Income tax time!

[Kirk W]

As the new year is about to begin, most of us will soon be looking at income taxes or at least in filing our income return. There are many good options and most of us could do this ourselves on the computer. I am often amazed by how many people pay to have a relatively simple return filed for them because the process is so intimidating. With the availability of inexpensive but good quality computer programs for the returns, perhaps it is time to consider doing this yourself. If you have never done so, the majority of such programs today interview you, much like the paid preparer would and lead you through the process. For those of us who are on a limited budget, the IRS has a page that makes this available free, for all who qualify.

File Your Federal Taxes Online for Free  These programs are not yet available very soon.

For those who do not qualify, check out this tax program review for 2020 by C-net.

[LindaH]

I've used Turbo Tax's program for years and, if you qualify, you can do so for free.

[TexasPSDX]

We have used TaxSlayer.com for years to do our taxes.  Simple to use.  It will walk you through the whole process.  Information rolled forward year to year.

Edited January 2, 2021 by TexasPSDX

[Barbaraok]

We have used TurboTax for years.   Since it pulls information from prior years, it enters most of the data and I fill in new totals for the year, it checks and then alerts me if there is something I've forgotten to do.   What I especially like is the "What If" worksheet that you can use to plan out your anticipated taxes for the next year and adjust withdrawals from tax exempt funds and see how that affects your tax liability.   My goal each year is to come out as close to zero  due or refund.   

[ToddF]

And with a good pair of scissors, everyone can cut their own hair.

[Barbaraok]

5 minutes ago, ToddF said:

And with a good pair of scissors, everyone can cut their own hair.

Not when your arthritis is acting up and you can't see the back of your head, let alone get fingers to work properly.  😉

[RV_]

We have too many tax credits and deductions to not hire a professional. And I don't mean H&R Block, as they are about the same as turbo tax. Standard deductions low income they are fine. Years ago one tax guy we had, a now deceased retired USAF Chief Master Sergeant, challenged me when I said I can do my taxes myself. He said that he would do my taxes for free if he can't save me more than Turbo tax would. This was 1998. And he would take whatever he saved me as his fee if he did. Well, he saved me $700.00 more that time. He was nice enough to just charge me the $75.00 he usually charged back then. He had a copy machine but no printers or computers. He filled everything out by hand, and had a wall bookshelf filled with the tax codes. Can't find that kind of expertise anymore. Looking here now.

[sandsys]

1 minute ago, RV_ said:

a now deceased retired USAF Chief Master Sergeant, challenged me when I said I can do my taxes myself. He said that he would do my taxes for free if he can't save me more than Turbo tax would.

The challenge here is we don't know what we don't know. Sure Turbo Tax works well. But a true tax professional can work better. We'll never know what we might have saved by not using Turbo Tax if we never give a professional a shot.

Linda

[RV_]

Yep Linda! A good tax person takes you to where your toes are just touching the line of illegal but not over it. My last tax lady is no better than Turbo Tax. Now we are trying to find another great one. <sigh>

[Twotoes]

I was self employed most of my life and had to file a Schedule C as well as a 1040. Being self employed I was more at risk of being audited, especially as a Lawyer. The same for Drs and other high income professionals. I always paid someone to prepare my returns to decrease my chances of an audit. I looked at it as buying insurance and it was deductible on the next years return. I am retired now and have several rental properties. I still use a professional tax preparer. I don’t want to even try to compute all the depreciation on each property. I don’t cut my own hair, or do my own surgery, or even represent myself in Court. 

[bigjim]

1 hour ago, Twotoes said:

and it was deductible

Is that still the case?  I had used  a pro a few times in years past and I know it was then but for some reason I thought they changed that.

[agesilaus]

I used Turbo Tax for years then they did something to irritate me, ran up the cost probably, and I jumped to HRB and have been there for several years. I haven't noticed any major difference. I don't think I can use the free online services. But I haven't looked for quite awhile. I thought it was about the same as the 1040EZ form.

[Barbaraok]

39 minutes ago, agesilaus said:

I used Turbo Tax for years then they did something to irritate me, ran up the cost probably ...

That’s when I went to the basic one even though we have investment income.    I just use the forms section and fill in income amts for each investment for the year, let TT check the math, etc. and file. 

We don’t have any mortgages, no side businesses, and just property tax on Park Model, which is very small,  and relatively few medical expenses (even with Dave’s medical problems) so we don’t have enough deductions to take, especially after they changed the standard deduction levels.  

[Kirk W]

If you have something complicated or unique, it is probably worth the cost of a professional but the vast majority of people could do just as well with a good tax preparation program. I have a good friend who does taxes each year and she says that most of her clients could do their own taxes with a computer program if they chose to do so. This lady taught tax accounting in college until she retired. 

[Pappy Yokum]

Just remember to join these two together: 

THE (and) IRS - equals..

"THEIRS".

