The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: VioletVixen on January 16, 2015, 05:46:05 PM
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How do you all feel about Turbo Tax? Do you think you save more or less by using it vs paying a professional? Does the software truly catch all possible savings/deductions?
Also, can I open and contribute the max to an IRA before April 15th and deduct that from my 2014 earnings? How do I open an IRA?
Thanks!
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If you have an uncomplicated return there is no reason to pay for a CPA. I have friends who use CPAs because the CPAs are shady and get them deductions they don't really deserve but that only really works if you itemize and you want to be dishonest.
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Hi,
I'm an unshady CPA. No software or person can gaurantee you will get all possible savings/deductions. You are your best advocate, so you shoulld educate yourself.
If it's an easy return, turbotax is your friend.
Ira contributions must be made by 4/15. You can't deduct a Roth IRA, but you can deduct a traditional, unless you made too much money. Just google for the income limits.
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Or even... do a paper return, reading all the instructions...
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I'm also an unshady CPA (unless you count my 5 o'clock shadow, ba-dum-tis).
Just like CS said, if your return isn't too complicated, I have no problem recommending TurboTax. Out of respect for others, I wouldn't even offer them my services if all they had was some W-2s and simple interest / dividend income. Once you start getting into owning separate businesses or other matters, then a CPA can definitely come in handy.
As for your question, using either software or a CPA will only give you savings/deductions based on the quality of the information you give it. A little education to know what to look out for can go a long way here.
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http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free
Some states also offer free e-filing. Through this program I am doing my taxes online with H&R Block, which offers free federal and state filing. In previous years I just used TurboTax and didn't research alternatives.
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First post. I use TT for our taxes...we have wage income, dividends, master limited partnerships, rental income, sometimes our itemized deductions exceed the standard deduction, foreign tax credit, and more. Software handles it all and the IRS hasn't questioned me yet.
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Just be aware that Turbotax has changed their offerings. Things you used to be able to do with Basic, now require Deluxe. Things that for years were fine with Deluxe now require Premium.
H&R Block has not dumbed down their software, but this is the first year I've used it. Honestly, I'm getting sick of Intuit and their games (long time Quicken and TTax user).
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Thanks, everyone. My taxes are uncomplicated, so I'm glad you all approve of Turbo Tax. :)
Is there any benefit to using "free file" vs Turbo Tax? It looks like TT is free this year for state and federal (1040EZ/A).
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FWIW, I switched to H&R Block software from TT and am pleased with H&R Block thus far. I see no significant difference between the two products and the H&R software is cheaper. Just make sure to buy the version that meets your requirements.
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Turbo Tax is excellent for straightforward returns, which most are.
I would encourage everyone on the planet Earth living in these United States to buy a copy of Turbo Tax. Oh that smells so good....yes!
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I have used turbotax for years and really like it. This year because of the changes TT has made, I am switching over to H&R blocks program. It says it can import the tax information from last years TT. I hope so.
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It does import just fine.
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Turbo Tax, HR Block. What about TaxAct?
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My father and I always buy the desktop version of Turbotax, as it allows for installs on multiple machines and we split the costs. I'm planning to run my taxes through the software, and then find a CPA and compare our results. I said this last year as well, but I think this year is the year I get the second opinion.
We have had one home as a rental for a little over a year now, and purchased two in the fall to fix up. Also did a backdoor Roth for the first time due to a one year salary bump, and I think we are also facing AMT.
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It's fairly user friendly so long as you know the basics (i.e. what is an annual W-2 form, 1099, etc), so you recognize what you need to gather.
From there, they ask you a bunch of questions to help make sure you have included everything. In my view, it's a nominal fee in exchange for some comfort that you got your taxes (substantially) correct. There are some weird laws that may go under the rug, but most people can probably get through Turbotax/HRBlock/Tax act/other software.
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It does import just fine.
