Poll: How tax savvy are you?

[LOL!]

Taxes are easily our biggest expense, so I try to plan throughout the year to keep that expense as low as possible. I am not an accountant and have no specific financial training, but I guess I am a bit anal about making all the sensible possible moves to lower our tax burden. I would rather have the income and pay taxes, than not have the income and pay no taxes.

Anyways, I expect quite a mixed bag of answers to this poll. There are alot of financially astute folks who know alot about investing, but does that carry over to tax returns as well?

[MooreBonds]

I abstained from voting, since none of the above matches my situation:

I work up a template 1040 in Excel, plug in preliminary estimated info on wages, interest, dreaming of capital gains putting in my annual $3,000 capital loss carryover, dividends/qualified dividends, and play around with my withholding accordingly. Then, as October/November nears, I update my spreadsheet with current info to see if there are any major changes to make on my wage withholding. Then, as my 1099s storm my mailbox, I update the excel spreadsheet with 'final' values and wait until April 15 to file to make sure I don't get any last-minute 1099 changes (like I did one year when it was postmarked April 1, and arrived April 9! Luckily, I was waiting until April 15 anyway...but it would have been a most unfortunate PITA if I had filed early).

So, while I do use software, it's not the traditional TurboTax/etc. Sort of a hybrid manual/software.

[Sandy]

I grew up in a family of accountants and bookkeepers. Every spring when my uncle's family was over, the entire dinner conversation focused on taxes. I got pretty savvy and used to do it myself.

However, when I hit the point where I had to figure my AMT after doing at least 5 separate schedules, I threw up my hands and took advantage of my brother's generosity. He is a CPA as well. That was 5 years ago. Last year he said "When did you life get so complicated?" :

[Martha]

Good poll. I try to stay current on tax stuff that is relevant to me or at least interesting. I enjoy the puzzle. But I have not done our taxes for years. We used a CPA mostly because we had rental property. But, I do undertand what the accountants are doing and on occasion have interesting and vigorous arguments with them on different tax issues. Our current CPA's firm is in the same building as my law firm and I used him as a resource for my clients. Our original accountant retired and sold his business to another accountant. I did not like her at all, plus she was late in getting the returns done. She underestimated what we would owe and it cost us a penalty. We left her for the accountant I used at work.

Now we are mostly out of the rental business and I have tons of free time because I am retired. We should be out of AMT land. But we still have to do returns for two states. Next year back to doing them ourselves. I am having the accountant do them this year though.

[Texas Proud]

Quote:

Originally Posted by MooreBonds I abstained from voting, since none of the above matches my situation: I work up a template 1040 in Excel, plug in preliminary estimated info on wages, interest, dreaming of capital gains putting in my annual $3,000 capital loss carryover, dividends/qualified dividends, and play around with my withholding accordingly. Then, as October/November nears, I update my spreadsheet with current info to see if there are any major changes to make on my wage withholding. Then, as my 1099s storm my mailbox, I update the excel spreadsheet with 'final' values and wait until April 15 to file to make sure I don't get any last-minute 1099 changes (like I did one year when it was postmarked April 1, and arrived April 9! Luckily, I was waiting until April 15 anyway...but it would have been a most unfortunate PITA if I had filed early). So, while I do use software, it's not the traditional TurboTax/etc. Sort of a hybrid manual/software.

This would be file by hand...

[SecondCor521]

I happen to fill the forms out by hand simply because it seems easier to me than using turbotax. I know how my tax situation works, what forms to expect, where the numbers go, etc. And I can do the simple math although I usually do it two or three times over to make sure I haven't punched a number in wrong.

I also do tax planning throughout the year, though, keeping track of the new tax laws and how they might help me reduce my taxes, managing my finances in a tax-efficient manner, etc.

I also try to manage my withholding such that I owe a little bit or get a small refund. I've never been very successful at this because I don't try very hard. Usually what I do is adjust my withholding every April based on the outcome of the previous year. It's obviously a rough yardstick.

2Cor521

[cute fuzzy bunny]

If you're self investing, I cant see how you can be fully successful without at least a good grasp of the tax code.

Saving a percent or two in fund expenses and then handing 5% more than you need to the feds doesnt make sense.

Dont count on your cpa to tell you what to do differently either, although a very good one might.

If you arent sure, wait and see if your cpa or other tax pro advises you on the zero bracket capital gains situation for the upcoming tax years and suggests how you take advantage of it...that is if you qualify (or can qualify) for it.

Do note that many brokerages/financial institutions offer up free or nearly free access to desktop or web based tax programs.

