Doing My Own Taxes?

[Drake3287]

Yep I'm another. Used a tax service for years but about 10 years ago thought I'd give Turbo Tax a try and I've been both happy and comfortable with how things come out. For probably 90% of the country, they can easily get by with Turbo Tax. Or you could be my idiot brother and spend money on a tax preparer for what is probably the easiest tax situation in the country! Some people are simply afraid to do their own taxes.

 

[SecondCor521]

Right, it's the 10% to 20% that I'm concerned about.

This is actually one of the reasons I volunteer with Tax Aide. The things I learn in training about the tax code are these 10% to 20% things. I've easily saved or will save thousands to tens of thousands of dollars based on what I've learned.

The other way to do it is just to read a bunch of articles on taxes (or read tax threads here and Bogleheads). I do this too.

After maybe a decade or two of reading, there aren't that many ideas that are new to me. But they surprisingly still surface occasionally, and they're still valuable.

 

[frayne]

Easy if you can follow instructions. I’ve been doing my own since 1975, and tax software has made it even easier. I’ve used TurboTax, H&R Block, and VITA, all are pretty straightforward.

 

[Walt34]

I only paid a tax preparer once to do my taxes, the first year we'd bought a house and I had no idea where to start on it. The next year I just copied from the previous year and used the new numbers from the W-2 and bank statements. So from then on it was pencil and calculator or later the PC and TurboTax. And the first couple of years I still did the taxes by hand in parallel with TurboTax just to check. TT just seemed too easy so I was suspicious.

 

[Lorenzo]

I started out doing my own taxes with pen and paper when I was 22 and had only W-2 income, then when I was self-employed for a while used a CPA, then tried TurboTax for a few years, then when we had a 1031 exchange on a rental property sought some tax advice and ended up going with that CPA to prepare our taxes. We could easily go back to TurboTax, but I dunno--the CPA answers tax planning questions for us, is proactive about tax issues, and as far as preparing our returns is concerned I like the idea that if there is ever a mistake or an audit the preparer is ready to deal with it rather than me. I don't change my own oil or mow my own lawn, either, and I have only gradually warmed to the idea of handling my own investments thanks to this forum.

 

[Ian S]

I started using TurboTax when it was owned by Chipsoft back in the 1980s. Around the turn of the century, I switched to Taxcut which name H&R Block eventually dropped. Either is fine to use for the vast majority of individual tax returns. TurboTax is generally more expensive. Both walk you through an orderly questionnaire and keep track of your taxes as more data is entered. It's really quite easy. They make it easy to do state returns by transferring all the necessary info. Almost always, you can file electronically both federal and state. I make use of an obscure state tax credit for which H&R Block doesnt provide the form. So I just print the return and mail it in.

 

[wolf]

I suggest using one of the tax programs and doing your own taxes. It sounds like you have a good understanding of your taxes. Before filing the taxes, print it out and do a line by line comparison of last years taxes and correct any errors before filing.

Agree, 100%.

 

[Alex The Great]

I always do my tax return myself. The most complex part I had is to enter employer stock options sales correctly (ISO, RSU). It is gone now, since I retired. I used CPA one time around 20 years ago, when TT was not that advanced and I missed some cost basis numbers regarding ISO sales not reported to IRS. As a result, got a letter from IRS with an offer to pay a ridiculous amount which essentially were gross proceeds. I sent a letter to IRS myself explaining the situation, but it did not help. It seems they did not understand what I wanted to say. CPA recommended by a friend did everything quick and efficient. No questions from IRS since then.

 

[Koolau]

I struggle to fill out the form my tax preparer gives me. SO, I don't think I'll try to do my own taxes.

 

[Midpack]

Using the online version is fine if you're comfortable with your tax and personal info being online. Some don't mind, others prefer keeping that data more private. Whatever fits for you.

Private? I’d like to believe that but I doubt it’s true. Intuit keeps all or part of your personal data either way. But then almost every place you go online mines your personal data now, especially “free” sites. TurboTax Desktop Software EULA Tax Year 2024

Your Personal Information

We want to be transparent about how we use personal information and about your rights in our Global Privacy Statement. You should only provide us with personal information of others if you have received permission to do so.

You agree that Intuit may use and maintain your personal information according to Intuit’s Global Privacy Statement and any changes published by Intuit.

To the extent we allow you to input personal information (as the term is defined under applicable law) about other individuals other than yourself, you represent and warrant that you have complied with all applicable laws and received the proper authority or consent to allow us to collect and process such information to operate our business, in accordance with our Global Privacy Statement. You further agree that, other than with respect to information furnished to TurboTax in connection with the preparation of an individual tax return, any sharing of personal information among Intuit Group Companies is contemplated as part of the Platform. You agree such sharing does not constitute a “sale” of information as defined under the California Consumer Privacy Act (CCPA).

Electronic Filing Services. If you choose to file your return electronically, your tax return will be forwarded to Intuit's Electronic Filing Center, where Intuit will transmit it to the applicable federal and/or state taxing authority.

 

[pjigar]

What are your experiences with doing your own taxes?

I always tell two things to young folks starting out (as part of personal finance coaching):
* No-one loves your money more than you do.
* If you do your own taxes from early on you will keep learning new things as your tax situation gets complex. And you will learn ways to save taxes along the way. I know I have.

So yes, if your tax situation is simple once again then you should start doing taxes now.

PS: I use TurboTax offline version to do my taxes. Last return was 91 pages.