This depends on what OS you run. Now... you shouldn't be running WinXP. I don't... but... I run Linux and use a VM for doing taxes. If you try to use an old WinXP, H&R block will crash mercilessly. The real answer here is: use a real, supported OS. But if you are still using XP... it will not import. (I had to upgrade my tax VM to get past it.)
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Okay, if H&R Block runs, it imports last year's TTax file just fine. ;-)
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Or be like my grandfather who does his return by hand, including a hand written ledger of all of his stock trades. His argument is that there is no 25 year old IRS auditor that is willing to track down all those trades. The extra workload for them keeps him from getting audited.
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Turbo Tax, HR Block. What about TaxAct?
It works fine too. There are free versions of all of them.
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Honestly, I'm getting sick of Intuit and their games (long time Quicken and TTax user).
A-men.
This thread has me seriously thinking about switching. I'll have to see since I have some self-employed business income.
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Okay, if H&R Block runs, it imports last year's TTax file just fine. ;-)
I wasn't clear. It runs fine on XP. It crashes on import. But: XP is dead, so really not a huge issue I think.
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After re-reading the title of this thread this morning I have to say me or any other CPA would totally kick TurboTax's ass in a fight. Not even close.
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Another vote for "just read the instructions and fill out the form" if you have a straightforward return (only income on W-2s and 1099-INT/DIV, etc).
I kinda like doing this because it gives me a good feel for how our tax code works. Also gives me a good intuition about how valuable certain pre-tax things (401k contributions, etc.) can be.
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Thanks for the opinions! I just started my return on TT to see if it really was "free," but as soon as I went to fill out the HSA form it wanted me to "upgrade" because my taxes were suddenly not "simple." Is this what you mean by the "games" that TT is playing? I don't think I'm going to finish my return with them because they also wanted me to upgrade right when I started just for them to import last year's information...
I have a sort of unrelated question and don't want to start a whole new thread for it. From what I put into the TT software so far, it looks like I owe taxes this year. I got a nice refund last year and the only change this year is my Roth 403b contributions...do those get taxed at the END of the year and not as they're being withheld from my paycheck? If that's the case, can I recharacterize those contributions to a Traditional 403b and still benefit from the tax savings for 2014?
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Thanks for the opinions! I just started my return on TT to see if it really was "free," but as soon as I went to fill out the HSA form it wanted me to "upgrade" because my taxes were suddenly not "simple." Is this what you mean by the "games" that TT is playing? I don't think I'm going to finish my return with them because they also wanted me to upgrade right when I started just for them to import last year's information...
TaxAct may be worth a look. Or maybe https://sites.google.com/site/excel1040/?
I have a sort of unrelated question and don't want to start a whole new thread for it. From what I put into the TT software so far, it looks like I owe taxes this year. I got a nice refund last year and the only change this year is my Roth 403b contributions...do those get taxed at the END of the year and not as they're being withheld from my paycheck? If that's the case, can I recharacterize those contributions to a Traditional 403b and still benefit from the tax savings for 2014?
Not sure what you mean by "only change"...? Do you mean you income didn't change, and you had no 403b in 2013 but in 2014 you had a Roth 403b? Or did you have a traditional 403b in 2013 and a Roth of the same amount in 2014?
You can recharacterize IRA contributions, but not 403b contributions.
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http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free
Some states also offer free e-filing. Through this program I am doing my taxes online with H&R Block, which offers free federal and state filing. In previous years I just used TurboTax and didn't research alternatives.
yep, free is good. Used the hr block on line. Great results.
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If you have an uncomplicated return there is no reason to pay for a CPA. I have friends who use CPAs because the CPAs are shady and get them deductions they don't really deserve but that only really works if you itemize and you want to be dishonest.
being dishonest on taxes is like telling the gun robber your pockets are empty. Whatever that means?
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MDM, I started my Roth 403b in September 2013, so I didn't contribute as much in 2013 as I did in 2014; however, I didn't think Roth contributions would make me owe taxes, unless that's not the reason I owe? I made about 5k more this year. Last year was about 53k, this year 58k. Nothing else changed. Still MFJ with one income. I didn't change my withholding, either. Maybe I won't owe when I finish the return, but I remember the minute I entered my W2 last year I had a refund and not a debt...
