Author Topic: How could anyone ever fill out his own tax return?  (Read 15392 times)

BrettB6

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How could anyone ever fill out his own tax return?
« on: January 30, 2015, 12:04:06 PM »
http://finance.yahoo.com/news/heres-figure-whether-own-taxes-200000176.html

Actually this article is not the worst, but every year at this time, I'm astonished that most Americans wear the fact that they can't add, subtract, multiply, divide or follow instructions as a badge of honor. It's even one company's slogan, "I have people for that."

Someone who can't complete a wage-earner's tax return should not graduate from high school.

MMM believes in insourcing everything. I'm OK with tax help if you have a business with employees, sketchy expenses, etc. You may need an accountant. But tax preparation services deserve the same treatment from Mustachians as Payday loan stores.

johnny847

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Re: How could anyone ever fill out his own tax return?
« Reply #1 on: January 30, 2015, 12:12:10 PM »
Actually this article is not the worst, but every year at this time, I'm astonished that most Americans wear the fact that they can't add, subtract, multiply, divide or follow instructions as a badge of honor. It's even one company's slogan, "I have people for that."
Yea I don't get this either. Why is this acceptable? Would it be acceptable for somebody to say proudly that they don't know how to read?


I'm still amazed how many Mustachians use tax software as their primary method of filling out their tax returns (I use it after I've done it by hand just to check my work).

vivophoenix

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Re: How could anyone ever fill out his own tax return?
« Reply #2 on: January 30, 2015, 12:26:11 PM »
why is it a badge of honor to do it by hand?

there is free or very inexpensive software($20, and its a tax deduction)  that saves time.

alot of it pulls data from your bank/investment accounts  and from you w2 electronically.

this means im not sitting there with a stack of papers squinting at lines.

there is no mention of an inability to do math, its a way to make paperwork easier on people.
i do believe you also have the option of using the software for free  and then printing it all out and mailing your forms.
it only cost to efile

and you refund gets to you faster


what do you gain by doing by hand and then using the software to check everything?

sounds like waste of time.

Cpa Cat

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Re: How could anyone ever fill out his own tax return?
« Reply #3 on: January 30, 2015, 12:31:45 PM »
I also believe that most people should learn how to do their own taxes. I see no reason why someone who qualifies for 1040EZ would ever need to be confused. But they are. They get their W-2s in the mail and they are immediately overwhelmed. "What are all these boxes and numbers? What am I supposed to do?!" And then their brains shut off and they hire someone to help them.

I did an amended return for a friend who had sold some investments for the first time. She didn't know to expect a 1099 (or didn't know what it was when it arrived). H&R Block filed her taxes without that information and without asking about it. Of course, she ended up with a letter from the IRS saying that she owed a bunch of tax (she had actually sold at a loss, but the brokerage company did not report the basis, so the letter was basing the tax owed off gross sales price).

When she went back to H&R Block, they wanted $300 to fix it. It was a relatively easy fix, but I still had to walk her through what a 1099 was and how to get a copy of it and why it was important.

I don't blame her. Walk down the street and ask random people what "tax basis" means, and they won't know. People frequently make the mistake of assuming that they owe taxes on the entire sales price of something. But you can't know what you don't know. How am I supposed to learn what "basis" is if I don't know that word? How do I look up what a 1099 is, if I don't know that I'm supposed to have one.

Also - I don't think paper filing is a badge of honor. The IRS discourages it because it's less secure (identity theft), because the error rate on paper returns is 21% vs 0.5% for efiling, because it takes longer to process, prone to mailing errors and more labor intensive for them.
« Last Edit: January 30, 2015, 12:35:09 PM by Cpa Cat »

BrettB6

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Re: How could anyone ever fill out his own tax return?
« Reply #4 on: January 30, 2015, 01:13:38 PM »
Also - I don't think paper filing is a badge of honor. The IRS discourages it because it's less secure (identity theft), because the error rate on paper returns is 21% vs 0.5% for efiling, because it takes longer to process, prone to mailing errors and more labor intensive for them.

The tax preparers have great lobbyists. It is actually illegal for the IRS to do in house electronic filing or fillable forms. That would be "competing with private business." I believe this is the first year for fillable forms. I tried it, and you get directed away from the IRS site.
« Last Edit: January 30, 2015, 01:15:45 PM by BrettB6 »

lise

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Re: How could anyone ever fill out his own tax return?
« Reply #5 on: January 30, 2015, 01:25:36 PM »
I am not ashamed to use turbotax.

Cpa Cat

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Re: How could anyone ever fill out his own tax return?
« Reply #6 on: January 30, 2015, 01:43:05 PM »
Also - I don't think paper filing is a badge of honor. The IRS discourages it because it's less secure (identity theft), because the error rate on paper returns is 21% vs 0.5% for efiling, because it takes longer to process, prone to mailing errors and more labor intensive for them.

The tax preparers have great lobbyists. It is actually illegal for the IRS to do in house electronic filing or fillable forms. That would be "competing with private business." I believe this is the first year for fillable forms. I tried it, and you get directed away from the IRS site.

