Tuesday, March 06, 2007

Taxes

(For my overseas readers, this post may not make much sense. It's all about our American Income Tax system. Sorry.)

Each year I do my own federal taxes. I have done so ever since I started earning enough money that I was required to file a return. When children came along in our marriage, I started doing their taxes as well, so now I have three returns to prepare.

Although I've long been a computer enthusiast ("nut," Carol would say), I've preferred to do my taxes the old-fashioned manual way. Oh, I download forms and instructions from the IRS web site. But then I read through the instructions and fill out the forms with a pencil, review everything carefull to make sure it "looks" right, and then sign and mail in my return.

Until now I have avoided tax preparation software. Not any more!

I was talking with my company's accounting firm auditor a few weeks ago about a recent complication in my tax situation. He recommended that I buy Turbo Tax. He called it "idiot-proof." Told me all I had to do was answer questions on-screen, like an interview, and the program would offer explanations and then put all my data on the correct line of the correct form.

I thought, "Yeah. Right."

I loaded it onto my computer and started with my daughter's return (the simplest of the three I have to do.) Well, the accountant was right -- it's just about idiot-proof. The software steps you through the return line by line, but you never fill out a form. It starts with name, address and Social Security number. Soon you're at the part where it asks for W-2 information. Depending on whether or not your employer or their payroll company (ADP, Paychex, and others) subscribes to the service, the program CAN go to an internet site that will match up your Social Security number and import all your payroll W-2 data automatically! Now that's slick!

But it gets better. My daughter had a statement from an investment broker (1099-B) with a number of transactions that had to be reported on a Schedule D (capital gains). BUT, if I entered her username and password to that broker's web site, all that 1099-B data was also automatically imported to Schedule D. Date of purchase, dates of sale, proceeds of sale... everything!

Now THAT'S REALLY slick!

The software walked me through the entire return in about 2 hours. It wouldn’t have taken me that long if I hadn’t gone through every menu and sequence even though I knew they didn’t all pertain to this return.

So, I’m a fan of Turbo Tax.

Tomorrow I’ll start on the other daughter’s return – the one that also has STATE income tax and a more complex set of federal forms to deal with. We’ll see how long that one takes.

Then, when I’m REALLY sure I know what I’m doing, I’ll tackle my own taxes.

Hey, I've got MY priorities straight!

4 comments:

kenju said...

Wh have been having our taxes done by our CPA for 25 years+, but now they are not as involved as they used to be. My kids tell me to use Turbo Tax, but I have not wanted to try it. You made me think I might be able to do them!

Steve G said...

I hate to think about taxes, but it comes up every year, rain or shine. I'm waiting on my wife's tax statement (German) before I decide which way to go. Turbo Tax may be the way this year.

Badabing said...

You just made my blood pressure rise 30 points by mentioning the "T" word. I've used Turbo Tax in the past and really liked it. Like you, I pretty much do things manually, but I use Excel to tally things up & do simple calculations. I've been doing my own returns for the last 20 years, but the last two years I've made silly mistakes, so I hired an accountant. If I write any more about the "T" word my bp will spike another 20 points so I'll just end here.

Candace said...

Lucky gals to have a dad like you!