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Lisa99 03-17-2012 12:56 PM

DIY Tax Return - Jumping into the deep end of the pool
 
Some of you know me from our escape in August 2010 from Ameriprise. Well, the DIY investing is going great, our portfolio is doing well, I've learned a ton and our investing is pretty much on auto-pilot.

So what's next? Today I'm going to learn how to do our taxes. I did them until about four years ago using TurboTax. When the Ameriprise statements got SO confusing and we added three rental properties I found a tax person to do the work. He does a straight filing, no suggestions on where we could save, no 'planning', so no value add.

His fee is now up to $750. If we DIY through Vanguard it will cost $9.95 since I'll be using TurboTax Premier to help with the rental properties.

I have all our past tax statements so can reconstruct the rental property cost basis, depreciation, etc.

Wish me luck, I'm a bit hesitant, but then I was also scared when I moved our money from Ameriprise to Vanguard...being out of my comfort zone is all about learning so here goes!

And BTW, I didn't put this in "what did you do today, because I'm hoping that if I get stuck that I can ask you guys questions!

ziggy29 03-17-2012 01:04 PM

Quote:

Originally Posted by Lisa99 (Post 1174167)
Some of you know me from our escape in August 2010 from Ameriprise.

Yeah, I consider you one of our greatest "success stories" in that regard. :)

Quote:

Originally Posted by Lisa99 (Post 1174167)
So what's next? Today I'm going to learn how to do our taxes. I did them until about four years ago using TurboTax. When the Ameriprise statements got SO confusing and we added three rental properties I found a tax person to do the work. He does a straight filing, no suggestions on where we could save, no 'planning', so no value add.

His fee is now up to $750. If we DIY through Vanguard it will cost $9.95 since I'll be using TurboTax Premier to help with the rental properties.

I have all our past tax statements so can reconstruct the rental property cost basis, depreciation, etc.

Wish me luck, I'm a bit hesitant, but then I was also scared when I moved our money from Ameriprise to Vanguard...being out of my comfort zone is all about learning so here goes!

And BTW, I didn't put this in "what did you do today, because I'm hoping that if I get stuck that I can ask you guys questions!

Hopefully you can get it all figured out. If not, one more year of their fees is a relatively small price to pay to avoid mistakes and setting off IRS audit flags -- and you'd have plenty of time before 2012 returns are due to know the ins and outs of your tax situation.

Another good thing about getting away from Ameriprise and into DIY investing is that YOU are in total control with respect to how your investments impact the complexity of your taxes in terms of the strategies used in the investments and the number of trades that trigger capital gains or losses.

FIREd 03-17-2012 01:04 PM

Good luck, Lisa. I know it's weird, but I do enjoy doing my own taxes. I learn a lot from the process.

Midpack 03-17-2012 01:13 PM

For $9.95 you should definitely try it, you can always fall back on your pro. After you've completed your return with TT, unless your circumstances have changed dramatically, I would think comparing last years return to the 2011 return line by line might be instructive. As my returns have gotten a little more complex, comparing to the prior year has reassured me. If lines/boxes are empty/filled differently from year to year or amounts are inexplicably different, I make sure I understand why. I've caught some errors comparing this way.

Good luck, you can do it!

JPatrick 03-17-2012 01:14 PM

Perhaps something to watch on Turbo Tax this year.
I started our federal return a week ago, but have not finshed as I'm waiting for some additional info.
So today, I get a notice saying as below.

We are writing to notify you of a price increase for TurboTaxhttps://webmail2.centurytel.net/hweb...spacer_red.png Online products after March 23, 2012. If you haven't completed or filed your return yet, we encourage you to file your taxes before prices go up. If you have already filed, please disregard this notice and thank you for using TurboTax.

Print or e-file your return by March 23 and lock in your savings before prices go up.

So let me get this straight..I selected a service and price through Fidelity and now you say I'd better hurry up and finish or you will raise the price we BOTH agreed to? Plus you don't even say what the new price is? BS Turbo Tax.
I can't wait to write my review.

ziggy29 03-17-2012 01:17 PM

I should have mentioned, of course, that filing for an extension is always an option if you don't have it all nailed down by April 15. You need to remit what you think you'll owe and face interest charges on underpayment, but that's still going to be a lot less than $750...

REWahoo 03-17-2012 01:18 PM

An additional reason I won't use the online version of any tax software. Can't charge me now for the free version I downloaded in January.

scrabbler1 03-17-2012 01:32 PM

I have been doing my own taxes with pen, paper, (and spreadsheet since the mid-1990s) for more than 25 years and have never, ever considered paying someone else to do them. And for the last 8 years or so, I have doing the taxes of my best (male) friend and my ladyfriend.

Lisa99 03-17-2012 01:36 PM

Quote:

Originally Posted by ziggy29 (Post 1174170)
Yeah, I consider you one of our greatest "success stories" in that regard. :)

Thanks Ziggy!

And thank you for everyone's suggestions.
Midpack, I'm actually doing this year's taxes with last year's return by my computer. I'm going line by line to make sure as I go that I'm not missing anything. I also have all of the completed forms that the tax guy filed so I'll be able to compare that as well.

As for filing by the 15th, I don't think we've ever filed 'on time'. I'll have enough information today to know if we owe, but I'll file the return on October 14...so plenty of time to learn.

