Filing Taxes myself in the future

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ThisJustIn
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Filing Taxes myself in the future

Post by ThisJustIn » Sun Mar 11, 2018 11:14 pm

This last year was the first time I have been into personal finance and investing in stock market, although I have had RSUs from companies I worked since 2013. This year, however, I did many things that I haven't done before: Selling RSUs, opening brokerage accounts (Vanguard (not selling any index fund, but received dividends which were taxed)), using Wealthfront (mistake, I know, and I'm looking for an exit plan), Robinhood, some online savings banks (Ally bank, Synchrony bank), and very minor crypto (GDAX). So, filing my taxes this year was quite complicated, so I returned back to using H&R block this year, thinking that they will make it easier for me.

Until this year, I have mostly used TurboTax for filing taxes, and used H&R Block between 2012-2015. In the past, when I used H&R block, the cost of filing taxes were in $100-$150 range. But today, I returned back to H&R Block to file my taxes, and tax preparation costed me $450, due to new things I have been in this year. Moving forward, I will continue to use brokerage accounts, online savings banks, and possibly more, and I want to for sure prevent such a high fee for tax preparation.

I know a couple of ways to prepare taxes almost free (TurboTax), and also free (freetaxusa.com, mint.com, creditkarma.com). My first question is: Do you have any preference as to which one I should use? My second and more important question is as follows: I actually want to be equipped with all the knowledge I need to file these taxes. I know people become CFAs or tax specialists to do this job, but I know there are some books out there that I can use to learn this myself, and file my taxes myself next year. One such book, I think, is any book that prepares someone for Series 7 and Series 65 exam (correct me if I'm wrong.). Are these books good enough for me as a start? Do you have any other suggestions as for which books I can use to learn more about personal finance, and file my own taxes, regardless of how complicated it is. I'm pretty sure websites such as freetaxusa.com, mint.com, creditkarma.com make things easier no matter how complicated my tax preparation work is, but I what to know the extra mile, in case some edge case comes up, e.g. what to do in wash sale. To those who file your taxes (which I used to do as well, when I was not into personal finance this much), where do you file your taxes, and where do you learn more about basics you need to file your own taxes?

rkhusky
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Re: Filing Taxes myself in the future

Post by rkhusky » Mon Mar 12, 2018 7:10 am

The IRS instructions are fairly informative. Try to fill out your tax forms using the instructions, and then check to see how TurboTax did it.

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FiveK
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Re: Filing Taxes myself in the future

Post by FiveK » Mon Mar 12, 2018 11:13 am

ThisJustIn wrote:
Sun Mar 11, 2018 11:14 pm
I actually want to be equipped with all the knowledge I need to file these taxes.
Consider creating a spreadsheet to do the tax calculations pertinent to you.

Doing the spreadsheet will more or less force you to acquire the knowledge needed. Then you can use it to project next year's taxes, and take whatever actions might be useful.

Good luck!
Last edited by FiveK on Mon Mar 12, 2018 12:48 pm, edited 1 time in total.

scrabbler1
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Re: Filing Taxes myself in the future

Post by scrabbler1 » Mon Mar 12, 2018 12:46 pm

When I bought my first PC back in the 1990s, I created a skeleton version of an income tax return which included only the relevant stuff for me. This has been a valuable aide, as I have been doing my own taxes for more than 30 years.

As my tax return became more complicated back in the 1990s and 2000s, I added things such as a another state's non-resident form and home state resident credit form, as well as the ACA premium credit worksheet. The spreadsheet also includes worksheets found in the instruction booklet such as the one for determining taxes on dividends and LTCG distributions. I also built in features which enable me to estimate my taxes in the middle of the year, particularly useful for estimated tax payments. Similarly, I can always run what-if scenarios such as the effect on taxes on selling something at a gain or loss.

My system is not foolproof, however. Every year, I have to carefully update the spreadsheet for new tax law changes and tax brackets. I try to make them actual cells to change instead of formulas within cells to change. Always put little notes about cells which need to be changed.