I have wondered why there's not a better E-filing system in place via the IRS for individual users and business owners. But your explanation makes sense. I guess I should be happy that people will pay me for this. But somehow... it leaves me feeling hollow.

TinyLightsBelow

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Re: How could anyone ever fill out his own tax return?
« Reply #7 on: January 30, 2015, 01:48:54 PM »
I've always just used Taxact. It is the easiest process I've ever seen, and is completely free. I can't imagine someone not knowing what to do unless they had very complicated finances.

rugorak

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Re: How could anyone ever fill out his own tax return?
« Reply #8 on: January 30, 2015, 02:01:50 PM »
I use taxact as well. It is only free if your income is low enough. First year I used it it was free for me but since then I make too much. But still at less than $20 for the top level of support it isn't going to break the bank of anyone here.

I wish they would change the laws that say the IRS cannot write the software themselves. Seems silly when it could potentially increase collections and save taxpayers money. But as was said, the tax prep industry has really great lobbyists. Simplifying the tax code could help as well. But you have the tax prep industry and a ton of other special interest groups who get involved there. Plus all the breaks that the lower and middle class love even though the rich benefit disproportionately. Such as the mortgage interest deduction.

Metta

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Re: How could anyone ever fill out his own tax return?
« Reply #9 on: January 30, 2015, 02:09:11 PM »
I also believe that most people should learn how to do their own taxes. I see no reason why someone who qualifies for 1040EZ would ever need to be confused. But they are. They get their W-2s in the mail and they are immediately overwhelmed. "What are all these boxes and numbers? What am I supposed to do?!" And then their brains shut off and they hire someone to help them.

I did an amended return for a friend who had sold some investments for the first time. She didn't know to expect a 1099 (or didn't know what it was when it arrived). H&R Block filed her taxes without that information and without asking about it. Of course, she ended up with a letter from the IRS saying that she owed a bunch of tax (she had actually sold at a loss, but the brokerage company did not report the basis, so the letter was basing the tax owed off gross sales price).

When she went back to H&R Block, they wanted $300 to fix it. It was a relatively easy fix, but I still had to walk her through what a 1099 was and how to get a copy of it and why it was important.

I don't blame her. Walk down the street and ask random people what "tax basis" means, and they won't know. People frequently make the mistake of assuming that they owe taxes on the entire sales price of something. But you can't know what you don't know. How am I supposed to learn what "basis" is if I don't know that word? How do I look up what a 1099 is, if I don't know that I'm supposed to have one.

Also - I don't think paper filing is a badge of honor. The IRS discourages it because it's less secure (identity theft), because the error rate on paper returns is 21% vs 0.5% for efiling, because it takes longer to process, prone to mailing errors and more labor intensive for them.

I grew up in a tax accounting business prior to e-filing or tax software for non-professionals and I remember my parents devoted some of their time each year doing pro bono simple tax returns for people who lived in elder homes or dodgy neighborhoods. I'm really glad to see that there are options for such people that do not depend on the kindness of strangers.

(They also prepared free tax returns for people's minor children with 1040EZ forms and if the children were along for the ride, my father would give them fatherly financial advice. I think the idea was that teenagers would accept financial advice more readily from a professional than from their parents.)

It seems to me that it is very easy to say that people "should" know how to do their own taxes but some of the people my parents helped had trouble reading standard English (either because they were immigrants or functional illiterates), much less the variant of English known as the US Tax Code. Many were terrified of the IRS. There are reasons to show compassion toward people.

Someone who can't complete a wage-earner's tax return should not graduate from high school.

Frequently those most in need of help did not graduate high school. What then?

austin

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Re: How could anyone ever fill out his own tax return?
« Reply #10 on: January 30, 2015, 02:14:42 PM »
I did my taxes by hand during a meeting last week. It took probably less than 20 minutes and I still had time I had to waste during the meeting. We only have two W-2s and a few interest income forms and the saver's credit so we have it easier than most but not by much.

johnny847

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Re: How could anyone ever fill out his own tax return?
« Reply #11 on: January 30, 2015, 02:28:29 PM »
why is it a badge of honor to do it by hand?

there is free or very inexpensive software($20, and its a tax deduction)  that saves time.

alot of it pulls data from your bank/investment accounts  and from you w2 electronically.

this means im not sitting there with a stack of papers squinting at lines.

there is no mention of an inability to do math, its a way to make paperwork easier on people.
i do believe you also have the option of using the software for free  and then printing it all out and mailing your forms.
it only cost to efile

and you refund gets to you faster


what do you gain by doing by hand and then using the software to check everything?

sounds like waste of time.
Neither the OP nor I were advocating doing it literally by hand. I use the IRS's Free Fillable Forms (which incidentally, does the math for you).

What do we gain doing it manually? We get to understand the tax code, so that we can plan ahead for our taxes. This can literally save you tens of thousands or more in taxes over your lifetime.

[Also, the tax software is tax deductible, but you must itemize to realize the tax deduction, which not everybody can do].