The one thing I know I'm going to need help with is how to put in the rental properties that we've owned for three years. Turbo tax has a help line and I'm quite sure they'll get several calls from me.

samclem 03-17-2012 01:38 PM

Lisa,
Good for you. I learn something every time I do my taxes. With your investments under your own control you'll probably be doing less trading (which simplifies things). You may also want to fine-tune future sales in your taxable accounts to minimize your taxes. If so, consider the advantages (and complexities) that come with using the "specific shares" method of computing cost basis. Once you sell shares in any mutual fund you are "locked in", so give this some thought.

I sprung for the desktop version of TurboTax. It hurt to pay, but I feel more comfortable owning the software.

Midpack 03-17-2012 01:40 PM

[QUOTE=Lisa99;1174185]
Quote:

Originally Posted by ziggy29 (Post 1174170)
Yeah, I consider you one of our greatest "success stories" in that regard. :)

Thanks Ziggy!

And thank you for everyone's suggestions.
Midpack, I'm actually doing this year's taxes with last year's return by my computer. I'm going line by line to make sure as I go that I'm not missing anything. I also have all of the completed forms that the tax guy filed so I'll be able to compare that as well.

As for filing by the 15th, I don't think we've ever filed 'on time'. I'll have enough information today to know if we owe, but I'll file the return on October 14...so plenty of time to learn.

The one thing I know I'm going to need help with is how to put in the rental properties that we've owned for three years. Turbo tax has a help line and I'm quite sure they'll get several calls from me.

I've found the interview questions that TurboTax asks to be very helpful, but not 100% of the time. I have not dealt with rental properties though, so I don't know if the interview approach in TurboTax works as well there. Again, best of luck...

donheff 03-17-2012 03:09 PM

If you start out and get nervous you can always go back to your pro and then carefully try to match his/her results using TT. That is what I did last year. This year I am filing on my own.

frayne 03-17-2012 03:55 PM

Good for you and go for it, taxes ain't hard, just a tad confusing now and then. Have done my own taxes since 74, retired six years ago and work for H&RB as a seasonal tax pro during tax season. Schedule Es for rental income are pretty straight forward and no big deal. Double check what your tax dude did before and don't be afraid to amend prior year returns, as many tax pros don't dig deep enough for legit deductions. Just my two cents.

nwsteve 03-17-2012 04:11 PM

Another transition option is to prepare your return yourself with Turbo Tax and before you file, take your return to you tax accountant and pay his/her hourly rate to do a "review". Do not expect him/her to sign it but they should answer your questions and point out any other issues you may not have addressed. I believe TT actually provides for a review option as well at the end of the process.
Should be a whole cheaper than paying accountant rates for data entry.
Nwsteve

MichaelB 03-17-2012 04:19 PM

Lisa, good luck. If you can replace ameriprise you can also do your taxes. There are many advantages to doing your own. One is it leads you to become more aware of taxes when making investment decisions and doing financial planning, and this might help you become more tax efficient.

youbet 03-17-2012 04:50 PM

Quote:

Originally Posted by MichaelB (Post 1174243)
There are many advantages to doing your own. One is it leads you to become more aware of taxes when making investment decisions and doing financial planning, and this might help you become more tax efficient.

Absolutely! Doing my taxes makes me grouchy and even more unpleasant for DW to be around, but it's worth it. (I haven't actually checked with her on this......) And by involving DW in some of the record keeping and plugging in the resulting numbers, she becomes aware of why we keep a running tab of medical expenses, etc.

Lisa, believe me if this retired factory worker, educated in the Chicago Public Schools, can do it, so can you!

Lisa99 03-17-2012 05:22 PM

Thanks for the encouragement everyone! Donheff, you've hit on exactly what I'm going to do this year. I'm going to finish the TT-based exercise but not file. Then I'll package it all up and send to the tax guy. I'll consider the $750 for this year's taxes as tuition.

Three hours later and I've just finished with wages and investments. We sold stock options, ESPPs and RSUs. Thank goodness we have good records, but my brain is in protest!

I'm not going to try to tackle the rental properties today because honestly I don't know where to start.

We've owned one property since 2006, bought one in 2008 and one in 2009. So I can't answer the TT question, did you buy properties in 2011, but the data on the houses has never been in Turbo Tax. I have to figure out how to start now but reconsturct where we are financially. We make too much to deduct rental losses, so have significant paper losses that I have to reconstruct.

Anyway, I think I've earned a cold one or three so bye for now!

Peter 03-17-2012 05:29 PM

Lisa, I found it helpful to look at last year's CPA-filed return to get the details on rental properties. This was just for one property (first time filing joint) but I seem to remember that TT asked if there were more to enter after I'd finished the details.

I started the rental section with some trepidation, but in the end found it quite straightforward. This was with the standard TT package as well; not sure how the more expensive Premier version would have helped.

Sirka 03-17-2012 05:46 PM

Higher Tax Rates
 
Quote:

Originally Posted by scrabbler1 (Post 1174183)
I have been doing my own taxes with pen, paper, (and spreadsheet since the mid-1990s) for more than 25 years and have never, ever considered paying someone else to do them.

Can you get the same (lower) tax rates, that software uses vs table look up?

Texas Proud 03-17-2012 05:50 PM

The other thing that I would suggest is to make sure you answer ALL their questions....

At the end of my return (using H&R whatever they name it)... I thought there was something wrong... I used to do takes way back when and I was thinking that a credit should be higher... I kept looking for what was wrong and FINALLY saw I did not answer a single question... it made a $900 difference when I finally found where it was...

Most have help screens that you can use to look... do not hesitate to use them... and as other say, compare it to last year's return. You should be able to determine why there is a difference between last year and this year if you do it right.... like, I had $X more expenses on my rental, so I have less of a loss... if you can not determine the deltas in your numbers, then you might be making mistakes...


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