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

[Brat]

fh2000 is correct, I just looked at my Costco receipt. $39.99 after the $10 discount.

 

[pb4uski]

Given the OP's question, I would vote for tax software, but I'm curious, am I in a very small minority that sits down with the blank forms and fills them out manually ? I think I already know the answer !

I have always done mine manually as well. The last couple of years I have used the fillable forms from the IRS website. I save them to my PC, print copies, and mail to the IRS.

OMG! Why don't you just shoot yourself in the head? Wouldn't that be easier and less misery?

At the beginning of my career I prepared personal and corporate income tax returns - at first by hand - and later (late 70s mind you) by filling out forms that were input into a computer program. Today's software is so good there is NFW I would do them by hand. I do use the forms input rather than the Q&A part of the software.

I had to do a state tax return my hand for my great-aunt last year and it was a boring chore. I do my dad's trust return by hand and use the fillable forms from the IRS website but even that is a PITA but is is a very simple return and I'm too cheap to buy the trust return software which is pricey.

With respect to the OP, if your return is routine and no major changes for the tax year, I think software is the way to go - the bonus is that you learn a lot about your finances by doing it yourself compared to relying on a tax preparer. But it is sort of like any other maintenance activity (house, cars, or whatever) - you need to be able to recognize when you are in over your head doing it yourself and seek help if necessary.

 

[GalaxyBoy]

My brother the CPA once told me only chumps hire CPAs. Well, maybe if you have a complicated portfolio, own a business, etc., they're not chumps, but he always said most people who hire CPAs don't really need one. "The IRS makes lots of information freely available to you," he said, and this was in the days before the Internet was available to the general public.

I use H&R Block at Home, and I always get the cheapest version. It handles all I need, including Schedules A, B and D, and imports information from Quicken and downloads 1099s from the 'net. I don't see much point in paying for reference information available for free online, nor do I see paying for a state program when my state's form is trivially simple to complete by hand.

Actually, this year I bought the program in November in order to estimate my tax liability before the end of the year, then they mailed me a free copy that included the state program. Wish I had known they were going to do that and saved myself $15.

It's getting hard to find the most basic version in the bricks and mortar stores near me. I guess they want to sell the more expensive flavors. I also switched from TurboTax several years ago because TT was getting more and more expensive. I find HRB at Home as easy to use as TT was, at least the last time I bought TT.

 

[pb4uski]

i think the chumps reference is a bit harsh in that some people don't have the aptitude or interest in doing it themselves, but I would agree that if you have a typical middle class return that you are much better off doing it yourself and the bonus is that you will focus on your finances and tax situation in the process.

 

[ronocnikral]

Do it yourself. We had a CPA (and I agree, I was a chump) for 2 years. We could have spent just a little more time plugging everything into Turbo Tax than we did getting everything together. Then, when we got audited b/c of a blatant error the CPA made, she washed her hands of us.

The moral of the story is, I have across many people who I would deem to be idiots, and many of them are professionals in something. CPA's included.

 

[GalaxyBoy]

"Chump" was simply a reference to the original post in the thread and no offense was intended. I have a wacked sense of humor sometimes.

 

[Tree-dweller]

Are there any significant differences between Turbo Tax and H&R Block?

I have used H&R Block exclusively for many years, but was wondering if I should change to TT as most folks I know seem to use that and are happy for the most part.

I have a simple return, no salary ( FIRED in 2011 ), no rentals, no self employment, no exotic investments. The biggest section is my Sch D, as I do a fair bit of trading stocks.

However.....this year 2013 I was thinking of investing in MLPs which produce a monster document called a K-1. Which software package does a better job handling K-1s?

I've used the HR Block software for years myself, and am happy with it. Downloaded it again this year, using a link from retailmenot, for significant savings. Can't speak to K-1s.

 

[Texas Proud]

We use TT Deluxe online, discounted a few bucks through Fido. Nice feature is the auto-import of taxable data from your Fido acct. Vault is another nice feature, where TT auto-fills personal data from last year's return (also makes the TT product a bit more 'sticky').

We may haz 2 uPgrayd to TT Premier this year to handle a rental property...