I'll take a look at Tax Act and HR block. Thanks!
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CPA here; no longer in public practice so I can't use our awesome software anymore...
I picked up Taxact this year and it's pretty good. I find it frustrating that the forms are buried b/c I know what I need but walking through the wizards and Q&A stuff can be a little annoying.
Please don't go to a CPA unless you actually need to. Generally it will become apparent when the time is right.
Sometimes you can also find some good Enrolled Agents(EA's) who will do a good job.
As far as "shady CPAs" go... It's a black eye on our profession if there is someone out there who is doing things they are not supposed to be doing. Please be aware that sometimes what is happening is perfectly legal and the person bragging about it may not really understand what's happening and may sell it like they are getting away with something when they are actually fully within the law. I'm in my mid 30's and as I get older it constantly surprises me how little some people understand about things that significantly effect their lives.
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...however, I didn't think Roth contributions would make me owe taxes, unless that's not the reason I owe?
You are correct: Roth contributions should have no effect on taxes.
I made about 5k more this year. Last year was about 53k, this year 58k. Nothing else changed. Still MFJ with one income. I didn't change my withholding, either. Maybe I won't owe when I finish the return, but I remember the minute I entered my W2 last year I had a refund and not a debt...
Hmm...given similar inputs, it is reasonable to expect similar results, so it isn't obvious why yours are different.
One thing to consider: create a spreadsheet with columns for the years, and rows for the entries and calculations on Form 1040 (and other forms and worksheets as needed). That's a good way to compare one year to another. Even more useful, you can project next year's taxes with this tool.
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...however, I didn't think Roth contributions would make me owe taxes, unless that's not the reason I owe?
You are correct: Roth contributions should have no effect on taxes.
In this case this is incorrect. OP has an AGI of less than $60k while filing MFJ, meaning OP qualifies for the Saver's Credit. OP qualifies for a 10% credit for the first $4000 in contributions.
http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29 (http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29)
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If you have an uncomplicated return there is no reason to pay for a CPA.
I agree with this sentence. If your tax return is pretty basic, let you and TurboTax do the work. When my parents died and I had to deal with a house sale in a different state, trying to figure out the basis, etc., then we switched over the a CPA. Then I inherited a bad investment that went through bankruptcy court and then started making payments to its investors. At that time, we had already made the switch to a CPA, and we have continued. I am not up-to-date on tax laws like I used to be, and it is well worth it to have a CPA prepare them.
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...however, I didn't think Roth contributions would make me owe taxes, unless that's not the reason I owe?
You are correct: Roth contributions should have no effect on taxes.
In this case this is incorrect. OP has an AGI of less than $60k while filing MFJ, meaning OP qualifies for the Saver's Credit. OP qualifies for a 10% credit for the first $4000 in contributions.
http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29 (http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29)
This is great advice that I concur with, as I myself have just found out about this credit.
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In this case this is incorrect. OP has an AGI of less than $60k while filing MFJ, meaning OP qualifies for the Saver's Credit. OP qualifies for a 10% credit for the first $4000 in contributions.
Thanks, good point, and given that I recently added the Saver's Credit to the Case Study spreadsheet (http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/msg274228/#msg274228), one I should have remembered.
Another good example (i.e., so you can track differences) of why keeping your own tax spreadsheet to do year to year comparisons can be helpful.
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I've been a fairly satisfied TurboTax user for the last 10 years...
For better or for worse, this will be the first year i switch over to a CPA.
NQ Stock Options, Relocation Expenses, Spouse acting as a 1099, lending club, and needing to file an extension because a property may be a resident or it may be a rental depending on decisions I make this year.
Tax software can handle most individual actions, but there is a point where its probably best to just hire a professional. What will take you hours to figure out with software they can quickly solve because its the 30th+ time they've seen the issue.
