Survived Turbo Tax - What's next?

[Felix Mulier]

Mailed our Federal and State returns yesterday. The dog is sitting here with his leash in his mouth waiting to go to the post office to mail the Estimated returns.

I must say I learned a lot and was very surprised to find that filing taxes in retirement was a lot more complex than I remember from when I was working!

A couple of questions for those who use Intuit's marvelous product(s). Since we're filing Estimated taxes for 2013, I'd really like to get started with an actual return. Can I do that in the 2012 version of TT? For last year's return, there were nice worksheets to enter $ by quarter, etc. Would like to do this starting now for 2013 and keep a "rolling return" going. If I have to wait for the 2013 version, when will that grace us with its presence?

Finally, is Quicken worthwhile? I used to use it back on the Windows 98 version (old clunker now collecting dust yadayada). It was a lot of work AIR. But, now that I've wrestled TT to the proverbial ground, maybe I should try Quicken again. I can get -$10 from TT. Deluxe would be $50 and Premier $80. Any recommendations on go with it or not? And which version?

As always, thanks to the group for your great advice.

P.S. It was nice having TT print out all the forms and instructions etc. Have to give them that. The learning curve was arduous - you have to know what you're doing and have a lot of patience. Mine (patience that is!) is dwindling - think I'll go for a walk!

 

[Texas Proud]

Any reason why you mailed the return instead of filing electronically

 

[grasshopper]

I am using TT 2012 to estimate ACA income levels, so I can take some LTCG's or convert some IRS's to Roths. Seems to me only std deduction and exemption numbers my change in my return.

 

[gerntz]

The following is my understanding of the tax withholding law. I'm not a qualified tax prepayer.

As I understand the law, if you take a non-required minimum distribution from an IRA, many IRA holders will allow you to make/designate the distribution entirely/almost entirely as taxes withholding. Net, you can wait till the end of the year to to take this single distribution (or per each of your IRA's if you wish to do it multiple times). The IRA holder will then submit the withholding to the IRS (& possibly your state, if necessary) & the IRS will consider it satisfactory for the entire year. Withholding is withholding regardless of when in the year earnings (the IRA distribution) occur vs. estimated quarterly payments being on fixed timing. But once you make the initial quarterly estimated taxes payment, I believe the IRS expects you to continue to do so for the entire four payments to aoid late payment penalties. You can switch methods each year.

Also note that you can redeposit the withholding "withdrawal" amount to your IRA within 60 days & the distribution is not taxed - you're allowed to withdraw from an IRA, say oops, changed my mind, & redeposit. If your income is below your exemptions & deductions, then the IRA distribution is not taxable anyway and no need to redeposit.

You say why do you need withholding if your income is low enough to be non-taxable? Well, because in our case we need state withholding but not Fed because our state taxes LTCG as regular income when those same gains will be 0% Fed taxable at our intended income level.

Note that Schwab holds our IRAs & will withhold 89% for our state maximum, 10% Fed, & require us to take 1% distribution to us (This may be a law.). They have an online form for this action. We'll redeposit the entire amount within 60 days and have to wait for our Fed refund for 10% of the amount. But we do this one time (probably) when we better know what our income will be for the year vs. the equal payments. And we hold the money till late in the year.

 

[RunningBum]

You can make uneven estimated quarterly payments to match when you earn money through IRA distributions or end of year dividends if you fill out form 2210 and schedule AI within it to list your income and deductible expense totals at the end of each quarter.

I'm pretty sure info you put into TT 2012 for 2013 can't be transferred for 2013. I don't know when TT 2013 comes out, probably late fall. So no head start on doing taxes, though keeping paperwork organized is the best start. If you want to use it for estimating, that works for the most part though some things like max Roth contributions, standard exemption, max HSA, etc, may change year to year. I just make a spreadsheet with the relevant info and calculations for my estimates. Mine last year had an error that it double subtracted some deduction and I went over the 15% line on a Roth conversion, so it would be good to double check your spreadsheet with TT, even from a past year.

 

[meierlde]

Actually if you go to the forms view of turbotax and add the ES and W4 wks you will be presented with a form that you can fill out with estimates for 2013 It will then tell you what the estimated tax should be:

 

[JoeWras]

You ask about Quicken. Well, I'm not happy that they want you to update every 3 years. Nor that they basically have a monopoly.

However, if you use it religiously, it can really be a help.

We've been entering every transaction we do in life for the last 15 years. Every credit card entry, every withdrawal from the bank, every check. Oh, and also all the bank and finance transactions. I still do those myself, although you can now have them automatically done. I just don't like passing out passwords.