And I have outsmarted tax software before. H&R block's software minimizes federal and state separately, whereas I'm interested in minimizing the sum. There are situations when you can decrease your federal tax liability, but end up increasing your state liability by more than your decrease in federal.

I wish they would change the laws that say the IRS cannot write the software themselves. Seems silly when it could potentially increase collections and save taxpayers money.
I agree. Clearly the IRS has software that computes the correct tax bill based on your return. Sadly, this is impossible to do when a humongous tax refund industry already exists, as you mention.

Nothlit

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Re: How could anyone ever fill out his own tax return?
« Reply #12 on: January 30, 2015, 02:36:28 PM »
I use taxact as well. It is only free if your income is low enough. First year I used it it was free for me but since then I make too much. But still at less than $20 for the top level of support it isn't going to break the bank of anyone here.

I see people saying this all the time, but TaxAct's free online product does not have income limits. Maybe the downloadable one does?

mlipps

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Re: How could anyone ever fill out his own tax return?
« Reply #13 on: January 30, 2015, 03:08:01 PM »
I also believe that most people should learn how to do their own taxes. I see no reason why someone who qualifies for 1040EZ would ever need to be confused. But they are. They get their W-2s in the mail and they are immediately overwhelmed. "What are all these boxes and numbers? What am I supposed to do?!" And then their brains shut off and they hire someone to help them.

I did an amended return for a friend who had sold some investments for the first time. She didn't know to expect a 1099 (or didn't know what it was when it arrived). H&R Block filed her taxes without that information and without asking about it. Of course, she ended up with a letter from the IRS saying that she owed a bunch of tax (she had actually sold at a loss, but the brokerage company did not report the basis, so the letter was basing the tax owed off gross sales price).

When she went back to H&R Block, they wanted $300 to fix it. It was a relatively easy fix, but I still had to walk her through what a 1099 was and how to get a copy of it and why it was important.

I don't blame her. Walk down the street and ask random people what "tax basis" means, and they won't know. People frequently make the mistake of assuming that they owe taxes on the entire sales price of something. But you can't know what you don't know. How am I supposed to learn what "basis" is if I don't know that word? How do I look up what a 1099 is, if I don't know that I'm supposed to have one.

Also - I don't think paper filing is a badge of honor. The IRS discourages it because it's less secure (identity theft), because the error rate on paper returns is 21% vs 0.5% for efiling, because it takes longer to process, prone to mailing errors and more labor intensive for them.

I grew up in a tax accounting business prior to e-filing or tax software for non-professionals and I remember my parents devoted some of their time each year doing pro bono simple tax returns for people who lived in elder homes or dodgy neighborhoods. I'm really glad to see that there are options for such people that do not depend on the kindness of strangers.

(They also prepared free tax returns for people's minor children with 1040EZ forms and if the children were along for the ride, my father would give them fatherly financial advice. I think the idea was that teenagers would accept financial advice more readily from a professional than from their parents.)

It seems to me that it is very easy to say that people "should" know how to do their own taxes but some of the people my parents helped had trouble reading standard English (either because they were immigrants or functional illiterates), much less the variant of English known as the US Tax Code. Many were terrified of the IRS. There are reasons to show compassion toward people.

Someone who can't complete a wage-earner's tax return should not graduate from high school.

Frequently those most in need of help did not graduate high school. What then?

Well said. It's so elitist to snobbishly say taxes are easy and everyone could understand them if they just tried. Go volunteer at a VITA site and try to explain refundable v non refundable credits and then come back and tell me that everyone is capable of understanding this stuff. Sure, the average person might be capable if they tried, but guess what, 50% of our population is less smart than the average person, by no fault of their own.

Let's stick to knocking people for things within their own control around here.

Eric

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Re: How could anyone ever fill out his own tax return?
« Reply #14 on: January 30, 2015, 04:23:19 PM »
Well said. It's so elitist to snobbishly say taxes are easy and everyone could understand them if they just tried. Go volunteer at a VITA site and try to explain refundable v non refundable credits and then come back and tell me that everyone is capable of understanding this stuff. Sure, the average person might be capable if they tried, but guess what, 50% of our population is less smart than the average person, by no fault of their own.

Let's stick to knocking people for things within their own control around here.

You don't have to know that to be able to do your own taxes though.  You just need to be able to read and follow instructions.  Certainly more than half of the country can read.  I hope.

Davids

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Re: How could anyone ever fill out his own tax return?
« Reply #15 on: January 30, 2015, 04:30:30 PM »
Unless you own a business then you should be able to do your own taxes. If you own a business then I can see the need to have an accountant do your tax return and I mean a real accountant not some H&R Block bum.

solon

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Re: How could anyone ever fill out his own tax return?
« Reply #16 on: January 30, 2015, 04:33:03 PM »
I use taxact as well. It is only free if your income is low enough. First year I used it it was free for me but since then I make too much. But still at less than $20 for the top level of support it isn't going to break the bank of anyone here.