 

[freedomatlast]

I've done my own taxes ever since I started filing returns. This gives me a good opportunity to review all things financial and develop tax strategies for the next year. I still file paper returns because the less information I submit online, the better.

 

[Lorenzo]

I struggle to fill out the form my tax preparer gives me. SO, I don't think I'll try to do my own taxes.

Ha ha. Yes, if I were to fill out that form in as much detail as it suggests, I might as well just input the same information to TurboTax or even manually fill out the tax form, as it tracks quite closely. I hope those forms are just wishful thinking on the part of tax preparers who would rather not have to sift through my pile of financial documents. But that's what I'm paying them for.

 

[Livefree]

Right, it's the 10% to 20% that I'm concerned about.



Yes, they'll cheerfully take your overpayment - and if you make a mistake the other way and underpay, they'll slap interest on it. The asymmetry bugs me.

A few years ago after we sold an investment property, and filed our taxes, the IRS contacted us, and informed that we were owed a little over 3k which they refunded. I told my Accountant, and he said "We need to update our software, that slipped by us"

 

[marinauser]

We have always done our own taxes. We have used Turbotax for many years now.

 

[GrayHare]

Private? I’d like to believe that but I doubt it’s true. Intuit keeps all or part of your personal data either way.

If one uses Turbotax while offline then files by mail, how does Intuit get their tax data?

 

[Dash man]

I suggest you look up how to get the IRS to assign you a PIN each year for e-filing. It’s a protection against identity theft by someone filing a tax return using your information. Also, be sure to have any payment or refund done electronically. Checks in the mail are less safe than doing it electronically.

 

[audreyh1]

We haven’t requested an IRS assigned PIN for doing taxes. It’s an extra step requiring receipt in the mail each year. Of course if we run into tax fraud we’ll be forced too, but we don’t get refunds so it won’t be painful in terms of having to wait a long time if we do run into such a problem.

 

[Koolau]

I always tell two things to young folks starting out (as part of personal finance coaching):
* No-one loves your money more than you do.
* If you do your own taxes from early on you will keep learning new things as your tax situation gets complex. And you will learn ways to save taxes along the way. I know I have.

So yes, if your tax situation is simple once again then you should start doing taxes now.

PS: I use TurboTax offline version to do my taxes. Last return was 91 pages.

My CPA saved me a bundle in state taxes when I moved here. I had thought one batch of income was taxable and she told me it was not. I pressed her on it and she was adamant. 10 years later the state has never questioned me though the info is right in the return for them to question if they decide "she" is wrong.

 

[TickTock]

Thanks to all who replied!

I'm leaning towards purchasing TurboTax this year, running against the final return from the CPA, and seeing if I understand all of it. Seriously considering doing our own taxes next year.

 

[sdtech]

I do taxes for myself, two sisters and a son. turbotax handles most of the complexity if it can download info for investment in their brokerage accounts. I do hate international stock gains - it's a pain to get that right. For a "normal" person who just doesn't have business accounts I don't see why you wouldn't do your own if you can follow turbotax's questions. Worth trying and you can always hire someone if that doesn't work for you.

 

[scrabbler1]

I have been doing my own taxes since 1985, the year I graduated from college and entered the workforce. I did them by hand, with pencil and paper, from 1985-1994. In 1995, I bought a PC so I created a spreadsheet to mimic the calculations and set up a skeleton version of the tax forms. I have expanded the spreadsheet as my returns become more complicated, adding cap gains, ACA subsidy, a non-resident state return for some of my working years.

Starting in the early 2000s, I began doing the tax returns of my best (snake-bit) friend and my ladyfriend. In 2020, I began doing my dad's returns so he wouldn't have to pay his preparer several hundred dollars a year. Their returns have varied in complexity over the years, sometimes more complicated than my own.

Back in 2016, I tried to use TurboTax as a check on my own spreadsheet. To my shock, I got nonsense (i.e. nothing close to what my spreadsheet showed) coming out of TT even though my return was correct and not very complicated. I sent TT to the garbage can and have also wondered how it has ever worked right for anyone!

I have made a few mistakes on everyone's returns over the years. Sometimes, I have had to file amended returns to undo the mistakes. Sometimes, the IRS/State was right and money was due or refunded. It can be a PITA to deal with the bureaucracies, but I have the time although not the desire, especially if the state/IRS is wrong.

 

[Koolau]

Just spent a few minutes with the CPA. I'm beginning to wonder about her. I asked (for this year) about doing a QCD. She thought I could do it directly from my 401(k) which I said was incorrect (learned it here - so hope I'm right). Then she was concerned that transferring from 401(k) would be taxable. Say what?!

There IS a language barrier (she's Korean and I speak Kentucky) but seriously. I'm thinking about a new CPA or a translation app. SHEEESSHHH!

 

[SecondCor521]

Just spent a few minutes with the CPA. I'm beginning to wonder about her. I asked (for this year) about doing a QCD. She thought I could do it directly from my 401(k) which I said was incorrect (learned it here - so hope I'm right). Then she was concerned that transferring from 401(k) would be taxable. Say what?!

There IS a language barrier (she's Korean and I speak Kentucky) but seriously. I'm thinking about a new CPA or a translation app. SHEEESSHHH!

QCDs must be done from an IRA, not a 401(k). A traditional 401(k) to traditional IRA would not be taxable (and would enable QCDs).

 

[Koolau]

QCDs must be done from an IRA, not a 401(k). A traditional 401(k) to traditional IRA would not be taxable (and would enable QCDs).

Yeah, I was really surprised she didn't seem to know that.