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Old 05-12-2020, 08:59 PM   #61
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I don't "click through" stuff with Turbo Tax, I select what to work on. When I did the furnace / AC and the solar I went looking for those items.

Clicking through stuff is for first or second timers.
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Old 05-12-2020, 09:41 PM   #62
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Originally Posted by Carple Tunnal View Post
It is so complex, when there is a rule change, people can't even agree whether it was the rich or the poor who got the most benefit. Tax structure should be tied to the government budget, so that if spending goes up, taxes go up for everyone accordingly to cover the increase. ...
Beware of the fallacy that individual income taxes are somehow tied to governmental spending.

From 1776 all the way to 1935 the common man was not taxed on his income. The government had not yet developed this form of controlling the masses.
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Old 05-12-2020, 11:10 PM   #63
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The US tax code is mostly random, exceptions to rules are the norm, there are exceptions within the exceptions. One can not out do the current tax code if the goal is to confuse the heck out of people. And to make sure no one is ever up to date, we add/change the code every year. If one's goal is to use something like TT and pay whatever the program tells you to pay at the end of the year, it is not that bad. If one's goal is to understand what are the tax consequences and the how/what/when to take certain actions, it takes the equivalent of 3 PhD degrees to be on top of things. Keeping in mind that programs such as TT were not an integrate part of the tax code. The original idea was: each and every citizen will be able to do the tax with a pencil and paper forms. When it comes to something as widely applicable to millions of families such as the AMT (Alternative minimum tax), even a program such as TT basically said that it is too complicate to explain if you want to understand the rules (that was a few years ago, the tax code seemed to be simplified in the past few years regarding AMT).
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Old 05-13-2020, 04:14 AM   #64
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I appreciate that the US tax code creates opportunities for preparers and software companies.

If you've self prepared for a number of years then you persevere each year and get it done.
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Old 05-13-2020, 04:33 AM   #65
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Have not had a problem using tax programs. Have sold equities as part of spending $ in RE but never triggered AMT.
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Old 05-13-2020, 09:16 AM   #66
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I have to do standard deduction so tax prep is not too difficult. I do them long hand at home before I take them to AARP for free tax work, confirmation of my results, and electronic filing. For the past 8-9 years it has worked well and the results pretty much match.




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Old 05-13-2020, 09:34 AM   #67
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One thing, they should not be able to change the rules after the fact. IOW, the rules for 2020 taxes would be locked in on 1/1/2020.

I'm a fan of having an ongoing tax obligation calculated using estimates for things (most taxable events can be estimated). The complexity means that those who spend more time (actually, gain a higher understanding, so time and intelligence), have a better chance to pay a little less. Which translates to "tax those unwilling/unable to figure it out". But the tax code itself has built-in protections for some groups so knowing the details offers no benefit. But people who find themselves with savings probably can help themselves if they know the ropes.
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Old 05-13-2020, 09:46 AM   #68
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One thing, they should not be able to change the rules after the fact. IOW, the rules for 2020 taxes would be locked in on 1/1/2020....
YES!!!

And all the forms should be finalized on 1/1/2020 for tax year 2020. This would allow the tax prep companies to be more efficient and probably have fewer errors in their programs.

And it would allow me to do my taxes as I go, and know almost exactly how much I can apply to certain categories, like Roth Conversions, capital gains/losses etc.

-ERD50
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Old 05-13-2020, 10:50 AM   #69
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My perfect tax system would be a flat personal income tax from the first dollar and a flat corporate gross receipts tax. Go ahead and roll SS/medicare into the income tax rate, no "payroll tax" on corporations - that just hides taxes from the employee/voter. Simple as can be, doesn't hide cost of government from ~40% of the voters, and doesn't penalize winners and subsidize losers in business. I'm OK with a graduated tax bracket or two for the income tax.

But that wouldn't give the politicians much to do. Oh, another benefit!

The rates required are left as an exercise for the student.
I have been a fan of a flat tax for quite a while. Everyone has responsibility for running our government and should pay taxes. For those who need assistance, let them apply for and receive that assistance according to the laws at the time. I also agree that companies should pay based on their gross income, not adjusted income, just like the citizens would.

Let the government decide how to use the general fund for their chosen social programs (like home ownership, solar panels, electric cars.....) within their budgets and their available tax income.
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Old 05-13-2020, 10:52 AM   #70
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Originally Posted by ERD50 View Post
YES!!!