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I have a sort of unrelated question and don't want to start a whole new thread for it. From what I put into the TT software so far, it looks like I owe taxes this year. I got a nice refund last year and the only change this year is my Roth 403b contributions...do those get taxed at the END of the year and not as they're being withheld from my paycheck? If that's the case, can I recharacterize those contributions to a Traditional 403b and still benefit from the tax savings for 2014?
While I am suddenly not a fan of Turbotax (after this year's shenanigans) ... this may not mean anything. The way they walk you through things, they ask about income first (which may create taxes) and then ask about deductions (which may reduce taxes). The mid stream numbers they give you are not much more than "looky here, I am working".
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Hmm...given similar inputs, it is reasonable to expect similar results, so it isn't obvious why yours are different.
One thing to consider: create a spreadsheet with columns for the years, and rows for the entries and calculations on Form 1040 (and other forms and worksheets as needed). That's a good way to compare one year to another. Even more useful, you can project next year's taxes with this tool.
MDM, do you have a favorite spreadsheet that you use for this purpose? I am not proficient at creating complex Excel spreadsheets.
Johnny847, thanks for the credit tip! I didn't know about that.
Spork, I think you're probably right. I'm going to re-evaluate the different tax software options and not freak out before I enter my deductions. Sounds like my taxes do not require a CPA at this time, but now I can see when they would be the better option.
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Hmm...given similar inputs, it is reasonable to expect similar results, so it isn't obvious why yours are different.
One thing to consider: create a spreadsheet with columns for the years, and rows for the entries and calculations on Form 1040 (and other forms and worksheets as needed). That's a good way to compare one year to another. Even more useful, you can project next year's taxes with this tool.
MDM, do you have a favorite spreadsheet that you use for this purpose? I am not proficient at creating complex Excel spreadsheets.
Johnny847, thanks for the credit tip! I didn't know about that.
Spork, I think you're probably right. I'm going to re-evaluate the different tax software options and not freak out before I enter my deductions. Sounds like my taxes do not require a CPA at this time, but now I can see when they would be the better option.
Attached to this post is a template you might (or might not) find more useful than a blank worksheet.
It is a scaled-down version of what we use for our own purposes. As such, in some places is assumes "MFJ" status. It is not to be confused with real tax calculation software such as TurboTax, TaxAct, H&R Block, Excel1040.com, etc. It has some predictive capability, and with work on your (or anyone's) part could become very useful.
We use it partially for historical purposes, partially to double check our TT entries, and partially to incorporate tax effects as we plan throughout the year.
We use the Payroll tab to calculate the exemption allowances needed on a W-4 to "owe a little bit" each April.
Other things we have done for past years include programming the AMT calculation, part-year resident state taxes, and other forms. Those were discarded in the scaling-down, but are examples of what "could become very useful" implies.
You should at least be able to take your 2013 return, enter input values, and have the calculated cells match the calculations on the IRS form. I'd be happy to answer questions if you can't get that part to work. Also, some errors may have occurred during the scaling-down - let me know if something just doesn't look right.
The tax calculation is done with Visual Basic functions to cover all the tax brackets. You may have to enable the VB functions, depending on your security settings, for this to work. A slightly different way to do the tax calculation (w/o using VB), and some additional worksheet calculations, can be found in the Reader Case Study spreadsheet (http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/msg274228/#msg274228).
Where CPAs and tax software earn their money is knowing what options are applicable to you. There are ~a couple dozen credits and deductions listed as line items on form 1040 alone. Most of those will likely not apply, and once you have a trustworthy prior year example there is a good chance you can do it all yourself if things don't change much.
One last thing: our first version, many years ago, was much simpler. Up to anyone to decide if this, or a blank sheet, is the best starting point for one's own situation. And it will require modification to be truly useful - but maybe little enough to make it worth your while.
