Recommendation on Tax Preparation Software

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Flav
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Recommendation on Tax Preparation Software

Post by Flav » Tue Sep 20, 2016 2:25 am

Good Morning Bogleheads,

In recent years, my wife and I (filing jointly) have relied on a CPA to do our taxes. However, we are both active duty military and have both deployed for the majority of 2016. Thus, we have almost no taxable income. We will not have to file a state return as we are FL residents (no state tax).

So, this year I am considering buying some tax preparation software and filing myself. We should have a pretty simple return given that we do not own any property. Neither do we have a small business or outside employment besides the USAF. We do have IRAs, TSPs, and 2xtaxable brokerage accounts (1xVanguard, 1xAmerican). We did cash out the last of our individually-held bonds this year (about $5k worth), but this won't create that much income. Our taxable brokerage accounts are all invested in stock mutual funds. So, there will be some income there.

Does anyone have a recommendation on which tax preparation software to use. I am considering TaxCut and TurboTax at this time. Also, can anyone think of a reason why I should go back to the CPA?

V/R,
Flav
“It is not necessary to do extraordinary things to get extraordinary results.” -WB

JoinToday
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Re: Recommendation on Tax Preparation Software

Post by JoinToday » Tue Sep 20, 2016 2:54 am

I use turbo tax. I buy the download version rather than the online version. This allows me to do multiple scenarios for Roth conversions, what-if's, etc; this may not be relevant to your situation.

With only W-2, 1099's, no business, and no rentals, there is absolutely no reason not to do it yourself. It is easy.
I wish I had learned about index funds 25 years ago

Flav
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Re: Recommendation on Tax Preparation Software

Post by Flav » Tue Sep 20, 2016 3:03 am

@JoinToday thanks for the recommendation. I like that you can run multiple scenarios. That sounds fun.
“It is not necessary to do extraordinary things to get extraordinary results.” -WB

trasmuss
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Re: Recommendation on Tax Preparation Software

Post by trasmuss » Tue Sep 20, 2016 3:47 am

I have used Tax Act for many years and have been happy. It costs less but does what is needed.

jebmke
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Re: Recommendation on Tax Preparation Software

Post by jebmke » Tue Sep 20, 2016 8:06 am

At various times I have used TaxAct, HRBlock, Turbotax and Taxwise (this is professional software). For the most part, they are all the same. The UI and interview sequence varies a bit but in the end, they all have to connect the forms the same way or they aren't working properly.
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BL
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Re: Recommendation on Tax Preparation Software

Post by BL » Tue Sep 20, 2016 8:41 am

It looks like most would get the job done. I have H&R Block which is fine. They all take some getting used to but should be satisfactory. Some here complained that TT got more expensive as they had to buy a costlier version than before to do the same thing.

The IRS has some free versions (not sure if they cover your dividends/Capital Gains) and some fill-in-the-form yourself online as well as all the forms and Pubs (Pub 17) if you want to do it by hand and really learn this stuff! Programs are better for "what if" testing. (We actually do it both ways! There is no better way to learn how your financial decisions affect your taxes than to do them yourself.)

Some other comments. Disregard if you wish or have it covered:

Are your IRAs all Roth? If this is a really low tax year, have you considered converting traditional to Roth? Not advising this, just suggesting to look at the numbers. Deployed years are often good to contribute to Roth TSPs as you may be in a lower tax bracket.

Your American funds probably kick off more taxable income than tax-efficient total market index funds would. Are you still buying (and donating the load to them rather than investing it all each time)? Loads are a sunk cost, once you have bought them, but Expense Ratios count up over time, even though there are many with higher ERs. If you are in the 15% tax bracket, CGs would be taxed at 0% if they did not push you into the next bracket, so this year could be a good time to switch to more tax-efficient funds in taxable, such as Vanguard's total stock (about 2% dividends/year, almost all qualified,and/or total international funds (about 2% dividends/year, 70% qualified, and neither has had annual Capital Gains for a long time.

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JDCarpenter
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Re: Recommendation on Tax Preparation Software

Post by JDCarpenter » Tue Sep 20, 2016 8:53 am

If you are likely to be overwithheld, wait until the month or two before 4.15, then select the program that gives the best rebate for directing your return to particular gift cards that you use (or, in my case, Amazon account). I actually plan excessive withholding now in anticipation of a 10% rebate each year (limit some years has been $500 rebate, at least for amazon, when you direct 5K of the refund to that account).