I see people saying this all the time, but TaxAct's free online product does not have income limits. Maybe the downloadable one does?

The free version is federal only. If you want federal + state, that's $20.00.

BrettB6

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Re: How could anyone ever fill out his own tax return?
« Reply #17 on: January 30, 2015, 04:51:48 PM »
mlipps -

Understanding tax law is very different from being able to fill out your tax forms. One involves understanding refundable vs. non-refundable credits. The other involves writing the amount from Box A here, and subtracting the amount on this line from that, and entering zero if the result is less than zero.

And yes, I have helped low income people with this task.

I don't believe I'm knocking people who don't have the capability (I disagree that it takes a 3 digit IQ to fill in form 1040EZ). I'm knocking any school that would graduate someone without teaching them this skill, and I'm knocking the constant barrage of advertising that convinces people it's just so hard there's no point in even trying.

mlipps

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Re: How could anyone ever fill out his own tax return?
« Reply #18 on: January 30, 2015, 05:35:51 PM »
Well said. It's so elitist to snobbishly say taxes are easy and everyone could understand them if they just tried. Go volunteer at a VITA site and try to explain refundable v non refundable credits and then come back and tell me that everyone is capable of understanding this stuff. Sure, the average person might be capable if they tried, but guess what, 50% of our population is less smart than the average person, by no fault of their own.

Let's stick to knocking people for things within their own control around here.

You don't have to know that to be able to do your own taxes though.  You just need to be able to read and follow instructions.  Certainly more than half of the country can read.  I hope.

I just don't think that's true, based on the number of people who come to us having missed very important credits like EITC when filing on their own. And more people have complications than I ever expected. Not mention the mess of ACA exemptions to figure out this year.

I do think more people are capable of doing it than believe they are, but if people want to use a software or pay someone to do it for them, I think it's unkind to mock them for that.

MrsPete

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Re: How could anyone ever fill out his own tax return?
« Reply #19 on: February 01, 2015, 09:05:30 AM »
I was thinking about this same thing just the other day. 

I have a student who's, well, a bit of a hard-luck case.  Mother abandoned her.  Father is in some low-paying job, though he seems to be a nice guy.  And everything happens to them:  In the year I've known her, her house has been robbed . . . her pipes froze and burst . . . someone killed her dog.  She took a job working "under the table" for a party-planner, and after doing a massive 4-day job for her, her boss fired her . . . and didn't pay her for that work; obviously, she had no recourse because she had been working illegally.  Socially she's a wreck.  MUCH of this junk she and her father bring on themselves, but I like her and want to see her do well.  I think half of this is caused by living in a crappy neighborhood where bad stuff happens -- often, and the other half is that she and her dad just don't think things through. 

Anyway, the other day one of my other students was asking about FAFSA, and I told her that she should complete the form as soon as her parents had finished their taxes . . . Miss Hard-Luck piped up with, "Oh, well then I can do mine now because my dad and I just went and had our taxes done last weekend!"  I wanted to say, "You whine that you can't afford lunch, yet you paid someone to do something easier than your math homework?" 

I know that in 2014 she only worked (legally) at a grocery store for a couple months.  I'm 100% certain that she could've done an EZ form -- and she is smart!  Academically smart, that is.  She could do that form. 

I think the thing is, people ASSUME that taxes are hard.  And they don't even try.  That, and people fear making a mistake and being fined.



Zikoris

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Re: How could anyone ever fill out his own tax return?
« Reply #20 on: February 01, 2015, 12:00:41 PM »
To my understanding, up here in Canada our government is phasing out paper returns entirely over the next few years. They ended Telefile a year or two ago (you used to be able to call in and file your return by phone), and they've stopped automatically mailing out the fillable forms.

My mom still does her taxes by hand, and it apparently takes her about three hours. SHe's the only person I know who does. I filed my first two years manually, then realized it was a pointless waste of time and switched to free electronic filing (there are several options available in Canada).

johnny847

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Re: How could anyone ever fill out his own tax return?
« Reply #21 on: February 01, 2015, 12:06:01 PM »
They ended Telefile a year or two ago (you used to be able to call in and file your return by phone), and they've stopped automatically mailing out the fillable forms.
I'm just curious - how did this even work? Did a human on the other end jot down the numbers for every line/box? Or was it an automated phone system?

SnackDog

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Re: How could anyone ever fill out his own tax return?
« Reply #22 on: February 01, 2015, 12:10:57 PM »
I haven't calculated my own returns in over a decade. And try as I might, I have not been able to come close to following the hundred page returns filed on my behalf.  The best I can do is verify the correct input figures are used (income, deductions) but after that I am completely lost.  Still, I am determined and sit down to read them every year.  Once I get past the first 20 pages and knee deep in AMT calculations, I'm lost.

Zikoris

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Re: How could anyone ever fill out his own tax return?
« Reply #23 on: February 01, 2015, 12:20:52 PM »
They ended Telefile a year or two ago (you used to be able to call in and file your return by phone), and they've stopped automatically mailing out the fillable forms.
I'm just curious - how did this even work? Did a human on the other end jot down the numbers for every line/box? Or was it an automated phone system?

