The first year we were married, we took our taxes to H&R Block. It cost us too much money, and they screwed up. Ever since, my wife has done them and not screwed up, even though she has to figure out self-employment tax. Now she downloads the forms and submits them online, which she did last Monday. We’ll be getting our refund in a couple of weeks.
My taxes are simple. I have income from one job and a handful of savings accounts. No dependents, standard deduction, only one adjustment to my income (student loan interest) I do them myself on paper. I used to do them online, which was quick and easy, but now I make too much money to eFile for free, and I’ll be damned if I’m going to give some website $20 to send a glorified email.
If I thought there were something to gain from using the software I’d give it a try, but in the years I used the websites for free, they never did anything different than I would have with a pen and paper.
If you have a basic understand of taxes and you have a simple return, you’ll be fine using the software. I did ours for years when the most complicated itemization we had was K-1 income. Now we send it off to an accountant because it’s gotten more complicated.
Keep in mind that even if you use an accountant, you’re still responsible for supplying all the information that they’ll plug in. By the time you gather all the forms and write down all the charitable contributions, for instance, you’re more than half way there. And if you get audited because you forgot to give your accountant a 1099 form, then having a professional file it won’t insulate you from penalties.
Am I the only one who does taxes myself, by hand, without software? It’s not that hard. Even the year when we had residency in three states, plus dealing with the switch from F-1 to permanent resident status, and we got married.
I figured it all out by reading various IRS and state agency info sheets. We had to write a declaration that we were giving up tax treaty benefits (so that we could gain joint-filing benefits). Each state had its own criteria for filing jointly or separately (we ended up jointly for the Feds, two states and one city, and separately in the third state).
After that year, taxes have been simple. 
This year I used H&R block’s software and it said I owed almost $2000 plus penalties for underpaying. I knew that wasn’t right, but after going over and over the figures I couldn’t figure out what was going wrong. The problem as others have said is, you just enter the figures it asks for but it doesn’t tell you what it is doing with them. So I started over with TurboTax (luckily you don’t have to pay for the software until you actually file) and TurboTax was much more straightforward with better explanations about everything. Now I am getting a refund. That’s a pretty big difference for just using different software.
I like TurboTax well enough but as others have pointed out it’s hard to get questions answered. I e-filed everything but when I went to print out my return for my records, it told me to send in forms that were not included with the printout (even though the cover sheet said they would be included.) so now I have to figure out what I need to send in. I just e-mailed TurboTax support with my questions, they say I will get an answer within 24 hours. So we will see how good their support is, I am not holding out much hope but I need to know what to send in!
Argh. Maybe next year I will just pay someone. I hate it though since our taxes are not that complicated, we itemize but just normal things like mortgage interest and student loans and stuff. TurboTax and the like should be enough for people like me.
I have always done my taxes manually (sort of), and my tax situation has often been quite complicated. I always itemize, have capital gains (well, losses have been more frequent since the dotcom bubble burst), and for a while had home sales and purchases, multiple states, and even Sub-S Corp income.
When things were easier, I started to use TurboTax for the Federal return. I felt comforted that it didn’t identify anything I wasn’t already aware of. Since then, I haven’t been able to justify the expense that, as Debaser mentions, isn’t just the list price, but the nickel and dime approach for state returns and e-filing.
I used TaxAct one year. Again, the freeware version wasn’t complete enough to be that useful, and I’m too cheap to pay for the additional features (of little value).
I now use Excel, but pretty much only to simplify the math in case I need to go back and make changes. I setup a template a few years ago, and now I just need to make a few changes each year to keep the calculations working.
Rigamarole mentions a $30 deduction that TurboTax found for him. Perhaps I can do that for dopers that are filing their own this year. There is a one-time 2006 deduction with a value ranging from $30 to $60 if you had a wireline telephone in 2006 and back a few years. Here is a Snopes link with some of the details.