Agree that it is essentially a commodity market for simple returns; I figure that I might as well get paid for buying the software. A noted above, I like having the software on my computer to more finely project the next year's taxes as the year goes by.
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Northster
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Re: Recommendation on Tax Preparation Software

Post by Northster » Tue Sep 20, 2016 9:09 am

I am happy with H&R Block. I don't know about the other products but I find it advantageous to set a price alert for HR Block on Amazon. Usually catch a good price, which is sometimes short-lived.

dbr
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Re: Recommendation on Tax Preparation Software

Post by dbr » Tue Sep 20, 2016 9:26 am

I am happy with Turbo Tax. If you buy and install the program you can do returns for more than one person and you can run multiple scenarios including deciding how to estimate your next year tax with different scenarios. I don't quibble over paying whatever it costs which is minor in the scheme of things.

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Toons
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Re: Recommendation on Tax Preparation Software

Post by Toons » Tue Sep 20, 2016 9:28 am

TaxAct ,
Online
has worked great for me,
for years.

:mrgreen:
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dbltrbl
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Re: Recommendation on Tax Preparation Software

Post by dbltrbl » Tue Sep 20, 2016 9:55 am

FREE TAX. I have used it for 3 years. Before I used Tax ACT. They all work but with state tax form, Free taxusa has the right price. Thanks for your service.

coffeehubcap
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Re: Recommendation on Tax Preparation Software

Post by coffeehubcap » Tue Sep 20, 2016 10:10 am

I sold a house this year. What turbo tax will I have to get?

JW-Retired
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Re: Recommendation on Tax Preparation Software

Post by JW-Retired » Tue Sep 20, 2016 10:28 am

Flav wrote: In recent years, my wife and I (filing jointly) have relied on a CPA to do our taxes. However, we are both active duty military and have both deployed for the majority of 2016. Thus, we have almost no taxable income. We will not have to file a state return as we are FL residents (no state tax).

So, this year I am considering buying some tax preparation software and filing myself. We should have a pretty simple return given that we do not own any property.
I would buy someone's downloadable tax software as soon as it comes out this year, so you can do some what-if returns and see what special manuevers done in calendar 2016 might make sense. If you have almost no taxable income then some amount of Roth conversions would be wise, also perhaps tax gain harvesting if you have taxable account equities with gains. I use/like the HRB "deluxe" version and it always does everything I need. It's not the cheapest, but it's much less pricey than TurboTax. Usually it's available in November
JW
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livesoft
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Re: Recommendation on Tax Preparation Software

Post by livesoft » Tue Sep 20, 2016 1:15 pm

It should be mentioned that TurboTax has perennial issues with their marketing of TurboTax because It comes in several flavors that are confusing to people trying to make decisions. Intuit likes it that way and appears to do this all on purpose in order to have people pay more for TurboTax for features that they don't need and won't use. For example, what is the difference (besides price) of TurboTax Deluxe online and TurboTax Deluxe download? I don't think anybody really knows. Also Intuit will not clearly tell one what the exact features of any particular "level" of TurboTax are.

So while I was a long-time user of TurboTax, I can no longer recommend it. I used H&R Block tax software Deluxe downloadable for 2016 which cost me about $30, but gave me about an $80 rebate. So I got paid $50 to use that tax software. It works quite well and there are have been a couple of previous threads on comparing H&R Block Deluxe downloadable to TurboTax Deluxe Downloadable with all the extra confusing "downloadable vs online" obfuscations peppered through those threads.

Anyways, whatever software you get, I recommend that you get software that installs on your computer, so that you can you run multiple "What if?" scenarios throughout the year as needed without worrying about whether you are connected to the internet or not.
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MathWizard
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Re: Recommendation on Tax Preparation Software

Post by MathWizard » Tue Sep 20, 2016 8:08 pm

I use TurboTax. My son does his taxes with my version as well. You can use it of up to 5 people.\

I have state income taxes, so I use the deluxe version. I think it is $60.
Fairly cheap compared to a CPA.

brennok
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Re: Recommendation on Tax Preparation Software

Post by brennok » Tue Sep 20, 2016 8:38 pm

I have always used Taxact since no charge until you go to file. Also you can usually find promos to lock in the next year at a lower price which still doesn't charge you until you file.