ETA: slight modifications to template
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Check out TaxAct - I found them just as easy to use as turbo tax or HR block and they're free for more people/use cases.
http://thewirecutter.com/reviews/best-tax-software/
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Hmm...given similar inputs, it is reasonable to expect similar results, so it isn't obvious why yours are different.
One thing to consider: create a spreadsheet with columns for the years, and rows for the entries and calculations on Form 1040 (and other forms and worksheets as needed). That's a good way to compare one year to another. Even more useful, you can project next year's taxes with this tool.
MDM, do you have a favorite spreadsheet that you use for this purpose? I am not proficient at creating complex Excel spreadsheets.
Johnny847, thanks for the credit tip! I didn't know about that.
Spork, I think you're probably right. I'm going to re-evaluate the different tax software options and not freak out before I enter my deductions. Sounds like my taxes do not require a CPA at this time, but now I can see when they would be the better option.
Attached to this post is a template you might (or might not) find more useful than a blank worksheet.
It is a scaled-down version of what we use for our own purposes. As such, in some places is assumes "MFJ" status. It is not to be confused with real tax calculation software such as TurboTax, TaxAct, H&R Block, Excel1040.com, etc. It has some predictive capability, and with work on your (or anyone's) part could become very useful.
We use it partially for historical purposes, partially to double check our TT entries, and partially to incorporate tax effects as we plan throughout the year.
We use the Payroll tab to calculate the exemption allowances needed on a W-4 to "owe a little bit" each April.
Other things we have done for past years include programming the AMT calculation, part-year resident state taxes, and other forms. Those were discarded in the scaling-down, but are examples of what "could become very useful" implies.
You should at least be able to take your 2013 return, enter input values, and have the calculated cells match the calculations on the IRS form. I'd be happy to answer questions if you can't get that part to work. Also, some errors may have occurred during the scaling-down - let me know if something just doesn't look right.
The tax calculation is done with Visual Basic functions to cover all the tax brackets. You may have to enable the VB functions, depending on you security settings, for this to work. A slightly different way to do the tax calculation (w/o using VB), and some additional worksheet calculations, can be found in the Reader Case Study spreadsheet (http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/msg274228/#msg274228).
Where CPAs and tax software earn their money is knowing what options are applicable to you. There are ~a couple dozen credits and deductions listed as line items on form 1040 alone. Most of those will likely not apply, and once you have a trustworthy prior year example there is a good chance you can do it all yourself if things don't change much.
One last thing: our first version, many years ago, was much simpler. Up to anyone to decide if this, or a blank sheet, is the best starting point for one's own situation. And it will require modification to be truly useful - but maybe little enough to make it worth your while.
MDM, thank you for the spreadsheet! I did make use of it and modified it to meet my own needs (I even figured out how to make my own equations!).
Since this is my first year really trying to understand my taxes, I put my information into my new spreadsheet, Turbo Tax (what I have always used in the past) AND H&R Block. Turbo Tax was going to charge me about $60 to file, but H&R Block should be free for me this year. I have not used H&R Block before, but I am finding the software to be very glitchy compared to TT (certain pages just won't load when I click "Next"). I made sure my javascript was on, so I'm not sure if I'm going to get this to work for me. Any ideas? My goal is to have both the TT, H&R Block and my 'tracker' spreadsheet "match" so I can feel comfortable knowing why I got certain numbers and if I've made any mistakes on my spreadsheet.
Fuzz, I may check out TaxAct as well, but I think it will cost me to file with them.
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MDM, thank you for the spreadsheet! I did make use of it and modified it to meet my own needs (I even figured out how to make my own equations!).
Since this is my first year really trying to understand my taxes, I put my information into my new spreadsheet, Turbo Tax (what I have always used in the past) AND H&R Block. Turbo Tax was going to charge me about $60 to file, but H&R Block should be free for me this year. I have not used H&R Block before, but I am finding the software to be very glitchy compared to TT (certain pages just won't load when I click "Next"). I made sure my javascript was on, so I'm not sure if I'm going to get this to work for me. Any ideas? My goal is to have both the TT, H&R Block and my 'tracker' spreadsheet "match" so I can feel comfortable knowing why I got certain numbers and if I've made any mistakes on my spreadsheet.