Back to the expense side. We're pretty careful. If we go to the store and get a lightbulb and milk, we split the transaction into "household" and "groceries". Yeah, we're that crazy. When I take out spending money, I basically estimate categories for "miscellaneous", "lunch", etc. And when we get paychecks, we categorize it all. All the insurances, the taxes, everything.

So, what does that get us? A really good record of expenses over 15 years. I actually only use the last 10. From this, we have a very good idea of our habits and what we'll need when we retire. Of course, some like "insurance:health" and "medical" will need adjusting. But the thing is we know where things are going now, so we can tweak them for retirement.

I think I'd be clueless without this and would be very concerned to FIRE without this essential data.

 

[gerrym51]

Any reason why you mailed the return instead of filing electronically

my wife and i still do paper return. because we have always made too much to get it for free.

since we take the standard deduction even the deductibility of turbotax does not save money

 

[lemming]

Turbotax online version was a bear this year. Total black box narrative and you never see what the program is doing with the entries. Panic attack when the total income showed the balance of my rollover as income in the summary. It handles the non taxable part ok just shows the gross.

I am set up for a automatic EFT for my quarterlies but I set the $ for a WAG on what I am moving around in IRA withdrawals and captial gains from my other accounts.

I have been dinking around on the peer to peer Q&A forum. Some questions are interesting because there are situations I've never heard of. Some are just sad. Others funny . Or completely incoherent. I've learned some things.

 

[meierlde]

Turbotax online version was a bear this year. Total black box narrative and you never see what the program is doing with the entries. Panic attack when the total income showed the balance of my rollover as income in the summary. It handles the non taxable part ok just shows the gross.

I am set up for a automatic EFT for my quarterlies but I set the $ for a WAG on what I am moving around in IRA withdrawals and captial gains from my other accounts.

I have been dinking around on the peer to peer Q&A forum. Some questions are interesting because there are situations I've never heard of. Some are just sad. Others funny . Or completely incoherent. I've learned some things.

Between the complexities of my tax situation, (k-1s) and other issues I use the cd version of turbotax, and it that the forms mode, which lets you do as if you were filling in the forms (and some new forms turbo tax makes up). So it basically just does the math for you. The forms method also allows one to look at forms that would not necessarily apply for example the 6251 to see how far from amt you are.

 

[RockyMtn]

Been using TT for years. If you wish it will calculate estimated tax payments for 2013 and print slips for you too mail into the irs based on what you project your earnings to be. You can also forget the mail in and pay your taxes quarterly using https://www.eftps.com/eftps/enrollment/new-enrollment-flow?execution=e1s2.

I preferred Microsoft Money but once it went away I converted to Quicken. Once everything was set up it works pretty well although I don't really use it to track a whole lot of tax info. Most of what I need for taxes I import to TT from my brokerage firms.

 

[lemming]

Thanks for looking up that IRS website for EFTPS =I was too lazy.
I might switch to the cd version, but up til now the on line had the forms view.
I think they had too many people using the calculations then dropping out before paying.

 

[target2019]

This was my first year using turbotax, after many years of using Intuit Proseries. The product is poor, in my opinion. Entering data seemed to take much more time than other versions of tax software I've used. I think the interface is awful.

 

[Animorph]

I use Quicken, but don't transfer anything to TT. TT can download all the brokerage data, except for one of mine now, which is the worst stuff.

My estimated taxes were pretty easy. I want ot hit just below 160k AGI this year to pick up the tuition tax credit. Not quite as easy as knowing you're going to hit the top of the 15% tax bracket, but close enough. Now I just have to follow through and hope end of year dividends don't throw a wrench into the whole thing.

I did a giant Roth conversion for 2012 and paid only the 4th quarter estimated tax (since DW's withholding serves for all the usual taxes). I had to figure out all of the quarterly taxes, like how capital gains, qualified dividends, non-qualified dividends, foreign taxes etc. fell into each quarter. Saved me about $120 in penalties, but it was a big time waster (although I watched a Netflix movie at the same time).

 

[cantlogin]

My own tax situation isn't too complex and I've found that "Tax Act" software is really easy to use and flexible.

There are lots of things I don't like about Quicken but I have been using it for about 9 years to track all my financial transactions. I'm not as detailed with my itemization as JoeWras but the information available from the reports can be helpful.

