Best tax software? Simple situation, but multiple states

[dailybagel]

I would like to ask for recommendations about the best/most economical tax software for someone in my situation.

I have always been comfortable doing my own taxes, and get a sense of satisfaction from doing the job with precision and accuracy.

My issue this year is that I will have 5 returns to file:
Federal
Massachusetts (part-year resident)
New Jersey (part-year resident)
New York State (non-resident wage earner)
New York City (same)

Special tax issues: an FSA, plus about $8,000 in graduate school tuition (possible tax credit?). I have no capital gains/losses realized in 2012.

My question is, can anyone recommend software that will (1) optimize my tax return, (2) be adequate to handle an NJ return with out of state taxes, and (3) make it easy and economical to file returns in all five jurisdictions?

Even if you don't know about specific features, what do you think is the best deal in tax software?

[interplanetjanet]

I've been quite happy with TaxACT, and have used it for almost ten years including in a partial-resident situation such as you describe. I'm not sure if it's going to be the most economic solution for you but in my experience the pricing has been quite competitive. Your tax situation sounds straightforward so I think that any major tax package that properly supports the nonresident state returns in question should work for you.

[expat]

Turbotax

[Peter Foley]

Turbo Tax might get to be a bit pricy. It's fine for Federal and for one state return, but when you start adding additional states it gets expensive. I might go the Turbo tax route after reviewing the forms (and relative simplicity) of the state taxes you will need to do. Do your Federal and the most complex of the states with Turbo tax and do the others longhand or on line. (I do taxes for myself and my two kids - and for my mother until she died. In many years I did taxes for Minnesota, Illinois, Wisconsin, Massachussets and Arizona. I was never comfortable doing the Mass. returns, and Wisconsin's on line forms are not as intuitive as they might be.)

[sscritic]

With Basic:
Prepare and print unlimited state returns for only $44.99 per state
With Deluxe, Premier, and
Home & Business:
Prepare and print unlimited returns for one state at no extra cost.
Only $44.99 per additional state

You only have two additional that I count. NY is one state, not two.

[grabiner]

Whichever software you use, check the calculations yourself; part-year resident returns have fewer people to find bugs. When I moved to NJ in 2010, I found two bugs in TaxACT which applied only to a few part-year NJ residents.

[Bob's not my name]

Massachusetts (part-year resident)
New Jersey (part-year resident)
New York State (non-resident wage earner)
New York City (same)

Special tax issues: an FSA, plus about $8,000 in graduate school tuition (possible tax credit?).

Interesting tax situation. Massachusetts taxes TIRA contributions but not 401k or 403b contributions. New Jersey taxes TIRA contributions and 403b contributions but not 401k contributions. I believe NYC taxes apply only to residents and municipal employees.

This article may be useful with respect to education credits: http://thefinancebuff.com/how-to-save-4 ... taxes.html

[pshonore]

And to complicate things a little more, the rules may be different for PY residents versus residents (for the full year) in terms of credits, deductions, etc. I'm guessing OP started off the year as a Mass resident, moved to NJ sometime during the year and at that time started working in NYC.

[jebmke]

Massachusetts (part-year resident)
New Jersey (part-year resident)
New York State (non-resident wage earner)
New York City (same)

Special tax issues: an FSA, plus about $8,000 in graduate school tuition (possible tax credit?).

Interesting tax situation. Massachusetts taxes TIRA contributions but not 401k or 403b contributions. New Jersey taxes TIRA contributions and 403b contributions but not 401k contributions. I believe NYC taxes apply only to residents and municipal employees.

This article may be useful with respect to education credits: http://thefinancebuff.com/how-to-save-4 ... taxes.html

I do a lot of taxes -- probably 400-450 returns a years when you count ones I review and transmit. People frequently overlook unique state situations. In my state, MD, retirees (65 and over with moderate income) can exclude a portion of their qualified pension income from state taxable income. Unfortunately, IRA distributions do not qualify. I often get people who come in who have rolled their money out of a 401(k) or similar qualified plan into an IRA only to find out that the distributions are now taxable by MD.