Fuzz, I may check out TaxAct as well, but I think it will cost me to file with them.
Excellent - glad you were able to make it work!
We've always been satisfied merely to get TT & the spreadsheet to match, but might try TaxAct this year and if it works well enough, substitute TaxAct for TT next year due to the price difference.
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We've gone to a CPA for years, but the past few years he hasn't met with us before or after tax preparation and cost has creeped up to $200. I decided to do our own taxes last year and did a practice return, but went to him one more time per my husband's preference.
This year I did TT, TaxAct and H&R Block. The practice was good and I caught something I had missed. I did run into a problem with cost basis on some funds sold when we were simplifying our portfolio. H and R block imported information from Vanguard. I ended up going with them because it was the last program I tried. It was supposed to be free but ended up being $19.99. I was annoyed but didn't feel like going back and redoing the others, and it was way better than $200. There were some deals about putting a refund on gift cards and getting 5% on top of that. I chose to go for direct deposit.
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I used my parents CPA once and he charged $500. He required more of my time than Turbo Tax by calling and asking questions at random times over the course of two weeks. My parents tax information is more complicated because they are small business owners. However, for me there is no reason to use a CPA.
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MDM, thank you for the spreadsheet! I did make use of it and modified it to meet my own needs (I even figured out how to make my own equations!).
Since this is my first year really trying to understand my taxes, I put my information into my new spreadsheet, Turbo Tax (what I have always used in the past) AND H&R Block. Turbo Tax was going to charge me about $60 to file, but H&R Block should be free for me this year. I have not used H&R Block before, but I am finding the software to be very glitchy compared to TT (certain pages just won't load when I click "Next"). I made sure my javascript was on, so I'm not sure if I'm going to get this to work for me. Any ideas? My goal is to have both the TT, H&R Block and my 'tracker' spreadsheet "match" so I can feel comfortable knowing why I got certain numbers and if I've made any mistakes on my spreadsheet.
Fuzz, I may check out TaxAct as well, but I think it will cost me to file with them.
Excellent - glad you were able to make it work!
We've always been satisfied merely to get TT & the spreadsheet to match, but might try TaxAct this year and if it works well enough, substitute TaxAct for TT next year due to the price difference.
Yes, the spreadsheet has been very helpful in understanding how the calculations are done. I may try putting everything into TaxAct too, just because I was having an issue getting my TT and H&R State refunds to match. After an hour of tinkering, I figured out that the difference lies in the fact that TT is giving me a place to put my property tax and H&R block is NOT, so that $179 difference in my itemized amounts affects my State Refund because I am better off itemizing on the State. Does anyone know where to put the property tax amount in H&R?? I can't seem to find it. It's like they don't want to give it to me...
Workinghard and clarkfan1979, I agree that CPAs do seem very expensive, which is why I don't want to use one unless I really need to!
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MDM, thank you for the spreadsheet! I did make use of it and modified it to meet my own needs (I even figured out how to make my own equations!).
Since this is my first year really trying to understand my taxes, I put my information into my new spreadsheet, Turbo Tax (what I have always used in the past) AND H&R Block. Turbo Tax was going to charge me about $60 to file, but H&R Block should be free for me this year. I have not used H&R Block before, but I am finding the software to be very glitchy compared to TT (certain pages just won't load when I click "Next"). I made sure my javascript was on, so I'm not sure if I'm going to get this to work for me. Any ideas? My goal is to have both the TT, H&R Block and my 'tracker' spreadsheet "match" so I can feel comfortable knowing why I got certain numbers and if I've made any mistakes on my spreadsheet.
Fuzz, I may check out TaxAct as well, but I think it will cost me to file with them.
Excellent - glad you were able to make it work!
