tax software for QOZ investors [Qualified Opportunity Zone--tax break]

[FinanceGeek]

I'm looking for tax software that handles Form 8949 Box F, Code Z, and Form 8997.

Based on review of their respective websites, it appears that FreeTaxUSA, HR Block, Jackson Hewitt, Liberty Tax, TaxHawk, TaxSlayer, and TurboTax do not support reporting of QOZ investments.

TaxAct appears to support it, but there are mixed reviews on the quality of this software. One of the lesser priced professional software packages is Intuit's ProConnect. It appears to support QOZs, and it cleanly supports input from TurboTax which is what I've used up until now.

I find it quite surprising that QOZ's are so exotic that they aren't supported - they've been around about 5 years now, and people who own them are in this game for the long haul - 10 years plus. Do the tax software companies realize that they could gain decent market share by adding support for one form?

Any advice or insight?

[solveqoz]

I am in the same boat. And its bad that TurboTax could not incorporate that for 5 years now!. BTW I saw this in TaxSlayer for QOZ (form 8997) but not sure it will cover boxes F and Z- https://support.taxslayerpro.com/hc/en- ... nvestments

[FinanceGeek]

That's a data point, but your link points to TaxSlayer Pro. The "retail" TaxSlayer doesn't support Form 8997:
https://www.taxslayer.com/tax-tools/fed ... -for-taxes

TaxAct and Intuit's ProConnect are both (much) lower priced than the professional version of TaxSlayer.

[solveqoz]

oh ok. So can we say as of now the only software that supports QOZs for individuals are TaxAct, Intuit's ProConnect and Taxslayer Pro?

[nisiprius]

For any other curious bystanders: I find that QOZ stands for Qualified Opportunity Zone.

Q1. What is a Qualified Opportunity Zone (QOZ)?

A1. A QOZ is an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as QOZs if they have been nominated for that designation by a state, the District of Columbia, or a U.S. territory and that nomination has been certified by the Secretary of the U.S. Treasury via his delegation of authority to the Internal Revenue Service (IRS).

[FinanceGeek]

There are many professional grade tax preparation software packages. These cater to professional accountants who are going to file taxes for many clients. As such, they can cost thousands of dollars to license, and require that you obtain your own IRS EFIN number (if you want to electronically file).

Two others I briefly looked at were DrakeTax and UltimateTax, they both sell a "per pay return" 1040 product that is more reasonably priced for an individual to buy. But I wasn't able to discover a list of tax forms that they support.

Unless I get new information, I'm inclined to go either with Intuit or TaxAct. I'm going to spend a bit of time on this decision, since I'll be using this for quite possibly the rest of my life. Guess I will no longer be part of the annual "will Fidelity send me free TurboTax this year" crowd.

[bguser11]

I also need software that supports Form 8997, but HRBlock does not, so I would like to ask if the following is a possible solution. My question affects people that did not buy or sell a QOZ investment in the current tax year, but have done so in the past and still need to file Form 8997. Last year when I purchased a QOZ fund I used HRBlock online to prepare a paper return without Form 8997 and manually filled and inserted Form 8997 to it (HRBlock correctly calculates QOZ deferrals on Form 8949 with Code Z, but does not allow e-file and does not allow you to fill Form 8997 – you have to pay extra for a pro to do it and e-file for you). So this year I am thinking to e-file with HRBlock without including Form 8997 (I have no change in my QOZ holdings, but still need to file it I believe), and if the IRS asks for it, I will manually fill it and mail it to them. Any advice will be appreciated. I read in the following post that this is supported by the IRS:
https://ttlc.intuit.com/community/inves ... light/true

[FinanceGeek]

HRBlock correctly calculates QOZ deferrals on Form 8949 with Code Z, but does not allow e-file and does not allow you to fill Form 8997 – you have to pay extra for a pro to do it and e-file for you).

Are you saying H&R Block wants to charge you extra? Form 8997 looks fairly simple, compared to things like computing foreign tax credits.

[bguser11]

To clarify my previous post, last year I used HRBlock online successfully to file my taxes even though I made QOZ investments. To do that HRBlock allowed me to enter my QOZ investments on Form 8949 (thru a questionnaire), and it correctly added the code Z in column (f) and treated the amount as a loss, thus reducing my capital gains. Next I had to print my taxes, complete Form 8997 on my own, and insert it into the correct place of the printed pages, and file by mail (HRBlock does not allow efile if Form 8997 is needed, but they offered for $79 to have my taxes reviewed by a HRBlock pro who will complete Form 8997 and efile). So, this year I would like to know if I can just not bother with Form 8997 (because there are no changes to my QOZ investments), which will allow me to efile with HRBlock, and if the IRS asks me for Form 8997, I will fill it and mail it to them. It seems that the IRS allows you to mail a missing form. Thank you.

[solveqoz]

This link might help - https://ttlc.intuit.com/community/inves ... 00/2043086

[bguser11]

Subject: tax software for QOZ investors [Qualified Opportunity Zone--tax break]

This link might help - https://ttlc.intuit.com/community/inves ... 00/2043086

Yes, I am aware of your link, and had included it in my original post, but was hoping for feedback from someone experienced in the IRS missing form process. Thank you.

