Doing My Own Taxes?

[The Cosmic Avenger]

Having someone else do your taxes doesn’t eliminate the potential for mistakes. The one and only time I had H&R Block do mine, they screwed it up.

Same. I actually paid extra for "professional advice", and they told me we didn't qualify for a child care expense deduction. I read up on it very thoroughly, and we did, so I had to file an amended return. Never used H&R Blockheads again, went back to TurboTax, then two years ago switched to FreeTaxUSA. They require a little more double-checking, but IMO TT is not worth the extra money, I still find I have to go over everything with a fine toothed comb and I still catch issues after doing the "interview".

 

[athena53]

It's really hard to use last years taxes as a templete when your income sources are dramatically changing year-to-year.

I agree and that's been my problem. Capital gain distributions from my mutual funds don't come in till very late in the year (and sometimes estimates aren't available beforehand) and they fluctuate wildly from year to year. Liquidating them all and buying ETFs isn't a good idea because of large imbedded gains (good problem to have, I now).

This thread motivated me to go back to my estimate for 2025 and in sifting through the granular data from my UBS account I realized that the YTD "Realized Gains/Losses" were only capital gain distributions from the mutual funds- not any resulting from sales, which was another $8.000. %$$#! Looks like my estimated payments may still cover the Federal taxes and I know I'm over-paid on state taxes.

 

[Gumby]

Being a spreadsheet geek, I replicated all tax forms that are relevant to our situation in Microsoft Excel with all formulas and with all sheet/form references linked. It took a long time and a lot of effort to set it up, but should be easy to maintain going forward. Before my wife retired, because she worked in a different state than where we live, it included two state tax returns. I tested it with inputs from a previous year and the result came out pretty much spot-on with what the accountant did. Now that my wife retired, and because we take the standard deduction, taxes now are simpler. I just make sure that I keep abreast of any changes to tax laws from one year to the next. When a new situation occurs - for example, when we start collecting social security or when we begin RMDs - I'll seek the help of an accountant for that year just to be sure, and just make sure my spreadsheets replicate any new forms and/or calculations for subsequent years.

All I do is input our 1099-DIV, 1099-INT and 1099-R info, the standard deduction for the current tax year and maybe a few other things, and everything calculates.

Sounds like a lot of work. I just use a pencil and paper. Don't even really need a calculator.

 

[audreyh1]

Sounds like a lot of work. I just use a pencil and paper. Don't even really need a calculator.

Because TurboTax doesn’t do the annualized quarterly tax calculations for the annualized income method for estimated taxes, I built my own decades ago. They’ve taken very little work to maintain even through some major tax changes. Even though I don’t use the annualized income method for calculating estimated tax payments anymore, it still helps me get a good estimate on total year taxes in Dec/early Jan including the 90% safe harbor threshold.

 

[AudiDudi]

Just saw this article

Client Challenge

www.sfgate.com

 

[JoeWras]

Just saw this article

Client Challenge

www.sfgate.com

FYI for those who want to click, this is an opinion piece heavy on politics.

 

[Original Wally]

Things are so automated now, I don’t really know what a CPA adds, unless you have something really complex that requires some interpretation or decision making. Most forms can be uploaded, eliminating data entry errors and putting numbers in the right places on the right forms. If I discount the time it takes me to log into various accounts and download or link forms, I can probably have my taxes done in well under an hour. Maybe even under 30 minutes. I still print out the return and review it before filing, so that might add 10 minutes or so. I like to understand how the calculations are working so that I can find ways to reduce exposure.

I am one and I agree. For MOST people it is a fairly simple process. As others had mentioned, get a copy of Turbo or H&R block. Have it done "this year" by an accountant, THEN do it yourself and see if you agree, and if not, WHY.

The interview process for TT & H&R are pretty easy to follow. Just take your time.

 

[Original Wally]

Being a spreadsheet geek, I replicated all tax forms that are relevant to our situation in Microsoft Excel with all formulas and with all sheet/form references linked.

Me too. Even set up calcs for Section 199A and Foreign Taxes Paid.
To make it EXACT I had to add a second tab to to the calc done on the Capital Gains Worksheet.

It SEEMS to be working fine. When (or IF) VG finally sends out their consolidated 1099 I may make a final tweak to the spreadsheet for unknown items.

I trace all my income (Pension + Social) income, deductions etc, and also divs and interest throughout the year. So I have a REALLY good feel by mid October of what it will look like.

 

[Original Wally]

Sounds like a lot of work. I just use a pencil and paper. Don't even really need a calculator.

Ya, but I LIKE doing it. As a retired CPA it is still a kind of hobby. Keeps me out of cheap bars, I suppose. Shrug.

 

[Koolau]

Sounds like a lot of work. I just use a pencil and paper. Don't even really need a calculator.

I no longer trust my own arithmetic.

 

[Phoenix Rising]

Sounds like a lot of work. I just use a pencil and paper. Don't even really need a calculator.

Yeah, you're right - a whole 10-15 minutes to key in all my 1099 info and copy/paste the current tax tables. Whew! How ever do I manage.

 

[audreyh1]

Just saw this article

Client Challenge

www.sfgate.com

I don’t need no stinkin’ accountant! At least not for hopefully many more years yet.