And all the forms should be finalized on 1/1/2020 for tax year 2020. This would allow the tax prep companies to be more efficient and probably have fewer errors in their programs.

And it would allow me to do my taxes as I go, and know almost exactly how much I can apply to certain categories, like Roth Conversions, capital gains/losses etc.

-ERD50
I would agree with the rules, but not the forms. The forms should wait until at least the previous tax filing season is over, so the 2019 forms would not have to be finalized until the 2018 filing season is over in April, 2019. This way, if there are problems with the forms (think about how awful the 2018 forms were, and the many complaints including mine about them), they were able to be fixed in time for the next filing season.
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Old 05-13-2020, 11:46 AM   #71
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I would agree with the rules, but not the forms. The forms should wait until at least the previous tax filing season is over, so the 2019 forms would not have to be finalized until the 2018 filing season is over in April, 2019. This way, if there are problems with the forms (think about how awful the 2018 forms were, and the many complaints including mine about them), they were able to be fixed in time for the next filing season.
The forms should be right from the get go. If they need a month to do that, then tell Congress no changes after end of Nov, so forms can be online Jan 1.

People seem awfully willing to cut these people slack when this is their job. It's a big and important job that affects nearly every citizen, they should be expected to get it right.

-ERD50
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Old 05-13-2020, 11:50 AM   #72
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It might be of interest to see how it works in another country; in this case my adopted country, Switzerland.

The Swiss system seems to be a lot less complex both in structure and in execution. With respect to the latter, on the annual tax "declaration" you fill in the relevant information about your income and proposed deductions, and send it in. You don't calculate your tax. The tax offices (federal, canton, and your own town/city) each send you a detailed tax statement, showing what you owe and why. You have 30 days to dispute any part of it; otherwise, after that you are sent a bill to pay (well, actually three bills). These take into account amounts you prepaid during the year either quarterly or through payroll deduction.

Because the system is not overly complex, I am able to calculate my expected tax from year to year within a fairly close tolerance.

That said, as a US citizen I am taxed whether I live in the US or not. So, I also have to make quarterly estimated payments and then send in my US tax return and deal with its complexities along with the intersecting complexities of what I am allowed to count in Swiss taxes as offsets against my US tax bill. Those calcs can be mind bending and are based on interpretations of US tax treaties with other countries (in my case, Switzerland).

In theory I should be able to deduct all of my Swiss taxes against my US ones for the same income. In reality, I always end up paying about 7% still in US tax, plus my regular Swiss tax. The two tax bills together exceed what I would have paid in US taxes alone, had I not moved to Switzerland.

The good thing about the US system is that it is generally quite swift. In Switzerland, one can wait up to 12 months to get your tax bill(s) (what you owe above and beyond what you have paid in advance) from any given year. So, you always need to hold in reserve some funds for those eventual bills. A good thing about the Swiss system is that they do not tax capital gains.

-BB
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Old 05-13-2020, 12:01 PM   #73
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The tax system rewards those who diligently study the rules. Since 1977, I have always prepared my own tax returns and have never had a problem.

It may be too late for some, but this post identifies many of the income limits and thresholds for 2020. You may find it helpful.

https://www.early-retirement.org/for...-a-101090.html
I didn't retire based upon a desire to study tax codes to optimize my finances. When I was working I was too busy doing my job and living life with a family to spend the time to delve into the intricacies of tax laws. I know even today that I am not tax optimizing my withdrawals. At least near term I self-rationalize that one of the benefits of being FatFired is that I can afford the sub-optimization that's occurring with my taxes - but I'll admit it burns me a bit knowing that there's ways to reduce my and my heirs taxes that others are taking advantage of that I'm not due to the complexities of flushing those opportunities out.
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Old 05-13-2020, 12:09 PM   #74
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I just buy Turbo Tax each year and let it figure it out.
Paying taxes correctly is not the same as optimizing and/or understanding your taxes. The gazillion postings in regards to Roth conversions are and example of the complexity created need for understanding taxes so as to optimize your financial position.
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Old 05-13-2020, 12:12 PM   #75
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Originally Posted by ERD50 View Post
The forms should be right from the get go. If they need a month to do that, then tell Congress no changes after end of Nov, so forms can be online Jan 1.

