Until this year, I have always used the 1040EZ form to file my taxes. Minimum of fuss and all that. However, I bought a house this year and I’m betting that my substantial DC income taxes would make some mighty sizable deductions. So, for the first time, I’m planning on filing the standard 1040 and itemizing deductions.
I’ve looked through those forms and instructions, and even though it looks like it will take a considerable amount of time to fill out everything, double check it, and so on, I don’t get the impression that I’m not fully capable of filling out those forms in accordance with how I understand the instructions (after careful reading, of course). But still, I’m a wee bit daunted about doing it for the first time.
I see all these income tax software programs, usually priced at $20 or $30, and I wonder, do they really make filing taxes that much easier? Have you used these tax programs and found them worthwhile, or worthless? Would you recommend that more folks use them, or might they only be useful for certain people? Might some programs be better than others? Is there some advantage to using these programs that I don’t know of, or are they just a boondoggle?
Absolutely. The first year I had slightly complicated taxes I saved $1000 by using tax software. That is to say, when I tried to figure out what I owed with just the forms and tables, I came up with something around $1000. When I used the tax software, I was about even. Granted, the “savings” was due to the software saving me from my ignorance and poor tax calculation skills, but still.
Besides, it’s so much easier and more convenient. Even if you don’t save a dime, you’ll save a lot of time.
I used TurboTax for a few years and loved it. It was simple to use and it spit out a neat, accurate return. I felt like a grown-up.
I didn’t use it after I bought a home about 14 months ago, for a few reasons. The deed is in both our names, but the mortgage is in mine alone, for starters. I had unloaded stock for the down payment, for another. It was all a little too tricky for solo flying. I turned over the whole mess to an accountant. This year, I’m turning it to the accountant again, and I’m going to do it myself with TurboTax, just to see how the two compare. If I have the hang of it, I’ll skip the accountant next year.
I’ve used TaxCut for the last 5 years or so, and it’s pretty easy and accurate. It’s not so easy to use if you have to do taxes in more than one state.
TaxCut and I believe TurboTax charges extra for the State modules to the main Federal program, but there’s usually some sort of rebate for the State modules.
Yes it is, if you are filling out anything more complicated than the 1040EZ.
I get the Tax Cut deluxe version which rebates filing fees and includes on state. I think this year I’ll upgrade my MS Money program, which is free after rebate.
I’m waiting for my employer to support automated downloads so I type in nothing!
Canadian here, but perhaps there are some parallels…
I definitely think tax software is worth it. It’s not just a matter of time savings, or eliminating mathmatical errors. Quicken (the only software I’ve found useful here) will look at various scenarios to determine which spouse should take which deduction. It also explains all the various tax rules in plain english and alerts you to items you may have missed.
Just make sure you read reviews of the software and purchase the software that best meets your needs (some basic programs cannot calculate home business income, etc.)
I’ve used Tax Cut for the past 4 or 5 years. The ease of use, reduction in time spent manually filling out forms, ease of E Filing from my PC, guaranteed accuracy, and guidance to deductions I may have missed make it well worth the money in my book.
If you’re just doing a 1040EZ, no need for a tax program. If you’re doing a very simple 1040 (sounds like what you have), then a tax program is probably also overkill. HOWEVER, I still see some advantages for you to use a tax program: (1) getting all your personal and tax information into electronic form, which maintains an electronic record and makes it easier to prepare your return in subsequent years ; (2) filing electronicially; and (3) minimizing the chance for any calculations or other errors such as using the wrong form or forgetting a new tax rule. A tax program (I happen to use TurboTax) will lead you through the maze of forms and should have the latest rules built in. And finally, for a measly $20-$25 (watch for the many rebate opportunities), it’s a no-brainer to pick up a tax program. Oh, don’t forget that you’ll also need to get the state program (many times free or cheap due to rebates again).
I’d say get the software. If it is too expensive, see if family members are interested in chipping in and using it on your computer.
I do corporate taxes for a living and would not do my own taxes without the software. After filling in all the blanks the first year, it will promt you in subsequent years. That prevents you from forgetting your w-2 from a prior employer or that check to the Boy’s and Girl’s Club the neighbor’s kid always seems to squeeze out of you.