It's kind of neat to be able to use a financial program to recall the name of a restaurant that I enjoyed in Chicago two years ago. In a way, looking at old expenses like this is sort of like looking at old vacation photo's for reminiscing.


It's also kind of shocking when I see the total expenditure for restaurants from last year.

 

[Lsbcal]

...(snip)...
A couple of questions for those who use Intuit's marvelous product(s). Since we're filing Estimated taxes for 2013, I'd really like to get started with an actual return. Can I do that in the 2012 version of TT? For last year's return, there were nice worksheets to enter $ by quarter, etc. Would like to do this starting now for 2013 and keep a "rolling return" going. If I have to wait for the 2013 version, when will that grace us with its presence?
...

I believe there is a place in the interview section to enter estimated taxes but you can also go directly to the form. Just go to forms, bring up the 1040 form, look for the estimated tax line (line 63) and click on the little magnifying glass.

I always use the previous year's TT to do estimated tax planning for this year. I call the file something like "estimated tax for 2013 using 2012 TT". It generally works out pretty well. During the year if something changes I can just enter it into the estimate and continue the planning process. FWIW, I always slightly overpay the taxes and then roll the overpayment into the next year's taxes.

 

[Brett_Cameron]

I built an Excel spreadsheet that I use to estimate my taxes using all the forms I typically use. It includes income from all sources. For income sources that have the capability for withholding I have the spreadsheet calculate what the withholding rate should be using goal seek function. It is accurate within a few percent of what TT calculates.

I use quicken for my financial transactions but I have never set it up to accurately generate the information that TT needs. Maybe someday when I can't think of anything better to do then I will set it up.

 

[Felix Mulier]

Thank you for all the input on this post. I think I'll hold off on Quicken for the time being. FYI there is another thread about Quicken 2013 out there yesterday and today.

In closing, I came across this interesting factoid TurboTax Lobbies Lawmakers to Keep Tax Code Complicated - ABC News (bolding and brackets mine):

Still, although the concept [of pre-populated returns] has been endorsed by presidents from Ronald Reagan to Barack Obama, it has not been implemented. According to an in-depth article by ProPublica, that's largely because of extensive lobbying by companies like Intuit, which manufactures TurboTax, the software used by about 25 million Americans in 2012. Prices for its products range from free to $150.

Over the past five years, the story reports, Intuit has spent about $11.5 million on federal lobbying. In 2011 Intuit lobbied Congress on two bills that would have allowed many taxpayers to file pre-filled returns for free. Both bills died.

Ahha! So it's all about the money! Who'd a thunk?

 

[haha]

I built an Excel spreadsheet that I use to estimate my taxes using all the forms I typically use. It includes income from all sources.

What do you do when you reach Line 44, Form 1040, and you are faced with the alternate schedules to use for computing the tax? It seems that some If:then statements will be necessary. Does Excel support this?

Ha

 

[RunningBum]

What do you do when you reach Line 44, Form 1040, and you are faced with the alternate schedules to use for computing the tax? It seems that some If:then statements will be necessary. Does Excel support this?

Ha

As long as I don't get hit with AMT (which I do check for with TurboTax), I know that I'll be using the Qual Divs and Cap Gains worksheet and just tailor my spreadsheet to that. If/then/else is supported in many spreadsheets, but you can likely simplify a personalized spreadsheet. I wouldn't send my spreadsheet for someone else to use because I don't want to deal with the caveats of what may or may not apply.

 

[haha]

As long as I don't get hit with AMT (which I do check for with TurboTax), I know that I'll be using the Qual Divs and Cap Gains worksheet and just tailor my spreadsheet to that. If/then/else is supported in many spreadsheets, but you can likely simplify a personalized spreadsheet. I wouldn't send my spreadsheet for someone else to use because I don't want to deal with the caveats of what may or may not apply.

OK, I see. I was thinking somehow that I needed to cover all possibilities, while really all I have to do is cover my own common ones, and know enough to do something different if a year is looking different.

Sometimes I can be slow.

BTW, very glad you are OK but sorry your race was marred by this tragedy.

Ha

 

[samclem]

I always use the previous year's TT to do estimated tax planning for this year. I call the file something like "estimated tax for 2013 using 2012 TT". It generally works out pretty well.

+1. Works very well, much easier than making my own spreadsheet, and is always up to date (at least as-of the prior year) with the machination of the tax code.

I am [-]frugal [/-] cheap, but the money I spend for TT (or, probably as good, HR Block "At Home") is among my best purchases all year. Well worth the money. And having it on disk allows year-round "what-iffing" while all my data stays on my own computer.