I believe it was an automated phone system, similar to the telephone banking most Canadian banks offer.

netskyblue

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Re: How could anyone ever fill out his own tax return?
« Reply #24 on: February 01, 2015, 12:24:58 PM »
If people should learn how to fill out tax forms as part of growing up, then it should be taught.  I'm 31 years old.  Of course I can read, add, subtract, multiply and divide.  Therefore I should be able to fill out a tax return, right?  Problem is, I've never SEEN a tax return.  I wouldn't even know where to get one.  These things just aren't being taught.

Rural

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Re: How could anyone ever fill out his own tax return?
« Reply #25 on: February 01, 2015, 12:29:21 PM »
They ended Telefile a year or two ago (you used to be able to call in and file your return by phone), and they've stopped automatically mailing out the fillable forms.
I'm just curious - how did this even work? Did a human on the other end jot down the numbers for every line/box? Or was it an automated phone system?

I believe it was an automated phone system, similar to the telephone banking most Canadian banks offer.


The US had a similar voice telephone tax filing system called Telefile (now discontinued). I used it for a couple of very simple years.


http://en.m.wikipedia.org/wiki/TeleFile

johnny847

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Re: How could anyone ever fill out his own tax return?
« Reply #26 on: February 01, 2015, 01:33:10 PM »
They ended Telefile a year or two ago (you used to be able to call in and file your return by phone), and they've stopped automatically mailing out the fillable forms.
I'm just curious - how did this even work? Did a human on the other end jot down the numbers for every line/box? Or was it an automated phone system?

I believe it was an automated phone system, similar to the telephone banking most Canadian banks offer.
Cool beans. I can see why they phased it out.


The US had a similar voice telephone tax filing system called Telefile (now discontinued). I used it for a couple of very simple years.


http://en.m.wikipedia.org/wiki/TeleFile

leherself

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Re: How could anyone ever fill out his own tax return?
« Reply #27 on: February 01, 2015, 10:50:46 PM »
This is kind of funny for me - it hadn't even really occurred to me to examine *why* I use TurboTax every year.  This year especially it was probably completely unnecessary, since all I had was two W-2s and a 1099, and took the standard deduction.

After thinking about it though, I don't see any need to alter it.  My mom started using it for me in 2001 (I graduated highschool two years early in 2004 - you do the math), and I've used the same account ever since.  It's also free for me, usually, since I'm military.  There are too many benefits to having everything in one place - the program remembers my data (including things like carryover deductions, depreciations, etc., in addition to more simple personal and employment information), and I've got every single tax return I've ever filed in my life all handily in one digital place if something were to happen to my hard copies.  And while *this* year's return was the easiest I've ever done, next year's return will be a completely different story, since I'm both buying a house and starting a new small business.  Since the price for all that convenience is $0... yeah, not apologizing for that one :).

Just amusing since I'd always thought that using a preparation software was the same thing as doing my own tax return.  I stand corrected!

KodeBlue

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Re: How could anyone ever fill out his own tax return?
« Reply #28 on: February 02, 2015, 11:17:13 AM »
They ended Telefile a year or two ago (you used to be able to call in and file your return by phone), and they've stopped automatically mailing out the fillable forms.
I'm just curious - how did this even work? Did a human on the other end jot down the numbers for every line/box? Or was it an automated phone system?

I believe it was an automated phone system, similar to the telephone banking most Canadian banks offer.


The US had a similar voice telephone tax filing system called Telefile (now discontinued). I used it for a couple of very simple years.


http://en.m.wikipedia.org/wiki/TeleFile

There was also a period in the early 90's when you could fax in your return, think that has gone away also.

zephyr911

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Re: How could anyone ever fill out his own tax return?
« Reply #29 on: February 02, 2015, 11:26:58 AM »

Well said. It's so elitist to snobbishly say taxes are easy and everyone could understand them if they just tried. Go volunteer at a VITA site and try to explain refundable v non refundable credits and then come back and tell me that everyone is capable of understanding this stuff. Sure, the average person might be capable if they tried, but guess what, 50% of our population is less smart than the average person, by no fault of their own.

Let's stick to knocking people for things within their own control around here.
It's hard to find people who can accurately explain refundable vs. non-refundable, even in the Tesla forums where everyone is presumably wealthy and well-educated... that said, I do actually agree WRT the wage-earner return in question. Every high school grad should be able to enter data from a W-2 on a one-page 1040EZ and follow the instructions to derive a result (refund or payment due).
Having done both VITA and paid tax prep, I think the fundamental thrust of the OP is valid - people in general are afraid to handle their own returns, and the industry cultivates that fear by maximizing fear of failure and playing to the desire for convenience and quick cash. I think most people, if they could get past the hesitation, would actually do just fine with their own returns. Is there a place for paid help? Sure. Does it need to be as huge and profitable an industry as it is? Hardly.