And keep an eye on this thread for some cheap/free deals. Better enjoy doing rebates although you can sometimes end up with about 10 software packages for FAR or next to free.
http://www.fatwallet.com/forums/mess...word1=turbotax

[CyclingInvestor]

I do them by hand (with Excel). I would not trust them to anyone else,
and cannot see paying anyone to do them. It takes an hour or two in
total (including AMT calculations).

The 1099's from my broker for my REIT dividends are usually late
and sometimes never corrected. The REITs themselves had all posted their
dividend info by last week, which is what I base my calculations on. Some
years even after 3 or 4 revised 1099's Schwab never got the numbers right.

A couple years ago I checked my ex-MILs taxes. HRBlock made so many
mistakes that they refunded their entire fee after I pointed them out.

[retire@40]

Quote:

Originally Posted by CyclingInvestor ...HRBlock made so many mistakes that they refunded their entire fee after I pointed them out.

Expecting a great tax return job from H & R Block is like expecting a filet mignon from McDonalds.

[jazz4cash]

Not sure how any particular response makes me more or less tax savvy.

[maddythebeagle]

Quote:

Originally Posted by MooreBonds I abstained from voting, since none of the above matches my situation: I work up a template 1040 in Excel, plug in preliminary estimated info on wages, interest, dreaming of capital gains putting in my annual $3,000 capital loss carryover, dividends/qualified dividends, and play around with my withholding accordingly. Then, as October/November nears, I update my spreadsheet with current info to see if there are any major changes to make on my wage withholding.

I do the same in excel and monitor the sitiation in nov. to see where I stand....then use the software in jan. to start entering info....

[sgeeeee]

Quote:

Originally Posted by LOL! Taxes are easily our biggest expense, so I try to plan throughout the year to keep that expense as low as possible.. .

Stores and services are our biggest expense. I'm surprised that you spend more on taxes than in stores and services.

[cute fuzzy bunny]

Well, those stores and service providers charge tax, dont they?

[laurence]

My Step Mom has a tax prep business and my Dad is a retired IRS auditor (he was a lawyer too, don't ask). So We just keep the reciepts and call them on the phone about once a quarter to find out if we should send a check out, then they do our taxes and we get a direct deposit back. Taxes scare the crap out of me, really. I love my 401k and IRAs, in large part for the headaches I get to avoid.

[LOL!]

Quote:

Originally Posted by Laurence My Step Mom has a tax prep business and my Dad is a retired IRS auditor (he was a lawyer too, don't ask).

When they pass on, how are you gonna handle your taxes?

I think folks should always try to do their own taxes. If you start with your first income when young, then it is not so complicated. Each additional year may add a little more complexity, but you can handle it since you did last year's return. Eventually, nothing will scare you.

If all your life you've never done your taxes, then you are basically trapped into always paying for it even if you wanted to do it yourself.

[Goonie]

I used to go to a CPA because I thought figuring my own taxes would a big PITA. But then one day I thought, "hey...why not give it try!" I tried it, and it wasn't tough at all (plus I saved some serious $$). So ever since that enlightening day, I do my own with the forms and instruction books I grab at the local post office. After I have it all down on paper, I go online and eFile and have direct deposit if there is any refund.

Them thar revenuers don't scare me none!!!

[jazz4cash]

Quote:

Originally Posted by LOL! When they pass on, how are you gonna handle your taxes? I think folks should always try to do their own taxes. If you start with your first income when young, then it is not so complicated. Each additional year may add a little more complexity, but you can handle it since you did last year's return. Eventually, nothing will scare you. If all your life you've never done your taxes, then you are basically trapped into always paying for it even if you wanted to do it yourself.

I agree. Two daughters filed for 1st time this year. I had #1 load turbotax and she got through the whole thing (1040EZ), and got all her money back. A good positive initiation. Spent a small amount of time explaining the mysteries of the W2. DD#2 get her turn this weekend. My beef is always on the concept of Witholding vs. Tax liability. It seems all my friends & relatives are completely focused on "I GOT A REFUND" or "I GOTTA PAY"........ask em about marginal or effective tax rates and they dont have a clue

dang..after all that rant, I mis-spoke....DD#1 is bonifide Taxpayer

[Warthog]

I choose 'use an accountant routinely...', but my answer is a bit bias as I'm married to a CPA

Ironically, I do the taxes (TurboTax), and I just have her review them (and they're pretty complex...three investment properties, taxable investments, & two businesses). Thus, we talk tax strategy all the time

-Warthog

[Nords]

Quote:

Originally Posted by Warthog I choose 'use an accountant routinely...', but my answer is a bit bias as I'm married to a CPA

Ya know, I'm not even gonna touch that one...

[larry]

Use a CPA about twice/year for planning. Also use the Microsoft Money tax planner in between visits to run different scenarios.

The value is in the planning.