know the prep and exams are intense though - good luck! Any advice for finding someone competent with a particular focus (that isn't at a huge corporation/only takes the multi-million dollar clients)? 

[DDrake]

I thought I would chime in on this as a cpa.  Our real added value is in tax planning.  As far as preparation goes, if you have a fairly simple return, there is no reason a mustachian with mediocre critical thinking skills cannot do it themselves.   

I generally think that going to a firm is a hard cost to justify unless you really have a lot going on.  At our firm the minimum cost is somewhere between $500-600 and that is for a fairly simple return.  I would say that your best bet is to find a independent local CPA that you can call on during the year with questions and take the time and care to get to know you and your situation. For $200 to 300 a year I think that this is the most efficient option, outside of doing it yourself anyway.

We mustachians do try to in source as much as possible, and that is a great thing for self worth, but at some point you do not get a positive return by spending hours trying to figure out the best tax plan.