Warning: I consider Snopes to be a legit site, but my Firefox reports blocking two POP-UPs on this link. You could also google “federal excise tax refund credit”. Snopes Link
So now I googled. Here is the IRS link.
I do my taxes myself since they are amazingly easy (EZ, in fact ). But if I did have something more complicated, I would have no problem using tax software. I would certainly never go to a preparer.
But I can certainly see why people go elsewhere; they are not computer-savvy or simply don’t know what the questions mean, even if the questions are offered to them. I’m relatively smart but the tax materials are not the easiest read; it’s almost like they think of ways to make it more difficult to understand.
As **PunditLisa ** said, though, you can’t sign away responsibility for what the preparer did, so it must be really scary to have no clue.
I agree. I’m a normal W-2 with some additional 1099DIV/INT investments who rents. The most complicated part of my return is the fact that I live in NJ and work in NYC. The only reason I wouldn’t use tax software is that I’d rather just save the $50. But normally, I’ll just use by dads copy of TurboTax
Before I started using the software, I did our taxes myself, by hand. Can’t use the standard deduction or the EZ, but it’s not complicated. It did, however drive me crazy checking and rechecking for arithmetic mistakes.
I can do ours by hand, & did so correctly (survived 3 “random” audits with minimal penalty) for 18 years. Turbotax is faster, and the math is correct. This year is Married Joint, 2 LLP, 1 sole-proprietor, assorted 1099’s, and 2 real jobs – just acquiring all the proper forms is a PITA. Turbotax has them all on one disc, plugs in the appropriate numbers from last year, and I don’t have to special-order ledger pages or green white-out.
We had a CPA do them year before last, just to see. $700 and she came within $10 of Turbotax, which turned out to be a math error (yes, I was pissed). H&R Block cost us $300 and missed 10 grand in deductions (depreciation apparently confused him, and he was really bad at 10-key-by-touch but wouldn’t admit it) 4 years ago. I was unimpressed by H&R Block, to say the least.
$60 for Turbotax + however much Quickbooks cost to upgrade - stress - a new 10-key (I kill one every year), and - time = well worth the stupid sales pitches through the programs.
I did my taxes and my SO’s taxes in a grand total of about an hour, including two federal forms, one non-resident Massachusetts, one part year resident for Massachusetts and one part year for California, which took longer than the other four combined. I would never pay someone for something that is so simple.
My father runs his own company. We’ve done the books with Turbotax since he started in 1995. Other than the yearly traumatic ritual of finding all his receipts, pay stubs, forms and the like, it takes maybe five hours of my time and costs him roughly three cans of diet coke and half a pepperoni pizza. Never been audited, even the year he qualified for an Earned Income tax credit, even after making 150 K the year before and the year after. I couldn’t imagine doing them any other way.
No, I don’t have any other expenses.
I don’t carry an inventory, don’t advertise, don’t have employees. The route calls for no payment of tolls or parking fees.
I simply pick up books at an unattended warehouse and deliver them to the 140-odd locations listed on my route sheet. I write down miles at the warehouse and miles at the last stop, subtract, and multiply the yearly total by the standard mileage rate.
I suppose that I could make some expenses up and even get away with it since I’m a mere Small Fish to the IRS, but I don’t.
I would be very curious to hear what these deductions are that your brother believes zenith and I are missing. (I too am in the situation where my only self-employment business expense is mileage.) It’s nice to be mysterious and claim that we’re basically too ignorant to know that we’re wrong, but I’m not buying into your claim that we’re missing deductions until some concrete examples are offered.
I use tax software because, as others have said, it relieves the mind over errors in arithmetic. However, I have always done my own taxes, and I understand each step and what deductions I’m owed. The software is merely an organizing (and adding) tool.
I can do my own and I do use TurboTax.
I did my federal using TT because I got my W2 early in January and I wanted to e-file. The state forms were not available until February 2 so I decided to just do them the old fashioned way.