You probably did not have to upgrade... the program will do the taxes correctly even on the cheaper versions... just do not have all the questions they ask....

 

[Nords]

Given the OP's question, I would vote for tax software, but I'm curious, am I in a very small minority that sits down with the blank forms and fills them out manually ? I think I already know the answer !

I have a different question: Why?

 

[BornonaBayou]

I use TT deluxe now, started using in 1994ish. Have my records going that far back. Keep them secure off the hard drive and on a flash/thumb drive. Always save 2 ways, once the TT20XX format and in the adobe .pdf format image. This way you can always reprint your returns from the pdf file.

 

[Alan]

Thanks for the great recommendation! I am a volunteer tax preparer, and work with a great team of volunteers. We tend to ignore the limits, as our team has several retired CPAs (even ignore the income limits as long as we can handle the workload!)

+1, I volunteered a couple of years and there were no limits on income or complexity, except military and foreign income, for which we were not trained.

I did feel a little resentment towards one guy though, even though he was a very educated and well mannered individual. He was a retired university Professor who had worked at Nasa and taught rocketry at a London university. His income was very high and he had a lot of stock trades etc to enter. Ours was a very busy center and some days we had to turn folks away, asking them to return the next time (there were 8 of us actually doing the returns 2 mornings a week).

 

[Gumby]

Just downloaded my copy of H&R Block at Home and learned a trick that saved me a little money. If you go directly to the H&R Block website, the "Deluxe" download (which includes one state) costs $44.95. However, if you go to this site H&R Block At Home Coupon codes (1 available) - UltimateCoupons

it costs only $38.21 (a 15% discount). The other H&R Block products are similarly discounted going through this coupon site.

 

[Dimsumkid]

Just downloaded my copy of H&R Block at Home and learned a trick that saved me a little money. If you go directly to the H&R Block website, the "Deluxe" download (which includes one state) costs $44.95. However, if you go to this site H&R Block At Home Coupon codes (1 available) - UltimateCoupons

it costs only $38.21 (a 15% discount). The other H&R Block products are similarly discounted going through this coupon site.

Amazon price for deluxe + state $27.95 pc/mac download or retail box shipped to you. If you wait closer to tax deadline, in past years, they put it on deal of the day or lightning deal as low as $19.

Amazon.com: H&R Block At Home Deluxe + State 2012 [Download]: Software

 

[Independent]

Given the OP's question, I would vote for tax software, but I'm curious, am I in a very small minority that sits down with the blank forms and fills them out manually ? I think I already know the answer !

I have always done mine manually as well. The last couple of years I have used the fillable forms from the IRS website. I save them to my PC, print copies, and mail to the IRS.

I've recently switched to the fillable forms on the IRS website.

But, I do all the math in my own Excel spreadsheet. I like understanding exactly how things go together - e.g. if I want to do a Roth conversion, how much room do I have in this tax bracket?

I then go over to the free Turbo Tax or TaxAct sites and walk through the "interview" and enter my data to see if I've missed something new. They have caught a couple things, so it's worth the extra time.

 

[Independent]

From the recent report of the Taxpayer Advocate:

13. The IRS Has Failed to Make Free Return Preparation and Free Electronic Filing
Available to All Individual Taxpayers
Problem
The IRS has not developed a comprehensive plan to give all individual taxpayers the option
to prepare and e-file their returns for free, despite the existing array of return filing options
currently available to “eligible” taxpayers.

Recommendations
Develop a government-provided electronic version of the Form 1040 with computational
capability that allows taxpayers to e-file all 1040 series forms and schedules, with links to
forms, instructions, related worksheets, and publications; develop a portal to a governmentcontrolled
database from which taxpayers can import third party data

I'm not sure why we should have to pay anyone for tax form completion software. In today's world, that's kind of the equivalent of paying for paper forms.

http://www.taxpayeradvocate.irs.gov...nual-Report-to-Congress-Executive-Summary.pdf

Note, the other parts of the report may also be interesting to some people here.

 

[Lakedog]

I've recently switched to the fillable forms on the IRS website.

But, I do all the math in my own Excel spreadsheet. I like understanding exactly how things go together - e.g. if I want to do a Roth conversion, how much room do I have in this tax bracket?