Zikoris

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Re: How could anyone ever fill out his own tax return?
« Reply #30 on: February 02, 2015, 11:32:54 AM »
Do Americans have an equivalent to StudioTax, the free Canadian program? It's so easy to use - they just ask you simple questions, you type in exactly what they tell you to, and they explain how to send it in to Revenue Canada. You'd have to be incredible mentally challenged to not be able to use it for a simple return.

Forcus

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Re: How could anyone ever fill out his own tax return?
« Reply #31 on: February 02, 2015, 12:00:56 PM »
I use Turbotax even though technically I don't have to. With the complexities of the tax code I feel that $30-50 to make sure I'm getting every deduction, etc., is well spent. I think in the near future I will possibly even exceed the capabilities of Turbotax but we'll see. Could I examine the entire tax code when doing my taxes, sure (I used to be a Contract Administrator, reviewing contracts with the government, reference clauses, etc., so I am very familiar with how governmental regulations / law is written). But I would be spending 10x the time I do now and would probably still miss something important. My time is valuable enough such the $30-50 is an easy decision.

Left

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Re: How could anyone ever fill out his own tax return?
« Reply #32 on: February 02, 2015, 12:08:39 PM »
Thought it was easy to fill out myself, I use h&r block's software and it keeps the info from year to year so I only update it.

I've used "liberty tax" before because they have a free day for healthcare workers each year. They have it for other government/civil workers too I think.

netskyblue

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Re: How could anyone ever fill out his own tax return?
« Reply #33 on: February 02, 2015, 12:18:02 PM »
Speaking of TurboTax, how do they come up with their prices?  Every year, they charge me a different price.

This year (my first year as married) we between us had:

3 W2's (1 mine, 2 husband's)
1 unemployement statement/form (husband's)
1 student loan interest form (husband's)
1 bank interest form (mine)
1 HSA disbursements form (mine)
1 form from the insurance marketplace people (husband's)

We also both had to enter the amount we paid in vehicle registration fees in 2014.

We filed federal & state taxes (Iowa) and Turbo Tax charged us $71.98.

Last year I was single, had 2 W2's, 2 bank interest forms, and 1 HSA disbursments form, filed federal & state taxes, and was charged $56.98.

Did one particular form make it cost $15 more?  Or is that because we're married?

In 2013, for my 2012 taxes, they charged $66.98.  That year I had 3 W2's, and only 1 bank interest form, but everything else was the same as the following year.

Left

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Re: How could anyone ever fill out his own tax return?
« Reply #34 on: February 02, 2015, 12:21:03 PM »
wait turbotax isn't free? use a free one instead? The federal form is free e-filing, the local for me is free to fill out/print then it charges to e-file. I just print and mail/take it there myself.


zephyr911

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Re: How could anyone ever fill out his own tax return?
« Reply #35 on: February 02, 2015, 03:57:13 PM »
MMM believes in insourcing everything. I'm OK with tax help if you have a business with employees, sketchy expenses, etc. You may need an accountant. But tax preparation services deserve the same treatment from Mustachians as Payday loan stores.
I use TaxAct for the super-cheap error-checking, as well as the ability to run scenarios for educational and planning purposes.
I maxed my IRA for 2014 last summer, but DW needs prodding... and, today, I was able to show her the instant 23% payback, between federal and state marginal rates and the RSCC, on the $5500 she will be contributing by April 15th.

zephyr911

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Re: How could anyone ever fill out his own tax return?
« Reply #36 on: February 02, 2015, 04:07:22 PM »
Speaking of TurboTax, how do they come up with their prices?  Every year, they charge me a different price.

This year (my first year as married) we between us had:

3 W2's (1 mine, 2 husband's)
1 unemployement statement/form (husband's)
1 student loan interest form (husband's)
1 bank interest form (mine)
1 HSA disbursements form (mine)
1 form from the insurance marketplace people (husband's)

We also both had to enter the amount we paid in vehicle registration fees in 2014.

We filed federal & state taxes (Iowa) and Turbo Tax charged us $71.98.

Last year I was single, had 2 W2's, 2 bank interest forms, and 1 HSA disbursments form, filed federal & state taxes, and was charged $56.98.

Did one particular form make it cost $15 more?  Or is that because we're married?

In 2013, for my 2012 taxes, they charged $66.98.  That year I had 3 W2's, and only 1 bank interest form, but everything else was the same as the following year.
That's too much, man. Look into TaxAct for error-checking with less hand-holding at a lower price. My returns are substantially more complicated than any of the ones you describe - joint return, multiple jobs for each of us, multiple rental houses, 2-3 Schedule C's, alternative energy credits... less than $20 every time, error-checked, efiled, and archived. Each year, I import last year's data and save substantial time on data entry - just update the W2s and work mileage, etc, and calculate as I go. For me, it's the best tradeoff for value. YMMV :)

Sibley

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Re: How could anyone ever fill out his own tax return?
« Reply #37 on: February 03, 2015, 10:24:03 AM »
I'm an accountant, and have prepared taxes for a living in the past. I've already done my taxes this year. I will be doing my parent's taxes, which are fairly complicated and will take me, with the software, at least 16 hours to complete. I can do an average wage-earners return in about 30 minutes. Two close friends asked for my assistance, which I will give. They will also get an extensive lesson in taxes which will hopefully leave them able to do their taxes next year. I'll help my sister if she asks, but she's a student and can get them done for free. I use tax software. Just because I can do it on paper doesn't mean I want to. I have better things to do with that time.