My Chinese tax prep lady's last name is "Chan" - (IMO) she's like Jackie Chan on legal steroids & worth every dime!

No arthritis (yet) - still have a fair amount of hair, but I don't try to cut my own!

However, how *you* roll the dice is your choice! 

I just weigh mine -vs- theirs....and like to keep as much of *mine* as possible.

(One of these years, if I get a "round toit"  maybe I'll check her work against Turbo!)

.

 

 

[whj469]

I think that Kirk is !00% correct. My taxes are not to difficult and I have used Turbo Tax for years. I do like the fact that they go back and get last years information. Not much changes from year to year for us.

[Randyretired]

On 12/31/2020 at 6:30 PM, Kirk W said:

If you have something complicated or unique, it is probably worth the cost of a professional but the vast majority of people could do just as well with a good tax preparation program. I have a good friend who does taxes each year and she says that most of her clients could do their own taxes with a computer program if they chose to do so. This lady taught tax accounting in college until she retired. 

I agree. When we had businesses and active agriculture we used a professional.   These professionals saved us more than they cost.   Now that we have a somewhat simpler tax story I use a computer program because I don't see how a professional could save enough to justify the costs.

[Barbaraok]

9 hours ago, Pappy Yokum said:

(One of these years, if I get a "round toit"  maybe I'll check her work against Turbo!)

Easy way to check is to see what extra schedules you have added to your returns.  If you have a lot of them, then yes, a tax preparer may be the way.  If you are taking the standard deduction and the only extra schedules might be Schedule D then the computer programs will be easy to use.  

 

 

 

[Randyretired]

Another way a CPA type of professional can be beneficial is if they can give advise on ways to structure activities for maximum tax benefits. That type of advise was most useful for us.

[Twotoes]

On 12/31/2020 at 5:12 PM, bigjim said:

Is that still the case?  I had used  a pro a few times in years past and I know it was then but for some reason I thought they changed that.

If you are self employed or have a side business and file a Schedule C the fee you pay a professional tax preparer is deductible as a business expense. I don’t know if it is deductible if you don’t file a Schedule C and only file a Schedule A itemized deductions. If you have rental property and file a Schedule E it is also deductible. 

[DJohns]

Have you ever been audited by the IRS?  They attempted and would have if my taxes would have been self done. You want a tax accountant in your corner when going up to these people.  My opinion only, not having an accountant is like doing a LLC over the internet without a lawyer.

When things go south it is too late to go get a professional. What you saved will be eaten up by fees getting a new professional up to speed.

[Kirk W]

The fee to have a professional tax preparer do your taxes is an allowed deduction for anyone. 

If you have not tried using one of the current computer income tax programs, it might be worth the cost and trouble to go through it just one time. All of the programs that I am familiar with go through an interview type process asking about what you may have in income and deductions. At the end of the process, the program will compare the result of itemizing to the standard deduction and give you the choice of which to use.

In addition, the IRS website has an amazing amount of information and assistance available to us and all of that is free. There is also a Taxpayer Advocate site with advice on things like choosing a tax preparer and how to get your Economic Impact Payment, if for some reason you didn't get yours. 

With so many of us mostly staying home or isolating from the world around us, it seems to me that this might be a good time to spend some time studying the options we have with our taxes. I think that many people pay to have taxes done because they are intimidated by the process. I think that the majority of us on these forums are retired and for most of us that simplifies our filing. 

Quote

$188

 

According to the National Society of Accountants' 2018–2019 Income and Fees Survey, the average tax preparation fee for a tax professional to prepare a Form 1040 and state return with no itemized deductions is $188. Itemizing deductions bumps the average fee by more than $100 to $294.Nov 9, 2020

 

[TXiceman]

I am sticking to the professional tax preparer.  A couple of years back, I tried a program and to follow the previous tax return that was prepared by a tax accountant and got totally lost.  Wading through all of the stock mess was too much.

Ken

[GlennWest]

I am not retired yet so we use turbotax but it is not free. We have travel deductions, hotels, food, etc.  Neat thing about turbotax it brings up the forms you need. My cost will actually go up now that I have parked the rv. I did get audited when we first started traveling for work. My income and deductions greatly increased and threw red flag. But I keep a log book and all was good. He did tell me most people do not use a log book and can't prove deductions.

[podwerkz]

I've used TurboTax for years ever since my previous CPA retired...

Two areas where TurboTax fell short is figuring the 'per diem' deductions for transportation workers, and figuring basis and P&L (capital gains and losses) for employee stock purchases, and then later on selling some of the stock.

I had to go outside the program and acquire documents and information on other websites, in some cases waiting days or weeks for information, then do a LOT of 'ciphering' (I had Jethro on speed dial!) then return to the program and enter my results into the program in the right places.

These two very basic functions should have been included in the package. 

 

 

 

Edited January 2, 2021 by podwerkz