People seem awfully willing to cut these people slack when this is their job. It's a big and important job that affects nearly every citizen, they should be expected to get it right.

-ERD50
Totally disagree. There will always be unforeseen and unintended consequences, so we shouldn't have to be stuck with bad forms for an extra year because an arbitrarily early due date. Having new forms out by late summer, after the filing season is over (excluding this year because of COVID-19) still gives the commercial tax form software folks plenty of time for the next tax filing season. I'm just trying to be practical. You want the 2020 tax forms to be ready on 1/1/2020 even though nobody will be able to use them (except for a few such as estimated tax forms) until 1/1/2021? Be serious, now.
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Old 05-13-2020, 12:34 PM   #76
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Totally disagree. There will always be unforeseen and unintended consequences, so we shouldn't have to be stuck with bad forms for an extra year because an arbitrarily early due date. Having new forms out by late summer, after the filing season is over (excluding this year because of COVID-19) still gives the commercial tax form software folks plenty of time for the next tax filing season. I'm just trying to be practical. You want the 2020 tax forms to be ready on 1/1/2020 even though nobody will be able to use them (except for a few such as estimated tax forms) until 1/1/2021? Be serious, now.
I am serious. There's no reason to not get the forms right the first time. Of course, mistakes will happen, nobody is perfect. Fine, get a few mistakes cleaned up in the first quarter. That's really not asking too much at all.

In this way, people could start tracking their tax obligations as they make transactions. To issue this stuff after I started making the transactions is like starting a job with a half filled out, unsigned contract. If we are responsible for taxes for all income in 2020, then I should know the rules on the first day of the year.

-ERD50
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Old 05-13-2020, 12:39 PM   #77
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I am serious. There's no reason to not get the forms right the first time. Of course, mistakes will happen, nobody is perfect. Fine, get a few mistakes cleaned up in the first quarter. That's really not asking too much at all.

In this way, people could start tracking their tax obligations as they make transactions. To issue this stuff after I started making the transactions is like starting a job with a half filled out, unsigned contract. If we are responsible for taxes for all income in 2020, then I should know the rules on the first day of the year.

-ERD50
I already agree with you about the rules. But you don't need the forms right away. I am quite capable of figuring out my cap gains taxes on early-year sales by knowing the tax brackets, not by having the forms in front of me which I won't use for at least 6 months.
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Old 05-13-2020, 02:27 PM   #78
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Midpack,
I'm still stubbornly doing my own taxes without software.

I started to use TT about 10 years ago, but it wanted to store all of my information on their site, and it also made me answer many questions that didn't relate to my situation.
I didn't trust it, and decided to not use it.

It sounds like the majority of "do your own taxes " people, including you, are relying on Turbo Tax to help with their taxes.

This is motivating me to give TT another try next tax season. Hopefully it will work out.

I also purchased new real estate, and did a refi this year. I'm not sure how that might affect my taxes.

Take care, JP
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Like many here, you have well above average financial savvy, computer and math skills. I manage fine with TT and spreadsheets too though Id hate to do it manually. But put yourself in the shoes of the millions of Americans with average or below abilities when it comes to personal finance. Should our system be so far beyond their abilities?
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Old 05-13-2020, 02:32 PM   #79
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Midpack,
I'm still stubbornly doing my own taxes without software.

I started to use TT about 10 years ago, but it wanted to store all of my information on their site, and it also made me answer many questions that didn't relate to my situation.
I didn't trust it, and decided to not use it.

It sounds like the majority of "do your own taxes " people, including you, are relying on Turbo Tax to help with their taxes.

This is motivating me to give TT another try next tax season. Hopefully it will work out.

I also purchased new real estate, and did a refi this year. I'm not sure how that might affect my taxes.

Take care, JP
I use the download version, not the web. I don't believe it is storing my info in their system. Perhaps this would ease one of your concerns, unless I am wrong.

TT also lets me explore on my own rather than take their long, guided questionnaire. I use this to speed up the process since not much changes for me year to year, especially now that I'm taking the standard deduction.
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Old 05-13-2020, 04:40 PM   #80
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X2 on the downloaded version of Turbotax.

One thing that a national sales tax, instead of an income based tax, is that it is better for savers. You aren't taxed on savings, just on spending. But unfortunately the government has too much need for the money and income based is here to stay. A flat tax would make easier for people to file. It also would eliminate a lot of IRS jobs.
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