The tax prep software, paid or free, are a godsend. Anyone who disses them really is being a jerk. Just because you think it's easy doesn't mean it is. Just about everyone I know who's not trained is afraid of the IRS and doing their taxes. You want to see panic? Watch the average person get a letter from the IRS. (If they read any finance related website on a regular basis, they're not average.)

I can not tell you how many highly educated, perfectly competent people I know who turn into a puddle of uncertainty and fear when faced with the prospect of dealing with taxes. Those with less education are generally even worse off. Not even filling out a 1040, but just getting tax forms in the mail! Yes, it would really help if people were taught at least the basics. But they're not, and it's pretty much impossible to make sense of a tax return if you don't know what the terms at least mean. Most people are too intimidated by taxes to even try to self-educate.

So next time you feel superior, please remember that we are members of a very elite club. Have some humility, compassion, and understanding for the vast majority of people out there, and shut up about it being easy. Then offer the suggestion to try one of the tax prep softwares out there, and maybe even your assistance.

Ok, rant done.

Mississippi Mudstache

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Re: How could anyone ever fill out his own tax return?
« Reply #38 on: February 03, 2015, 12:27:15 PM »
This will be the first year I've worked up my taxes by hand. It was a very enlightening experience, and I'm glad I did it, since it will help me plan better for next year's taxes. Even if you do your own taxes using software like TaxAct or TurboTax, there is a bit of a "black box" effect going on. You just plug some numbers into a program and it spits out a result, without you having a clue what's going on behind the curtains.

For example, I had no idea before this year that:
  • Moving expenses are deducted directly from your AGI
  • Health insurance that isn't paid by your employer (like COBRA) is NOT deducted from your AGI
  • Tax preparation fees are only deductible to the extent that they exceed 2% of your AGI
  • You can only get the saver's credit if your AGI is below $60,000 - which means I missed out on it by $1900 this year :(
Heck, until last year, I didn't even know the difference between AGI and MAGI. This kind of stuff is critical if you care about your finances. I think everyone who is capable should do the work by hand at least once in their lives, just so they can get a better idea of the financial impact of certain decisions. It's amazing how many people are perfectly happy to pay their mortgage interest to get a tax deduction, not realizing that they only benefit from tax deductions to the extent that they exceed $12,400 (for a married couple). Of course, paying mortgage interest because you feel that you can get a better return by investing is another story altogether, and more defensible unless you have a ton of deductions.

johnny847

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Re: How could anyone ever fill out his own tax return?
« Reply #39 on: February 03, 2015, 12:56:18 PM »
I think everyone who is capable should do the work by hand at least once in their lives, just so they can get a better idea of the financial impact of certain decisions.
This is what I keep saying to people, and most of them shrug it off saying ugh it's too complicated.

And once you've done it the first time, the 1040 instructions always has a section at the beginning highlighting the changes between this tax year and last tax year's rules. So if your tax situation hasn't changed much, it should be easy enough to keep doing it by hand.

Mississippi Mudstache

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Re: How could anyone ever fill out his own tax return?
« Reply #40 on: February 03, 2015, 02:49:08 PM »
Yeah, now that understand how it works, I have no intention of using software or an accountant again, unless I start a business (which is a possibility). Even then, I'll definitely look into the possibility of doing it myself before I throw my hands up in defeat.

NotJen

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Re: How could anyone ever fill out his own tax return?
« Reply #41 on: February 04, 2015, 08:28:57 AM »
If people should learn how to fill out tax forms as part of growing up, then it should be taught.  I'm 31 years old.  Of course I can read, add, subtract, multiply and divide.  Therefore I should be able to fill out a tax return, right?  Problem is, I've never SEEN a tax return.  I wouldn't even know where to get one.  These things just aren't being taught.
Um, you've never looked over a copy of the tax return you've submitted?  When starting to do tax returns on your own, you can use previous years as a guide.  (And aren't you supposed to save copies for forever?)

I'm 35 and was never taught how to file a tax return (although it's not a bad idea to teach this).  Somehow, I always knew that I could get paper forms at the library. Of course these days, how do you find anything? Do an Internet search and you will be directed to the forms and instructions on the IRS website.

I am eternally grateful to my dad, who made me fill out my first 1040EZ on my own. Ever since, I've been learning each year as more complexity is added to my financial situation. I've never paid more than the cost of a stamp to file my taxes, and that makes me happy.

austin

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Re: How could anyone ever fill out his own tax return?
« Reply #42 on: February 04, 2015, 10:37:48 AM »
http://google.com/ <- This website will basically tell you how to do just about anything. Just type in your question and click the "Google Search" button.