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celia
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Re: Recommendation on Tax Preparation Software

Post by celia » Tue Sep 20, 2016 8:39 pm

BL wrote:Are your IRAs all Roth? If this is a really low tax year, have you considered converting traditional to Roth? Not advising this, just suggesting to look at the numbers. Deployed years are often good to contribute to Roth TSPs as you may be in a lower tax bracket.
+1000. Be aware that the amounts converted are taxed. It would be a no-brainer to fill up the 10% bracket, as long as you can pay the taxes out of taxable.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

Church Lady
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Re: Recommendation on Tax Preparation Software

Post by Church Lady » Tue Sep 20, 2016 10:14 pm

- If your situation is very simple, it's possible you don't need tax software at all. You should review the forms your CPA prepared last year. Are there a great many of them? Can you understand them? Tax arithmetic is tedious, but that's why G-d invented spread sheets and hand calculators. You can download all the forms and instructions you need from http://www.irs.gov.

- If you must have tax software, your broker might offer free or deeply discounted software packages. I got a free Turbotax Deluxe download from my broker last year, so that's what I used.

- You may be able to download TaxAct for free. I did that for many years and was quite happy with it. Last year they started charging for Schedule D filers, hence the switch to the free Turbotax. If you have to pay full price, TaxAct paid version is cheaper than most other packages.

- I'm not comfortable filling in forms online and efiling due to the risk of hacking and losing control of who has my personal information. But there are sites that will allow you to do this for 'free' (ask yourself how it is they can do this for free) and many folks here are comfortable using such services.

Good luck!
He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. Ecclesiastes 1:8

Flav
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Re: Recommendation on Tax Preparation Software

Post by Flav » Wed Sep 21, 2016 3:18 am

celia wrote:
BL wrote:Are your IRAs all Roth? If this is a really low tax year, have you considered converting traditional to Roth? Not advising this, just suggesting to look at the numbers. Deployed years are often good to contribute to Roth TSPs as you may be in a lower tax bracket.
+1000. Be aware that the amounts converted are taxed. It would be a no-brainer to fill up the 10% bracket, as long as you can pay the taxes out of taxable.
Great recommendations, but my wife and I both maxed out Roth IRAs and Roth TSPs this year. Sadly, we don't have any Traditional IRAs to rollover either. But next year, we are both unlikely to deploy and will move everything over to traditional IRAs and TSPs. Then hopefully on the next low taxable income year we roll those into our existing Roth IRAs.
“It is not necessary to do extraordinary things to get extraordinary results.” -WB

sixtyforty
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Re: Recommendation on Tax Preparation Software

Post by sixtyforty » Wed Sep 21, 2016 8:33 am

We've used Turbo Tax for the last 10 years. I started with the CD version , then eventually have been using the online version when it became available. It walks you through everything if necessary, or you can jump to specific sections if you know what you need to do. I particularly like the fact it transfers all necessary info from previous year tax to current year for federal and state etc.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci

Nearly A Moose
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Re: Recommendation on Tax Preparation Software

Post by Nearly A Moose » Wed Sep 21, 2016 1:00 pm

JoinToday wrote:I use turbo tax. I buy the download version rather than the online version. This allows me to do multiple scenarios for Roth conversions, what-if's, etc; this may not be relevant to your situation.

With only W-2, 1099's, no business, and no rentals, there is absolutely no reason not to do it yourself. It is easy.
Dumb question: what's different about the download version that lets you run what if scenarios better? Is it just the ability to start and then delete a dummy return?
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

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dodecahedron
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Re: Recommendation on Tax Preparation Software

Post by dodecahedron » Wed Sep 21, 2016 2:25 pm

Nearly A Moose wrote:
JoinToday wrote:I use turbo tax. I buy the download version rather than the online version. This allows me to do multiple scenarios for Roth conversions, what-if's, etc; this may not be relevant to your situation.