[sscritic]

And to complicate things a little more, the rules may be different for PY residents versus residents (for the full year) in terms of credits, deductions, etc. I'm guessing OP started off the year as a Mass resident, moved to NJ sometime during the year and at that time started working in NYC.

From memory (but it ain't that bad on some details), VA has three categories: Resident, PY Resident, and non-Resident. Most states combine PY and non, but I don't think VA does.

[Peter Foley]

With some editions of Turbo Tax, you can prepare and print a number of returns, but filing is an additional cost. You have to be very, very careful about which version you buy. The version I buy is Deluxe and even Duluxe has had different sub versions in the past. On the back of the box it states that you get 5 federal e-files and "1 state product via download (Print for free or e-file for $19.95 per return)"
Because of the number of federal returns I file, this might be fine for me, but not appropriate for the OP.

[jmg229]

I would just do it by hand. Take some time to familiarize yourself with the tax codes of the different states and do it yourself. As you said, you don't have a difficult situation, you just need to make sure that you are handling each state correctly. I have had multiple state returns all but 2 years of my life and also do the taxes for my siblings who are all multiple states (NY, NJ, PA; NY, NJ, NH; NY, NJ) and can assure you that if you read carefully, it will be easy enough and definitely cheaper than paying for all of those state returns.

[dailybagel]

And to complicate things a little more, the rules may be different for PY residents versus residents (for the full year) in terms of credits, deductions, etc. I'm guessing OP started off the year as a Mass resident, moved to NJ sometime during the year and at that time started working in NYC.

That is exactly correct!

You only have two additional that I count. NY is one state, not two.

I just looked at the New York tax forms, and you're right, the New York City tax is handled on the state return. At least I don't have to pay, as a nonresident.

[Bob's not my name]

In my state, MD, retirees (65 and over with moderate income) can exclude a portion of their qualified pension income from state taxable income. Unfortunately, IRA distributions do not qualify. I often get people who come in who have rolled their money out of a 401(k) or similar qualified plan into an IRA only to find out that the distributions are now taxable by MD.

I have a morbid interest in state tax treatment of retirement income, so I looked this up. It's rather a sad little exclusion, isn't it? $26,300 minus your SS income. Also, why do you say "with moderate income"? In my quick review I didn't see an income qualifier, but the form and worksheet are opaque, like most. Just wondering where it's hidden. Or maybe you said "moderate income" because only very moderate income would fit into the small exclusion?

[grabiner]

I do a lot of taxes -- probably 400-450 returns a years when you count ones I review and transmit. People frequently overlook unique state situations. In my state, MD, retirees (65 and over with moderate income) can exclude a portion of their qualified pension income from state taxable income. Unfortunately, IRA distributions do not qualify. I often get people who come in who have rolled their money out of a 401(k) or similar qualified plan into an IRA only to find out that the distributions are now taxable by MD.

I discovered this particular quirk when creating the Wiki page, and it's one of the things we list in the Specific Issues for Investors section of the wiki page. If you retire in MD, you usually want to have a large enough 401(k) or defined-benefit pension that you can use up the whole exclusion, as it may save you about 8%. (However, if you have a high-cost 401(k), saving 8% in taxes may not be worth losing 10% in expenses.)

[bsteiner]

I've used TaxCut (now H&R Block) for about 20 years, and I've been happy with it. I think it's comparable to Turbo Tax. I, too, live in New Jersey and work in New York, and I use it to do both my New York nonresident return and my New Jersey resident return. The program includes any one state of your choice, and lets you buy additional states for about $25 per state.

The New York state income tax on a nonresident is equal to the tax if you were a resident, multiplied by the percentage of the income that's earned in New York. Your moving from Massachusetts to New Jersey shouldn't make any difference -- as far as New York is concerned, you were a nonresident for the entire year.

New York City used to tax nonresidents on wages and self-employment income. However, that tax was repealed about a dozen years ago.

[Toons]

I've been quite happy with TaxACT, and have used it for almost ten years including in a partial-resident situation such as you describe. I'm not sure if it's going to be the most economic solution for you but in my experience the pricing has been quite competitive. Your tax situation sounds straightforward so I think that any major tax package that properly supports the nonresident state returns in question should work for you.

+1 Used TaxAct 5 years now,part-year resident return last year,no problems good price