Kris

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Re: How could anyone ever fill out his own tax return?
« Reply #43 on: February 04, 2015, 11:02:12 AM »
When my husband and I first got married, our situations were insanely complicated, due to many different factors (we'd both been married before and we had a lot of complex issues), so I was so overwhelmed that I decided to have someone we knew and trusted do our taxes.  It was an ego blow to me, but I had no confidence in my own ability to sort through it all.  For many years, the complexities kept me going to him.  Now, almost nine years later, I have found mustachianism and have decided I need to wean myself off of having someone else do it.  If all goes well, TaxAct will be my tax preparer this year.

Northerly

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Re: How could anyone ever fill out his own tax return?
« Reply #44 on: February 04, 2015, 11:06:48 AM »
http://google.com/ <- This website will basically tell you how to do just about anything. Just type in your question and click the "Google Search" button.

OMG that site is amazing. My indexed set of ten 3-ring binders with web addresses is probably obsolete now...

Cpa Cat

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Re: How could anyone ever fill out his own tax return?
« Reply #45 on: February 04, 2015, 11:22:06 AM »
http://google.com/ <- This website will basically tell you how to do just about anything. Just type in your question and click the "Google Search" button.

This is oversimplying things. I have found a lot of bad/erroneous information about taxation while researching questions using Google.

There are a lot of people out there who think they understand tax matters and who sound really convincing, but are just plain wrong.

And that's assuming you even know what your question is. A lot of people don't.

People should re-read Sibley's post. Because +1,000,000 to what he/she/it said.

frugalnacho

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Re: How could anyone ever fill out his own tax return?
« Reply #46 on: February 04, 2015, 12:08:27 PM »
This will be the first year I've worked up my taxes by hand. It was a very enlightening experience, and I'm glad I did it, since it will help me plan better for next year's taxes. Even if you do your own taxes using software like TaxAct or TurboTax, there is a bit of a "black box" effect going on. You just plug some numbers into a program and it spits out a result, without you having a clue what's going on behind the curtains.

For example, I had no idea before this year that:
  • Moving expenses are deducted directly from your AGI
  • Health insurance that isn't paid by your employer (like COBRA) is NOT deducted from your AGI
  • Tax preparation fees are only deductible to the extent that they exceed 2% of your AGI
  • You can only get the saver's credit if your AGI is below $60,000 - which means I missed out on it by $1900 this year :(
Heck, until last year, I didn't even know the difference between AGI and MAGI. This kind of stuff is critical if you care about your finances. I think everyone who is capable should do the work by hand at least once in their lives, just so they can get a better idea of the financial impact of certain decisions. It's amazing how many people are perfectly happy to pay their mortgage interest to get a tax deduction, not realizing that they only benefit from tax deductions to the extent that they exceed $12,400 (for a married couple). Of course, paying mortgage interest because you feel that you can get a better return by investing is another story altogether, and more defensible unless you have a ton of deductions.

You can also click over on turbo tax to look at the actual forms.  I used turbotax this year for the guidance and ease of use, but I double checked my stuff on the actual returns.  I even posted a thread when I calculated my tax savers credit using the IRS form and it was different than what turbo tax calculated, and I had to review the actual form in turbo tax to determine where the error was (turns out the not a full time student box was not checked for my wife, so turbotax thought she didn't qualify even though she did).   I suppose I could have just blindly accepted what turbo tax popped out, but I am glad I checked the actual forms and figured it out correctly.

eyePod

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Re: How could anyone ever fill out his own tax return?
« Reply #47 on: February 04, 2015, 12:35:47 PM »
I am not ashamed to use turbotax.

You should be. It's damn expensive and not a better value compared to TaxAct!

MonkeyJenga

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Re: How could anyone ever fill out his own tax return?
« Reply #48 on: February 04, 2015, 06:28:04 PM »
Um, you've never looked over a copy of the tax return you've submitted?  When starting to do tax returns on your own, you can use previous years as a guide.  (And aren't you supposed to save copies for forever?)

As I understand it, most individual returns only require a holding period of 3 years, unless you're committing fraud, in which case you may have bigger issues to worry about. From the IRS: http://www.irs.gov/taxtopics/tc305.html

NotJen

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Re: How could anyone ever fill out his own tax return?
« Reply #49 on: February 05, 2015, 07:36:54 AM »
Um, you've never looked over a copy of the tax return you've submitted?  When starting to do tax returns on your own, you can use previous years as a guide.  (And aren't you supposed to save copies for forever?)

As I understand it, most individual returns only require a holding period of 3 years, unless you're committing fraud, in which case you may have bigger issues to worry about. From the IRS: http://www.irs.gov/taxtopics/tc305.html
The way I read that, you only have to keep your supporting documentation for three years, but there is no mention of how long you should keep a copy of your actual filed returns. I can't find a reference for that.

Not that it really matters. The point is that if you have filed a tax return, you should actually have a copy you can review, so that you "know what one looks like".