Best US Tax Prep - Buy Software or Hire a Preparer?

[donheff]

We used a preparer for many years when DW was full time with multi-state income, self employment tax, and a lot of variability. When she semi-retired I followed the accountant the first year using Turbo Tax Deluxe and then switched over to doing it myself. Although our income is very predictable now, DW still gets a stipend from the firm that entails multiple states and self employment tax. In retrospect, I could have done it myself all along.

[gerntz]

The main thing my tax advisor/preparer does is inform me of the tax consequences of having/taking different kinds of incomes. That has saved me way more than his costs. I don't get that filling out the forms however myself.

[samclem]

Quote:

Originally Posted by Sarah in SC Am I the only Tax Act user?

No, there are others here. I tried it several years ago and it was okay, but there were some technical issues (I had to shut down my computer and change some things to get it to run, etc). I have Schedule C income and a solo 401K, I didn't know if it would handle those things well, and I just didn't want to go to the trouble to learn the stuff that's different from TT's approach. A lot of folks like Tax Act, but I have a low threshold for both computer aggravation and tax aggravation, so the $$ for something I already know and which runs without (even minor) glitches is worth it.

[WhoDaresWins]

I use a wonderful accountant who takes the box of receipts and statements I dump off at his place every year and magically renders by return mail prepared statements for my state and federal taxes. He is one professional that I think charges me way too little for his services, probably not much more than purchasing a tax software program.

I know some folks enjoy preparing their own taxes but I am not one of them.

[HighRoller]

I've been using Turbo Tax Deluxe for years now... In the past I would buy it at Wal-Mart so I'd have the physical CD but in the last few years I've just downloaded it directly from the Turbo Tax web site. Never had any problems either way and it's been very easy to use, save, edit, print, etc. I've never used the efile option but I may try it this year.

[donheff]

Quote:

Originally Posted by Sarah in SC Am I the only Tax Act user? I first learned about it here, maybe in 2008 or so, and have used it ever since. It is free, though if you want to do the e-filing you have to pay something for the state version. IIRC, it is much cheaper than TT. We have super easy taxes: no debt, no small business income, and no little deductions running around the house.

I learned about it here and used it to run what if scenarios before I started doing my own taxes. It seemed OK and you can't argue with free. I use TT Deluxe now because it is free with my Vanguard account.

[jim747]

Quote:

Originally Posted by donheff I use TT Deluxe now because it is free with my Vanguard account.

I don't have a Vangard account but it seems I read Fidelity will provide TT too if requested. Am I remembering right?

[Nords]

Quote:

Originally Posted by Siestatime Just wondering if I'm a chump. Do you guys use retail tax prep software or do you hire tax preparers to get you the biggest refund possible?

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Originally Posted by brewer12345 I use TT Deluxe. The problem with using a professional is that there are always gray areas and decisions to be made on your tax posture. If you DIY, you make the decisions and know exactly what has been done. If you use a pro, often they make the decisions and you may not even know there was a decision to be made. I play it very conservative, so I like DIYing and knowing that I made the straight arrow choice every time.

Quote:

Originally Posted by samclem Doing my taxes myself gives me a much better understanding of the opportunities to save on taxes in the future (and which talked-about opportunities aren't worth it to me) than I'd ever get if I left everything to a paid preparer. I guarantee that there are hundreds of thousands of middle income Americans who have their taxes done professionally and believe their mortgage is saving them lots of money, when they are really saving very little or nothing compared to just taking the standard deduction. I do know people who, every few years, do their taxes themselves and then pay someone to do them. They look at the differences and pay the preparer to explain them. Then they accept the advice they think is appropriate and use it in the following years. This might be worth doing if you have a complicated situation.

Quote:

Originally Posted by Siestatime Thank you all. That's what I thought. I have an accountant acquaintenance who calls me a chump because I settle for TurboTax's terms.

What Brewer & SamClem said.

I guess this "acquaintance" thinks that an accountant's worst nightmare is an educated client. Sounds like it's time for a new accountant acquaintance. One who helps other acquaintances figure out the answers which don't involve descriptors like "chump".

This year I'll do my father's tax returns on TurboTax. Then I'll start our own return, but the last of the K-1s won't come through until August so I'll file an extension. Then our daughter will file her own extension and come home on summer break to do her return, and this year she'll probably become a Texas resident. Of course she's done a half-dozen returns by now so she'll probably find a free version of TT to get it done on her own before running the numbers by me.

So I can't imagine paying an accountant for three sets of returns across two or three different states.

[rbmrtn]

Quote:

Originally Posted by Sarah in SC Am I the only Tax Act user?

Not at all, been using it since 98. I try to stay away from Inuit if possible, they always seem buy up something I'm using and like, then kill of the product.

[travelover]

I use Tax Act. I took a ton of tax loss harvesting during the crash and it is convenient to have the losses rolled forward automatically. I know that I could do it manually, but I'm happy with Tax Act.

[frayne]

I have used both Block and Turbo Tax software and find them both pretty good. Also worked as a paid tax preparer for the past five years for one of the big retail tax firms. I think the real value of using a paid preparer is finding someone you trust and who can give you good advice concerning tax strategy as well as some financial advice, in addition to doing an accurate return. Unfortunately most retail tax firms are driven by volume and don't really train their preparers in either of those areas.