[solveqoz]

oh sorry...didn't see that

[FinanceGeek]

HRBlock does not allow efile if Form 8997 is needed, but they offered for $79 to have my taxes reviewed by a HRBlock pro who will complete Form 8997 and efile

Well, I'm sorry I can't answer your question about the consequences of waiting for the IRS to tag you on a missing form 8997 ... but I think you answered mine ... the cost of HR Block + $79 seems much better than the options I was considering. Especially since I see that Amazon sells the 2021 Deluxe + State with a bonus if you direct your refund on an Amazon gift card, with no apparent penalty if I don't have a refund coming (which by Boglehead tradition is a mistake!)

Thanks!

[bguser11]

I am glad my post was helpful. Keep in mind I used the premium option of the hrblock online tax service for $49.99 - 35% discount, not the desktop version.

[tallguy31]

bguser11 seems to refer to https://www.hrblock.com/online-tax-fili ... ax-filing/ which I understand does not allow to efile if Form 8997 is needed. I'm afraid that the HRBlock tax pro option is a completely different path!

I found some older references https://www.hrblock.com/tax-center/supp ... w-process/ to a 'Tax Pro Review' service. Is the 'Premium Online Assist' service being offered the same? Would they add Form 8997 and efile for you?

By the way, I noticed "The cost of Tax Pro Review is based on your tax complexity" in https://www.hrblock.com/tax-center/supp ... ro-review/

PS: Back in 2019 http://web.archive.org/web/201904231038 ... ro-review/ they offered the whole package for $144.99

[FinanceGeek]

here is one more thread that makes strong arguments against hacking together a return with overrides. VERY weird to see TurboTax's user support forum being used not only an advertisement but also a tutorial for how to handle this in TaxAct ... moderation on that forum must be pretty lenient

https://ttlc.intuit.com/community/taxes ... /00/828665

[tallguy31]

I spoke with H&R Block - twice
HRBlock software does not support Form 8997, but their ~$90 Tax Pro Review service can and will add it i.e. before efiling.

[tallguy31]

Just to make sure I called H&R Block again before taking the plunge, and this time I have been told that ..
Their Tax Pro Service (which can add QOZ forms) is only available for the online versions https://www.hrblock.com/online-tax-filing/
and it is not available (neither anything similar) for their desktop/download versions https://www.hrblock.com/tax-software/
That's different from what they told me earlier this week.

[FinanceGeek]

For anybody who's interested, I completed my taxes, including form 8997, using the download version of TaxAct for 2021.

The only gotcha I experienced is that Form 1116 (Foreign Tax Credit) isn't available yet.

[kmn99]

Did anyone try this on OLT Online Tax software(IRS free file)?

They have the QOZ forms but I am unable to update the purchase date of the QOZ fund. I invested in 2022 and looking to offset 2021 capital gains. Their drop box has only till 2021, not 2022, weird.

[stn2007]

Thanks, @FinanceGeek for this thread and your input. It helped me to get in the right direction to do QOZ taxes with TaxAct!

I was able to do it TaxAct online. You will not find form 8997 when searching inside taxact online. One has to go to Tools and there is a list of forms. It does list form 8997 there! I spent almost 2-3 hours with taxact free expert help! He did not know QOZ stuff. He also learned it along with me.

Also, a couple of videos helped me to understand what IRS wants. The form 8949 + 8997 goes together for QOZ investments.

https://www.youtube.com/watch?v=6zC87hityTw
https://www.youtube.com/watch?v=dvTGoa6cv9Y

• One has to fill up form 8949 (1099-B entry) first with capital gain transaction followed up by QOZ investment entry with Z adjustment code.

• Taxact automatically populates for 8997 partially (part II). But other parts need to be filled manually if applicable.

[sribogle]

I am glad my post was helpful. Keep in mind I used the premium option of the hrblock online tax service for $49.99 - 35% discount, not the desktop version.

Hello, newly filing 8997 this year. HRBlock doesn't list form 8949 for the online service for 2022:

https://www.hrblock.com/tax-software/up ... available/

Has anyone been able to use HRBlock for 2022? I would be grateful for info on any other new tx software options for forms 8949/8997.

Thanks.

[bguser11]

TaxAct online supports form 8997. That is why I switched from H&R Block to them.

[FinanceGeek]

I used TaxAct again this year. Worked great. I am not aware of any other consumer level priced package that supports form 8997.

[sribogle]

TaxAct online supports form 8997. That is why I switched from H&R Block to them.

I see. I thought I would go the route you took for 2020 taxes where HR Block Online would include Form 8949 with the Z code and I would manually include 8997 and mail the return. But looks like this route is closed since HR Block "Online" doesn't support 8949 for 2022 per the below:

https://www.hrblock.com/tax-center/supp ... ted-forms/

My earlier link was for the Windows/mac versions and that shows form 8949.

Curious if TaxAct is as sophisticated as H&R Block Online form your experience.

[sribogle]

I used TaxAct again this year. Worked great. I am not aware of any other consumer level priced package that supports form 8997.

Thanks for the info. Looks like they now include Form 1116?

[FinanceGeek]

I used TaxAct again this year. Worked great. I am not aware of any other consumer level priced package that supports form 8997.

Thanks for the info. Looks like they now include Form 1116?

Yes, I had to file it and it worked great.