Same here with Excel. I have a spreadsheet that I have used for years and just update it with any tax code changes. I like being able to know at any point during the year where my fed taxes stand. With the spreadsheet, I can easily have my taxes done before I could answer all of the tax software questions.

 

[Gumby]

Amazon price for deluxe + state $27.95 pc/mac download or retail box shipped to you. If you wait closer to tax deadline, in past years, they put it on deal of the day or lightning deal as low as $19.

Amazon.com: H&R Block At Home Deluxe + State 2012 [Download]: Software

Dohh! I should have looked there.

 

[kaneohe]

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.

according to this Reporting Your Child's Income on Your Return
this may not be possible

"Probably the key point here is that the election isn't available if your child has capital gains or losses, other than capital gain distributions. Many people wonder if they can use this rule to move a child's capital losses to the parents' return, but this isn't possible. (Click here for more on capital losses of minors.)

 

[samclem]

I'm not sure why we should have to pay anyone for tax form completion software. In today's world, that's kind of the equivalent of paying for paper forms.

I think any official government software for this purpose would be just as "helpful" as the government guides presently published. The commercial companies have every incentive to make the software very user-friendly and they've done a good job. I'm cheap, but happily part with the money for TurboTax.

What I do resent is having to pay for e-filing (fees are still charged for e-filing some federal and state returns). If the government is trying to encourage e-filing, and if it's much cheaper for them to process these returns (as they claim) then why isn't it free for all taxpayers to e-file? As I understand it, the answer is that government has an agreement that they will not press for universal free e-filing (preserving a line of business for these companies) if the companies agreed to provide free e-filing for low-income taxpayers.

 

[rbmrtn]

If I was getting a refund I might pay for the efile, but since I have to send in a check, I just send the paper as well. I'd like to pay by CC ( to get the cash back rewards ), but they use a third party that charges a fee for that.

 

[audreyh1]

If I was getting a refund I might pay for the efile, but since I have to send in a check, I just send the paper as well. I'd like to pay by CC ( to get the cash back rewards ), but they use a third party that charges a fee for that.

Well, actually, it's just that the federal government, states and municipalities aren't willing to pay the fees to the credit card companies for customers using their credit, so they charge customers the fees up front.

A lot of us use the EFTPS - electronic federal tax payment system - that way you don't have to deal with mailing paper checks either.

 

[rbmrtn]

Well, actually, it's just that the federal government, states and municipalities aren't willing to pay the fees to the credit card companies for customers using their credit, so they charge customers the fees up front.

A lot of us use the EFTPS - electronic federal tax payment system - that way you don't have to deal with mailing paper checks either.

My state and county take CC with no fee. The EFTPS is for checks, to pay by CC they charge a fee.

 

[Gotadimple]

My state and county take CC with no fee. The EFTPS is for checks, to pay by CC they charge a fee.

Agree. They pass the fee they would normally pay to the CC company to you. The CC takes the fee and rebates it to its customers by giving them points that can be used as cash.

It's kind of a left pocket, right pocket deal.

-- Rita

 

[audreyh1]

My state and county take CC with no fee. The EFTPS is for checks, to pay by CC they charge a fee.

Whew! Mine sure doesn't! They wanted $2.50 per $100 to pay our property taxes with a credit card! (2.5%)

I say you have a great deal with your state and county if you can pay with a rewards credit card and with no fees, and your tax paying buddies paying by cash or check are getting the shaft. That credit card fee has to come from somewhere.

Yes, EFTPS uses electronic funds transfer - i.e. debit a checking account.

 

[audreyh1]

Agree. They pass the fee they would normally pay to the CC company to you. The CC takes the fee and rebates it to its customers by giving them points that can be used as cash.

It's kind of a left pocket, right pocket deal.

-- Rita

Not quite. The county and state are paying the credit card company a fee - it might be like 3% of the tax receipts - 3% that doesn't make it to the county/state coffers. If it's a rewards credit card, the credit card company rebates part of that fee back to you, so it becomes a discount on your taxes. Definitely a sweet deal - but realize that it's the county and state that are paying you that discount, not the credit card company.