the Limits of Turbotax or, Do I Need an Accountant?

Factual Questions
1

In the past I’ve used Turbotax (basic package) and been very satisfied with the experience. However, in the past my taxes have been relatively simple. One main job, a small amount of freelancing (1099) income and long-term Capital Gains.

I had kind of an unusual financial year though. I had a regular normal job part of the year. I had a small amount of freelancing income. I sold stock options. I sold some of my mutual fund and invested in something different. I moved to a different state (deductible expense+ possibly 2 state filings needed). I started paying for health insurance out of pocket (deductible expense?). I took a new job on a farm (I think for some reason this may be taxed differently).

So, can I use Turbotax this year? Or am I out of its depth and on to requiring the assistance of a (human) professional?

2

Turbotax= GIGO. In othewr words, if you know what numbers to plug in, it is wonderful. If you don’t- well now it does have a few reminders and hints. Yes, it sounds like you need some help. Some companies will -for a much lesser charge- review your taxes.

3

GIGO? “Garbage in, Garbage Out”? Okay, I admit it, shameless bump to front page.

4

TurboTax is a very good tool but it doesn’t do your taxes for you, it just organizes it and does the math. It should be able to deal well with all the situations you mentioned, but you need to understand what you’re doing. If you are totally unfamiliar with the tax rules regarding each of those points, then you either need to study up or go to a tax person. You’ll probably spend less time and be more comfortable doing the latter, although I have never used anyone to do my taxes so I can’t speak from experience. You might want to try a CPA instead of an H&R Block part-timer, though cost will be higher.

5

Is TurboTax capable of handling your situation? Of course.
Are you capable of handling the situation with a favorable result? Probably.
Is it worth your time? Maybe.

I did my own taxes until I incorporated. Now I have a pro do them for me and it’s well worth it. Since I don’t have to buy the software and I can write off the expense, it’s not even that much more expensive in the end.

Haj

6

My wife is a writer, so we handle that with TurboTax with no problems. Capital gains are well handled also.

I’ve done state moves, and they are a pain, but that was before TT. You’d have to buy two state packages, and I don’t know how well they handle this. There is a question about how long you lived in the state, so it might be fine.

I don’t know anything about farm labor. TT comes with tax forms and manuals, so you could buy a copy, try it out, look up the relevant passages, and punt to a professional if you are uncertain. We used a CPA before TT, and it was useful to see it done right first, and to know what was legitimate in terms of appreciation and deductions.

At the very least, you will be better able to understand what the CPA does if you use TT first. And I agree that 90% of the job is collecting the right receipts and information.

7

You may have to buy one of the fancier versions of TurboTax or TaxCut, rather than just using the “basic” package. Documentation on the vendor sites or the boxes in the store should provide information about the extra features you get for the more comprehensive versions.

I haven’t done part year state returns or farm income with either of these, but I have done fairly complex investment scenarios, stock options, and AMT liability with them. They worked fine. That DID require something above the base-level package though.

I used TurboTax for several years, and switched to H&R Block TaxCut when TurboTax had their debacle with “safecast” (c-dilla). Frankly, I think TaxCut is just as good, and I’m not inclined to go back to Intuit.

8

Intuit has a product selector so you know which version to get.

9

Hmm, looked more closely at the OP (BTW, Turbo Tax fan and son of an accountant here…)

No problem. Goes on the 1040. The only real trouble you could run into though, and this has nothing to do with Turbo Tax, is that depending specifically when during the year you made money from your various sources, the IRS may tell you you should have been contributing quarterly all year (estimated tax payments), in which case you might owe a penalty. TurboTax may be able to handle figuring that out (in my experience with the Deluxe version, it seems pretty sophisticated).

Depends specifically on how you were classified. If you got a 1099 from whoever paid you, it goes on the 1040 along with info from your W-2s. Otherwise, you’ll need a Schedule C or Schedule C-EZ. TurboTax works with both forms and will print the correct one for you.

Capital Gains. Your broker or vendor should send you paperwork that gets entered on Schedule D. TurboTax works with this as well.

You need to check and see if the states have a special Partial Year resident tax form. Turbotax gives you a free state version, but not two, and I don’t happen to know if their state versions have the proper partial-year forms. You shouldask Intuit, but it wouldn’t surprise me if they handled them. You’ll probably have to pay extra if you want TurboTax to do both partial year forms.

Offhand, I can’t remember if Insurance counts as deductible medical expenses or not. You need Schedule A. Turbotax handles Schedule A.

I’ve never dealt with Farm Income (Schedule F), but I was always under the impression that it dealt with income for the owner of the farm, but I could be wrong.

If you don’t want to do the legwork at the IRS website yourself to figure out what info you need, you probably want to get some professional help. Or at least get Taxes for Dummies, which can explain in plain English what you need and who to go to if you want help.

Be really careful when you go for pro help. We did our taxes for a couple of years with an Authorized Agent, or whatever it is they call an IRS certified tax preparer who has to go in for special training regularly and is supposed to be one of the best sources of help.

He had us declare someone as a dependent in a way that seemed blatantly against the rules. Sure enough, we got a note from the IRS indicating the error, which was exactly what it seemed to be. His response to our presentation to him of his error? “Challenge it!” Sorry, fuck that. I’m not getting myself on the IRS shitlist so you can wave your dick around, pal.

We own a house, have teacher deductions, various investments, and TurboTax has served us well so far.

10

They’re called Enrolled Agents. They’re kind of like CPAs who can only do tax.

Haj

11

That’s the one. They come highly recommended in general, but you still ought to check out references for any speific ones you consider.

12

Sorry to go off on a tangent but

Huh?

13

Intuit used an activation scheme similar to what Microsoft is using for WinXP and Office 2000 and on. It angered so many people that I believe Intuit is no longer using any sort that thing, though I believe it still says that it’ll only give you one free e-file.

14

Might I do a semi-hijack here and ask a question… I don’t think a new thread is warranted.

In 2004, I won $5000 in Vegas. I know legally I have to claim this as income. Does the casino send me a 1099 form? Do I have to request one?

Thanks.

15

They might send you a 1099. Otherwise, just claim it in the “other income” section of the 1040.

16

SafeCast, formerly called Ç-dilla, is digital rights management software. TurboTax for the 2002 tax year chose to install it with their product to assure that the purchased copy was used on only one computer. They succeeded instead in pissing off a large amount of their customer base, many of whom became very vocal about it in public forums. Some of them were simply hot under the collar because TurboTax was installing “spyware” (it wasn’t, really), or were irate that the thing installed SafeCast without telling you about it (and TurboTax uninstall didn’t remove it), others encountered a number of actual problems in the operation of the product. I got a downloadable copy online, in response to the email they sent out to previous year’s customers. It didn’t work right, and they wanted to mail me a CD copy. Instead I demanded a refund, and bought TaxCut, after checking the feature list on TaxCut to see that it would import the previous year’s return from TurboTax.

17

Squee -

I imagine the casino took some info from you before paying the cash. You’ll probably receive a W-2G in the mail. It will look like:

http://www.irs.gov/pub/irs-pdf/fw2g_04.pdf

18

Squee -

Come to think of it, they may have handed it to you with the winnings. Did you get something other than cash?

19

They should send you a 1099.

A few years back, I entered an Olive Garden sweepstakes for a trip to Italy.

I won a high end espresso machine instead. Really high end. As in they sent me a 1099 for it and I had to declare it on my taxes for that year.

Check your mail, it should arrive by the end of the month.

But be aware, if you can document your gambling losses, you can subtract them from your winings, I believe.

20

Thanks for the info everyone. .