[Gumby]

I have always done my own tax returns, even when I worked in one state while living in another. As Samclem notes, only by doing it yourself can you truly appreciate how taxes react to your own personal situation. And with that understanding comes a greater ability to organize your life in a tax minimizing manner. I have used the H&R Block product (formerly known as TaxCut) as long as it has been available. I find it easy to use.

[Gotadimple]

I have used all TT, TaxAct, and a few years ago switched to TaxCut. I like TaxCut the best, but all three do a fine job.

TaxCut is not the HR Block product.

-- Rita

[Dimsumkid]

Quote:

Originally Posted by jim747 I don't have a Vangard account but it seems I read Fidelity will provide TT too if requested. Am I remembering right?

Fidelity only gives you TT at a $20 discount, I know in a prior post, someone was able to do a specific request to get the cost reimbursed, I haven't tried this yet. I use TT Deluxe online (extra $20 to get the disc) by having a State Farm account. All I had to do was open an account w/$100 in it. Also heard you can open a credit card or just have an account (Insurance) of some type with them and you can get it free. I also get TT State free since I live in IL, not sure it applies to others. This will be my second year doing it this way, used to buy HR Block Deluxe and TT Deluxe in past years.

[JOHNNIE36]

I used Turbo Tax for years and never had a problem. Then in 2009 for the 2008 tax return year I ran into a lot of trouble because TT had not updated their software for a few crazy law changes and I ended up going to the free returns provided by AARP volunteers. The goofy changes in the law that screwed me up were:
1. In 2008 I had already taken my RMD early in the year. Congress then passed a law (for 2008 only) that allowed you to put that money back into your IRA or 401K. I put the RMD amount back in my IRA. That eliminated me paying taxes on that amount. Turbo Tax had no provision for doing that. In retrospect, even the IRS was screwed up because they audited me on that return for that reason.

2. Also, for 2008, I qualified as a "first time homebuyer" even though it was not the first home I ever owned. I got a $9500 credit but TT made it difficult to enter all the information required.

I was just lucky to find the AARP provided free filing that is provided in our retirement community. I also think that if your return is prepared by a professional, the IRS may look at it as more credible. My opinion.

[Brat]

I paid $30 for TT Delux w state yesterday at Costco.

[rbmrtn]

Quote:

Originally Posted by Gotadimple TaxCut is not the HR Block product. -- Rita

TaxCut, as far as I recall, was an H&R block product. But it is no longer available, replaced by H&R Block at Home in 2009. You can still order old versions at heir site.

H&R Block - H&R Block®

[RE2Boys]

I've used both TT and TaxCut (now called HR Block At Home) in the past. When I first switched to TT about 4 yers ago, I liked HR Block product a bit better. Switched to TT as I was able to get the softwar for free. But I may not be a good judge as I usually have a good idea what the results should look like. Worked for HR Block for five years and a CPA firm for last 6.
Biggest issue I've had with TT is it's handling of some state returns is cumbersome to questionable accuracy if you don't know what your doing and what the outcome should look like.
I frequently monitor the TurboTax live community board this time of year and by the questions, many folks have little understanding of how the various forms flow to each other having never done a return with pen & calculator. Biggest danger to using the software is not knowing when you need professional help. The more complicated your situation, the more knowledge you need to add to the software to prepare the return correctly.

[smurray5991]

I've used TT since 1999 for my own (relatively simple) returns, and have always liked it very much. Makes doing taxes kind of fun!

When my father died in 2000, he had been having his returns prepared by an accountant he had worked with for several years because of some more complicated investments, real estate, etc., but he basically did all the prep work for him putting the necessary data on spreadsheets for the various schedules, etc., so the accountant just had to put it into his proprietary software. It still cost beaucoup bucks, though! To help my mother, I continued to prepare the tax information in the same way for the accountant for 5 more years, which now included preparing a Family Trust return as well as the regular individual return (which even made the accountant fee more expensive). in 2006 I pulled the plug on the accountant and just started doing both my mother's returns myself as it was a lot (over $1000! by then) and I was doing most of the heavy lifting anyway.

However, I have to admit if I hadn't had the previous years of accountant-prepared returns as a cheat sheet/reference, I think it would have been very hard for me to complete the Trust return on my own (it's a separate TT product you have to buy for it). I even considered using TT's paid live-person checking service for the first year of doing it, but in the end was too cheap to do so. I have to admit I expected the IRS to haul me away in cuffs for making some fatal inadvertent error. That hasn't happened yet (6 years in), so I assume I'm not making major errors.

So basically I agree with RE2Boys that while easy to go through TTs questionnaires, unless you actually study the forms that TT spits out to see how everything is connected, or had prior experience doing the returns with paper and pencil, it is a bit of a black box. I feel reasonably okay with my understanding of what's happening with the 'regular' individual returns, but the Trust return, generation of a K-1, etc., largely remains a mystery.

[fh2000]

Quote:

Originally Posted by Brat I paid $30 for TT Delux w state yesterday at Costco.

I got my TT in Costco also yesterday for $39.99 (after $10 discount).

I always run few scenarios: include ours and 2 kids' investments (Form 8814 as part of kiddie tax rule) or file 3 returns with their as separate (Form 8615). Then I take the best results and file. Some years, I file all 3 returns, and some years just one.

This year, my eldest went to college. We sold one of her funds with a capital loss. I think I will try to include hers in ours and offset my other capital gains.