Tax prep recommendation: single, multi-state

Our family taxes have varied between “two weeks using the top-tier TurboTax version” and “team of accountants” for the last two decades, so I am out of touch with the simpler options. Some advice appreciated.

My daughter would be a 1040EZ filer except that she has W-2 income from two states, some unemployment and possibly some student-credit stuff to apply. I’d guess her income is no more than $10-15k last year.

What’s the least expensive prep tool or service that will catch all the nuances without going forwards and backwards through Federal, CA and CT tax docs for a week?

It’s almost always a mistake to use a tax prep service, because their employees are insufficiently trained. If you have half a brain, you’ll get a better result doing your taxes yourself. Aside from that, people with relatively small incomes, even with the minor complications your daughter has, don’t usually need complex tax returns. Nor do they face inscrutable tax issues. Fortunately, the IRS has translated its publications into English in recent years, and they’re now understandable. Obviously, you also need to examine state publications for the state in which she will file. Pay particular attention to how to declare and pay taxes on out-of-state income, and for the other state, how (and IF) to declare and pay taxes on nonresident income. She may need to file three returns (fed, CA, and CT), but I doubt any one of them will need to be more than a single page.

I suspect that Turbotax will be able to handle your daughter’s taxes. The program uses a Q&A process that will ask you if you’ve worked in more than one state.

I did my taxes with my own pencil and paper for 30 years. Then I used TurboTax twice, and H&R Block this year. The main advantage to the software is that they do the math for you, and they have all the forms. All very convenient. But you still need some basic understanding of concepts like “deduction” and “exemption”, and if you do understand them, then the software is not that much easier than the pencil. It is faster, though. And no problem with sloppy handwriting. Not much difference between Turbo and Block.

When my stuff was a little easier, I always just used the free version of TurboTax. I imagine the other free versions of the tax software listed on the IRS’s e-file site are pretty similar.

As far as I could tell, the only real issue with the free vs. paid one that would be relevant to most people is that it doesn’t automagically do your state return. For me, that was no problem since all I really had to do was plug the numbers from the federal return into the state one and mail it in. I suspect she could probably figure out how to do the state returns, but if not it gives you the option to upgrade at the end.

The IRS offers several options for free e-filing at www.irs.gov and California has a free e-file system at https://www.ftb.ca.gov/individuals/efile/allsoftware.shtml

It appears Connecticut is a bit late! but forms and a link to their free e-file is at http://www.ct.gov/drs/cwp/view.asp?a=1509&q=443614

I don’t really think this is true. I have a friend who started working for H&R Block in his retirement. They seem to have rather stringent training (and testing) requirements. They only let you work on returns that you are qualified for. If I am not mistaken, they have to take at least one course a year as well as a course on this year’s changes. (Aside from my friend, I have no affiliation with H&R Block).

Having said that, an intelligent person with an uncomplicated situation can certainly get by with something like Turbo Tax. The biggest part of doing your taxes is not filling in the return, it is gathering all the information you need, and you have to do this whether you fill it in yourself or bring it to a preparer. You can also take advantage of Block’s “Second Look” program. If you bring in last years return, they will ask you questions and examine it for free, unless they find more money and you have them file an amended return.