My federal actually took me 30 minutes using TT because I have yet to find a 1040EZ option. If I had done them the old fashioned way, it would have taken me less than 5 minutes. But, it facilitates e-filing so I’ll pay the money and take more time.
I did my state taxes at the Library, wile visiting my mom. She seemed surprised that I was going to spend visiting time on my taxes and then she watched in amazement as I took slightly longer than 5 minutes to do them. It only took that long because I neglected to bring a calculator. All I do is enter my wages, withholdings and rent, and I’m done.
It’s tax time alone that I’m happy to have no assets, a decent but not great paying job, and no kids.
by the way, The first few times I used TT, I also filled out the forms. TT always came up exactly, to the dollar, what I got. My boyfriend, with his actual assets used to use TT until he started working in RI. Now he has an accountant do it, since he has to file in two states. Based on my experience with TT, I don’t understand why he uses an accountant.
You could deduct the cost of the tax software, or at least a portion of it. That goes on line 17, Sch C. All or part depends.
Your actual car expenses could be higher than the std rate- you have tags, taxes, depreciation, insurance, gas, repairs, maintenence, etc. YMMV.
How dod you get your business and bill for it? Mail? (Postage). Phone? (Long distance). Do you have a land-line almost entirely for personal and thus a cell almost entirely for work? Basic charges on the cell could be deductable. YMMV, consult a Tax Pro.
Do you have a Keogh or other retirement plan? You should.
But the whole point is that a Pro interviews you and it takes some time. By “Pro” I don’t mean those PT seasonal dudes down at H&R, I mean a CPA or EA. My Bro has not interviewed you, nor can he do so here on the board (nor is he accepting new clients). Thus, he has no idea what else he’d find. Perhaps nothing. But he claims he usually finds enough stuff to pay his fee. Just FYI, he has some clients that want to do Turbo-tax go ahead and do them that way, and he then will charge a much reduced Reviewing fee.
Now, if you have had a real Pro do them, like MadPansy64 did, and the circumstances haven’t changed a lot, then sure, go ahead and do them yourself. But until you have had that thorough interview by a real Pro, you don’t really know.
He also sez that if anyone here re-fi’d, a Pro can often find quite a few little deductions in your loan papers.
Oh, and Remember the Maine, dudes! The Spanish-American war is over, and we all will get a little extra credit, about $30 each. YMMV.
I wanted to TeleFile like I used to but I guess that option is gone? So the paper federal and state went in the mail (no computer at home); federal will direct deposit but state won’t.
I know about those deductions and have taken advantage of them. I figured out whether to take the standard business mileage deduction over actual expenses (standard was better for me). And the tax prep deduction is actually the reason I bother with TaxCut software–I can write it off.
I should have been clearer about those things, perhaps.
I have zero expenses in this regard. The people who want me to work for them come to me. I don’t advertise. My clients provide just about everything I need to do my job except for my brain.
Of course I should, but I can get that advice by reading simple financial planning materials.
I’m a lawyer. I’m comfortable enough with my knowledge of the tax laws that I believe it is unlikely that a CPA would find enough missed deductions to justify his fee.
Also, in my case, I actually have so many deductions that as I figure it, I don’t owe federal or state income tax this year. So, even if a CPA could find more deductions, it would be a fairly pointless exercise.
Thanks for answering, though.
So you are a tax attorney?
The answers were for the dude running a delivery service. You’re a lawyer, and you’d have CPE, Law books, subscriptions to legal digests, Bar dues…
“Quiet Business meals” with fellow attorneys to network, or your clients.
You make the mistake of assuming my self-employment is as a lawyer. It’s not. I have a consulting business based on my non-legal talents.
And no, not a tax lawyer, but just about all lawyers study some tax law in law school.
Not trying to hijack this thread, but blanket statements like “everyone who files Schedule C and does their own taxes is an idiot” are simply ignorant.