We've always been satisfied merely to get TT & the spreadsheet to match, but might try TaxAct this year and if it works well enough, substitute TaxAct for TT next year due to the price difference.
Yes, the spreadsheet has been very helpful in understanding how the calculations are done. I may try putting everything into TaxAct too, just because I was having an issue getting my TT and H&R State refunds to match. After an hour of tinkering, I figured out that the difference lies in the fact that TT is giving me a place to put my property tax and H&R block is NOT, so that $179 difference in my itemized amounts affects my State Refund because I am better off itemizing on the State. Does anyone know where to put the property tax amount in H&R?? I can't seem to find it. It's like they don't want to give it to me...
Workinghard and clarkfan1979, I agree that CPAs do seem very expensive, which is why I don't want to use one unless I really need to!
Trying to manipulate the software into doing what I want it to is one of the reasons I gave up on tax software. It's just much easier to do it yourself if you already know what deductions and or credits you qualify for, and what calculations you need to do. And, you can avoid answering all those questions about things that don't apply to you.
If you want a guide on some aspects of personal income taxes (and capital gains taxes in the next couple posts), I have a blog post about it. https://fiby40.wordpress.com/2015/01/12/personal-income-taxes/ (https://fiby40.wordpress.com/2015/01/12/personal-income-taxes/)
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What did TT change this year that is so frustrating? I haven't purchased a copy yet, but had planned to.
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Trying to manipulate the software into doing what I want it to is one of the reasons I gave up on tax software. It's just much easier to do it yourself if you already know what deductions and or credits you qualify for, and what calculations you need to do. And, you can avoid answering all those questions about things that don't apply to you.
If you want a guide on some aspects of personal income taxes (and capital gains taxes in the next couple posts), I have a blog post about it. https://fiby40.wordpress.com/2015/01/12/personal-income-taxes/ (https://fiby40.wordpress.com/2015/01/12/personal-income-taxes/)
I agree, it's frustrating to try to figure out where the software is putting the numbers you enter, especially when they are not very clear about the questions they ask. I FINALLY figured out that H&R was calling Property Tax "Real Estate Tax," which is why I missed checking the tiny little box that I should have to enter in that amount on a separate screen. It was obvious when using TT. Now that I sort of know what I'm doing and have run my spreadsheet through the test of TT and H&R, I feel comfortable with it and might just use it alone to file if I can't file for free using software next year. :) Thanks for the link, I will check out your blog since I am still a tax infant and have no idea what to do if I ever have Capital Gains...
What did TT change this year that is so frustrating? I haven't purchased a copy yet, but had planned to.
I am using the online software that they tout as "free federal/state" when in reality they want you to upgrade almost immediately (if you want to pull in last year's information or use some extra forms). I hadn't planned on paying to file, so it felt like false advertising to me. Apparently they also had a huge data breach and compromised a lot of personal information...
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I fired Turbo Tax last night after many years of using that software package. The reason why I gave TT the boot was that I received a misleading 1098-T from my son's University in which no tuition payments were on the form (Spring Semester of Senior Year) but the scholarship was on the form. TT didn't allow me to add tuition expenses in any other part of the form whereas Taxact anticipated this and let me add. So I basically would have missed out on the $2,500 CREDIT to my taxes owed and my Son would have had to report his scholarship as income instead of netting against tuition. Talk about adding insult to injury. Since I know what I'm doing I could have ended up paying a lot more in taxes by using TT if I didn't switch to another software package.
So a CPA could have saved you at least $2,500 in this case.
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So a CPA could have saved you at least $2,500 in this case.
Or, if you took the time to read the IRS publications yourself, you would have saved yourself $2500 without paying a CPA. It sounds like this is already the case, because you realized that TT was doing it wrong.
How do you think a CPA knows about tax credits and deductions? They've read the appropriate IRS publications or some other source that is based on the IRS publications.
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So a CPA could have saved you at least $2,500 in this case.