It also keeps track of some tax attributes from year to year. For example, when tapping an IRA, it helps to know how much was previously contributed on an after tax basis. The software will track that over the years. You would have lost the details by the time it is necessary.
As your life becomes more complicated over the next ten years, you will be glad you made the investment upfront. If your life ever overwhelms your ability to do it on the computer, the accountant you hire will be glad to have the returns and workpapers the software can generate years later.
Having said that, you may not need the upgraded versions. Take a look on the backs of the various boxes. The $20 version will do just fine unless you are running a small business. The more expensive versions may not be worth the money to you.
Ravenman I also live in DC, not that that changes my answer to your question much. I would pay $100 for Turbo Tax. I am a financial guy, so I could do it myself, but I am impressed anew every year by how complete and helpful the program is. For example, if I am attempting to itemize something questionable I can easily look it up through Turbo Tax and be pretty confident about what I am doing.
I am a big fan as you can tell and can’t belive I used to do it all by paper.
It depends. If you have a fairly basic return the tax prep software will be very helpful. I recommend TurboTax over TaxCut.
However, if you have any taxable event that is remotely complicated then I’d recommend hiring an accountant if for no other reason than to CYA in case of an audit. I’ve been doing returns myself for about 7 years, and am very confident that I could withstand an audit. But the one year that my husband’s mother’s K-1 trust was dissolved, I acquiesced to the professionals.
I would also highly recommend filing electronically. It saves time, paper, and if you’re due a refund, you’ll probably get it deposited right into your checking account in 10 days or less.
Since it’s that time of year, do yourself a favor and get a manilla envelope now and label it “TAX STUFF.” You’ll be getting 1099s, 1098s, W-2s, etc in the mail shortly and no matter who prepares your return, you’ll need all those reports. The easiest way to do any return is to have all the docs together.
I use TurboTax, and you’d have to pry it away from my dead hands. It is worth it just to avoid all those situations where you fill out a 20 line form just to discover that you don’t qualify for a deduction. The simplicity of not having to fill in your information has already been mentioned.
My wife is a writer, and so her stuff is a bit complicated. We used to pay someone lots of money, and not getting any new deductions. Once we understood all the issues, we dumped him and went to TurboTax, with no downside. I used to do the state return myself, but then it got complicated, so I bought the state version (TurboTax Deluxe gives you a rebate on the state one) and discovered I had messed up and was about to overpay about $700! So the state package paid for itself many times over. Oh, and it literally takes seconds to do a state return with it - just a few questions about obscure situations, and you are done.
I don’t know what your time is worth, but even at minimum wage these things more than pay for themselves.
I’ve used TaxCut, and it’s usually worth it, except one year I had to do this weird thing with a pre-tax dependent care account that the program didn’t support.
But I’ve done it with and without software, and the pain it removes is worth the money.
I’m a long-time user of Turbo Tax, and it is absolutely worth the money - far more IMO. Just the time you save filling out forms is well worth the price.
It’s fair to note that two years ago TT came with a rather nasty copy-protection scheme that installed itself with nothing like the appropriate amount of notice and warning. They got suitably roasted for this piece of nonsense, and will probably not try to pull such a stunt again.
We have been paying $300 per year. This includes income from employment plus a small business and some non-IRA investments, federal and state forms completed.
I haven’t tried tried the computer programs. (yet)
Oh… I’ll have to either try the software or just tackle it myself via paper then. I’d really like to see a professional about it but there’s just no way I can manage that.
I pray every year to the tax gods I don’t get audited, 'cause I just follow instructions and hope I get this stuff right, but I probably don’t even make enough money to be even a blip on their radar so I guess right now it’s not a biggie.
When my income increases I am definitely going to hand this job over to someone that knows more about it, though.
:o
Anyone have recommendations on what the best tax program is for dealing with the small business stuff too? I may also have to start filing quarterly expected income or what have you next year, so I need to consider that as well.
(Sorry for all the questions, I’ve been meaning to ask where I should start looking for info on this stuff for a while and just saw it come up.)