With only W-2, 1099's, no business, and no rentals, there is absolutely no reason not to do it yourself. It is easy.
Dumb question: what's different about the download version that lets you run what if scenarios better? Is it just the ability to start and then delete a dummy return?
No, it is the ability to start and SAVE (rather than delete) as many variations of dummy returns as you want. Using the download version, you can efile up to five returns for free (e.g., for family members) but you can save as many dummy returns as you want (and subsequently reopen those saved returns to update your dummies as new facts materialize.)

With the online version, you are only storing one version of the return at a time, so if you change a parameter, your original scenario is gone. Also, the online version only allows one efile, not five.

Another difference between online and download version is that the online version tends to be more of a "black box," i.e., when you enter a data item it is not easy to see how the effects of that data item "percolate" through the various forms and schedules associated with the return, because you can't navigate easily between the interview mode and the forms mode.

By contrast, with the downloaded version, if I see that entering a particular piece of data has had a large unexpected impact, I can easily switch to forms view and trace what is going on in the return.
Last edited by dodecahedron on Wed Sep 21, 2016 2:45 pm, edited 1 time in total.

livesoft
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Re: Recommendation on Tax Preparation Software

Post by livesoft » Wed Sep 21, 2016 2:35 pm

^Download versions that I have used let one print out selected forms with your numbers, so that one can lay out hardcopies of the various "What if?" scenarios, too.

I've never used online-only tax software, so I am not sure if it can do the same thing.

Also download versions don't run on your smart phone. :)
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dodecahedron
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Re: Recommendation on Tax Preparation Software

Post by dodecahedron » Wed Sep 21, 2016 2:47 pm

livesoft wrote:^Download versions that I have used let one print out selected forms with your numbers, so that one can lay out hardcopies of the various "What if?" scenarios, too.
Or, you can print your scenarios to PDFs and have them open in multiple windows and scroll through side by side for comparison.

Nearly A Moose
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Re: Recommendation on Tax Preparation Software

Post by Nearly A Moose » Wed Sep 21, 2016 3:16 pm

dodecahedron wrote:
Nearly A Moose wrote:
JoinToday wrote:I use turbo tax. I buy the download version rather than the online version. This allows me to do multiple scenarios for Roth conversions, what-if's, etc; this may not be relevant to your situation.

With only W-2, 1099's, no business, and no rentals, there is absolutely no reason not to do it yourself. It is easy.
Dumb question: what's different about the download version that lets you run what if scenarios better? Is it just the ability to start and then delete a dummy return?
No, it is the ability to start and SAVE (rather than delete) as many variations of dummy returns as you want. Using the download version, you can efile up to five returns for free (e.g., for family members) but you can save as many dummy returns as you want (and subsequently reopen those saved returns to update your dummies as new facts materialize.)

With the online version, you are only storing one version of the return at a time, so if you change a parameter, your original scenario is gone. Also, the online version only allows one efile, not five.

Another difference between online and download version is that the online version tends to be more of a "black box," i.e., when you enter a data item it is not easy to see how the effects of that data item "percolate" through the various forms and schedules associated with the return, because you can't navigate easily between the interview mode and the forms mode.

By contrast, with the downloaded version, if I see that entering a particular piece of data has had a large unexpected impact, I can easily switch to forms view and trace what is going on in the return.
Ah, thanks. I'll confess I don't geek out with my taxes too much, but may have to as my situation gets more complicated. Migrated from the download version to online version a few years ago, and I just assumed that all of Turbo Tax was taking on more of a black box effect. Will definitely be looking into the download version this year.
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

montanagirl
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Re: Recommendation on Tax Preparation Software

Post by montanagirl » Thu Sep 22, 2016 9:53 am

I assume OP and spouse are both deployed in a combat zone, which qualifies from the exclusion from income.

Anyway, don't overlook H&R Block software, which is as good as any and usually at less cost.

jebmke
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Re: Recommendation on Tax Preparation Software

Post by jebmke » Thu Sep 22, 2016 10:08 am

montanagirl wrote:Anyway, don't overlook H&R Block software, which is as good as any and usually at less cost.
I am using HRB this year. In fact, I just made what I hope is my last entry on my 2015 return. Will review it in the next few days and hope to get it filed by the end of the month. So far, I have been happy with HRB. Most of my work is directly in the forms but for a couple of things, I tried the interview section and it wasn't too bad.
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