Or, if you took the time to read the IRS publications yourself, you would have saved yourself $2500 without paying a CPA. It sounds like this is already the case, because you realized that TT was doing it wrong.
How do you think a CPA knows about tax credits and deductions? They've read the appropriate IRS publications or some other source that is based on the IRS publications.
My main point was that people put a lot of faith in the tax software and follow blindly. Blissfully unaware that the tax software has limitations. I would wager that very few people read the tax law or would even know to think of reading it to check to see if the tax software is spitting out the correct numbers. So yes, in most cases a CPA that specializes in taxes would be a better alternative.
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So a CPA could have saved you at least $2,500 in this case.
Or, if you took the time to read the IRS publications yourself, you would have saved yourself $2500 without paying a CPA. It sounds like this is already the case, because you realized that TT was doing it wrong.
How do you think a CPA knows about tax credits and deductions? They've read the appropriate IRS publications or some other source that is based on the IRS publications.
My main point was that people put a lot of faith in the tax software and follow blindly. Blissfully unaware that the tax software has limitations. I would wager that very few people read the tax law or would even know to think of reading it to check to see if the tax software is spitting out the correct numbers. So yes, in most cases a CPA that specializes in taxes would be a better alternative.
For the general population...maybe a CPA will be better. But to get the full value out of a CPA, you need to ask them questions in the off season about tax planning, not just ask them to file your taxes. Tax planning is where the true savings come from
For members of this forum? I doubt it. People on this forum have already taken steps towards frugaltiy and are willing to learn new things (ie, how to invest). Learning the tax code so they can do their own tax planning (and save money on either CPAs or tax software, though really the money savings here pale in comparison to the savings from tax planning) should not be all that difficult in most cases (obviously if you're somebody like Mitt Romney who has a 300+ page tax return, this doesn't apply to you).
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The big TT issue this year was that they removed features from TT Deluxe and didn't make it as well known. In the past, Deluxe was able to handle investment income. Now, you have to pay more and get Premier. It's a fairly hefty fee increase for doing the same thing. TT claims that it was just making the boxed copy the same as their online software, but that's basically there way of saying, Suck it. If you complain enough, they'll give you a free upgrade this year. I wouldn't use TT, but I use my Dad's copy (on his computer), so it costs me $0 to file a more complex return. I have investment income and will end up itemizing this year.
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I'm a Turbotax fan, and was pleasantly surprised when Turbotax filed my Federal taxes free and only charged me $9.99 for state, because I'm Vanguard Flagship customer. So for all other Vanguard investors out there, click the Turbotax link after logging into your Vanguard account to get the discount. (Note: Size of discount varies based on amount invested).
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The big TT issue this year was that they removed features from TT Deluxe and didn't make it as well known. In the past, Deluxe was able to handle investment income. Now, you have to pay more and get Premier.
They backed down.
First they offered a $25 rebate if you had to upgrade, or, if you called in, they'd send Premier free (I got mine). Now, from what I've read, everyone with Deluxe will be upgraded free when you connect. Next year Deluxe will be like prior years as well.
H&R Block is trying to win people over by sending out free software if you send them your TTax receipt.
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CPA here; no longer in public practice so I can't use our awesome software anymore...
I picked up Taxact this year and it's pretty good. I find it frustrating that the forms are buried b/c I know what I need but walking through the wizards and Q&A stuff can be a little annoying.
Please don't go to a CPA unless you actually need to. Generally it will become apparent when the time is right.
Sometimes you can also find some good Enrolled Agents(EA's) who will do a good job.
As far as "shady CPAs" go... It's a black eye on our profession if there is someone out there who is doing things they are not supposed to be doing. Please be aware that sometimes what is happening is perfectly legal and the person bragging about it may not really understand what's happening and may sell it like they are getting away with something when they are actually fully within the law. I'm in my mid 30's and as I get older it constantly surprises me how little some people understand about things that significantly effect their lives.
My mom is an EA (Enrolled Agent w/the IRS) and prefers TaxAct to TurboTax.