 

[lem1955]

Ive been using TT for at least 20 years. Many years ago I took my completed return to an accountant. TT had not allocated taxes to each of two states. It was never audited, so I might have made or lost a few dollars. But no major problem. And as others have said, now I know what to look for. As time has gone on, I understand the return much more completely than I did when I started.

 

[COcheesehead]

Ive been using TT for at least 20 years. Many years ago I took my completed return to an accountant. TT had not allocated taxes to each of two states. It was never audited, so I might have made or lost a few dollars. But no major problem. And as others have said, now I know what to look for. As time has gone on, I understand the return much more completely than I did when I started.

There is no better way to understand and plan your taxes, then to do them yourself. I don’t even use the interview anymore, but skip to the parts I need.

 

[frank05]

I still don’t understand why after all these years TT still doesn’t run the calculations for foreign tax credit and tell you which method is better to use.

Don’t see any evidence of AI in TT this year. They now use huge icons for previous year’s finance firms for import They bother me more this year to buy their audit defense.

 

[AudiDudi]

Pensions, interest, Social Security and brokerage. I prefer to DL the brokerage and not manually enter in 50-100 entiries on Sched D. TT works for me. Thankfully I got rid of the K-1s years ago and no more self-financed mortages.

 

[Pointby2]

But I do wonder sometimes, how many mistakes have I made on my taxes that have slipped through?

 

[SecondCor521]

Pensions, interest, Social Security and brokerage. I prefer to DL the brokerage and not manually enter in 50-100 entiries on Sched D. TT works for me. Thankfully I got rid of the K-1s years ago and no more self-financed mortages.

Most of the time you can summarize the transactions by category (ABCDEF, and newly this year GHIJKL), and often people won't have C or F transactions, so at most it's four entries. That's how I do it at Tax Aide anyway.

 

[GrayHare]

But I do wonder sometimes, how many mistakes have I made on my taxes that have slipped through?

Taxes have become so convoluted that for anything but a simple return, odds are two pro accountants will calculate slightly different tax amounts. IRS probably comes out ahead on about half of those.

 

[COcheesehead]

But I do wonder sometimes, how many mistakes have I made on my taxes that have slipped through?

Why do you think you made mistakes?
I found that by doing my own taxes I actually made good discoveries.
I saved myself tens of thousands in capital gains because I understood QSBS rules.
I know to take a state deduction on part of my money market interest.
I know to buy my state specific muni bonds to get double tax free income.
I learned how to avoid AMT.
I understand tax loss harvesting and how powerful it can be if done right.
I know how to counter some 1099 income with corresponding expenses.
Plus much more. Education is powerful.

 

[audreyh1]

Because TurboTax doesn’t do the annualized quarterly tax calculations for the annualized income method for estimated taxes, I built my own decades ago. They’ve taken very little work to maintain even through some major tax changes. Even though I don’t use the annualized income method for calculating estimated tax payments anymore, it still helps me get a good estimate on total year taxes in Dec/early Jan including the 90% safe harbor threshold.

It’s also worth mentioning that I am able to use these same spreadsheets to check against the TurboTax output is there is a serious discrepancy. Found a few user data entry errors that way.

 

[TripleLindy]

I don’t even use the interview anymore, but skip to the parts I need.

Same, but TT doesn’t make it easy to skip the interviews. Clicking into different sections often invokes the interview for those sections. But still better than following TT’s painful process. I wish it followed the actual forms better.

I still don’t understand why after all these years TT still doesn’t run the calculations for foreign tax credit and tell you which method is better to use.

Exactly! I dug into this a few years ago because I didn’t understand it when TT asked which method I wanted to use. I manually went through the 1099s to figure it out. It wasn’t hard, but took some intuition when trying to tease out the correct numbers. So I know how to do it, but wonder why TT doesn’t do it for me.

 

[COcheesehead]

Same, but TT doesn’t make it easy to skip the interviews. Clicking into different sections often invokes the interview for those sections. But still better than following TT’s painful process. I wish it followed the actual forms better.

Exactly! I dug into this a few years ago because I didn’t understand it when TT asked which method I wanted to use. I manually went through the 1099s to figure it out. It wasn’t hard, but took some intuition when trying to tease out the correct numbers. So I know how to do it, but wonder why TT doesn’t do it for me.

There’s a screen that shows all the tasks for a section. There are boxes that say started or needs review. I am not sure what that screen is called, but I go right to that.

 

[Mark1]

But I do wonder sometimes, how many mistakes have I made on my taxes that have slipped through?

Completed Fed yesterday using Free Fillable Forms and I know it will catch some mistakes and so does the IRS before the return is accepted as I was once rejected due to rounding errors on cents. I'm much more careful on rounding to dollars now. I noted this year when we hit the "Do the Math" on long term CG form 8949, it vaporized all our dates on Date Acquired and Date Sold columns, which I thought was odd. Our return was accepted overnight, so I guess by checking box (D), it knows that these have been held for greater than 1 year by definition (?). Maybe the instructions say not to enter the dates for Box (D) items, but who reads all the instructions.

 

[target2019]

I only use Forms View during the initial prep, and have never seen interview mode automatically launch.

Perhaps that is something new and I haven't triggered it.