ThisJustIn
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Re: Filing Taxes myself in the future

Post by ThisJustIn » Mon Mar 12, 2018 8:41 pm

Thank you for your suggestions. IRS instructions is definitely a good place to start. But, going one step further, I want to get familiar with terms in those tax spreadsheets, such as wash sale, or cost basis. I know I can google them, but I'm looking for a central resource I can use, that will help me learn more than what IRS instructions or tax forms will prompt me to learn. If it is a couple of books, I will read them, if it is a video, I will watch them to learn more about personal finance. Also, there are cases where I probably will not be able to find out myself by looking at IRS instructions or tax forms. For example, the tax specialist in H&R block asked me if I have paid for my registration of my car, which he used as a deductible, and I won't be able to figure out myself whether I can use this as a deduction. This is why I'm looking for a little broader knowledge than what is written, - not explained, or taught - written in IRS instructions.

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arcticpineapplecorp.
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Re: Filing Taxes myself in the future

Post by arcticpineapplecorp. » Mon Mar 12, 2018 8:57 pm

ThisJustIn wrote:
Sun Mar 11, 2018 11:14 pm
One such book, I think, is any book that prepares someone for Series 7 and Series 65 exam (correct me if I'm wrong.).
These tests are for becoming a registered investment advisor or registered representatives. This is so you can get a license to trade stocks/mutual funds, etc. This is not the path to take if you're trying to learn how to do taxes.
The Series 7 exam, also known as the General Securities Representative Exam (GSRE), is a test for registered representatives. The Financial Industry Regulatory Authority (FINRA) administers the exam. In the United States, stockbrokers take this test to get a license to trade. source: https://www.google.com/search?q=series+ ... fox-b-1-ab
An exam administered by the Financial Industry Regulatory Authority (FINRA) on behalf of The North American Securities Administrators Associations. Completion of the Series 65 Exam will qualify an investment professional to operate as an Investment Adviser Representative. source: https://www.investopedia.com/professionals/series65/
You could become a certified volunteer for VITA (volunteer income tax assistance). You can learn to prepare basic, advanced and military tax returns for people within the income limits to qualify. It's very rewarding (non paid) work:

https://www.irs.gov/individuals/free-ta ... volunteers

I do this through the United Way (not every VITA location is through United Way)
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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FiveK
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Re: Filing Taxes myself in the future

Post by FiveK » Mon Mar 12, 2018 9:21 pm

ThisJustIn wrote:
Mon Mar 12, 2018 8:41 pm
...I'm looking for a central resource I can use, that will help me learn more than what IRS instructions or tax forms will prompt me to learn.
There is always Publication 17.
For example, the tax specialist in H&R block asked me if I have paid for my registration of my car, which he used as a deductible, and I won't be able to figure out myself whether I can use this as a deduction. This is why I'm looking for a little broader knowledge than what is written, - not explained, or taught - written in IRS instructions.
See the top of page 155 in Pub. 17 for exactly that example. ;)

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mhadden1
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Re: Filing Taxes myself in the future

Post by mhadden1 » Mon Mar 12, 2018 10:01 pm

Long ago I filled out paper forms I got from the library. When the PC era arrived, I used a MS Word file for a while (not even a spreadsheet!)

Luckily TurboTax and its ilk came along - certainly helps with the arithmetic and e-filing. I still try to understand what's going on under the covers with my mostly simple return by examining all the forms carefully before filing.

Nothing that the OP mentioned sounded $450 worth of exotic to me - I think one of other packages would handle things MUCH cheaper.

One approach would be to use IRS Free Fillable Forms which could mesh with the learning process goal.
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

ThisJustIn
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Re: Filing Taxes myself in the future

Post by ThisJustIn » Mon Mar 12, 2018 10:02 pm

@arcticpineapplecorp: Thank you for explaining Series 7 and Series 65 exams and what they cover. Also, thank you for pointing out becoming a certified volunteer for VITA (volunteer income tax assistance). This is something I can do and will want to do, once I'm more equipped to file taxes.

@FiveK: Thank you very much, I think Publication 17 is what I'm looking for (although it will change year to year). It seems to be a long read. Also, good to know the case I mentioned is included in the booklet / book, I will have a look at it.

ThisJustIn
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Re: Filing Taxes myself in the future

Post by ThisJustIn » Mon Mar 12, 2018 10:04 pm

@mhadden1: I heard about picking up paper forms from the library before. You are definitely right, my taxes shouldn't cost $450. Luckily, my company is reimbursing post-tax amount, so I should be paying around $150 in effect. But still, even that is higher than what I would be paying for say Turbotax, which I used in the past. I will check IRS Free Fillable Forms to learn more about tax filing process.

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mhadden1
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Re: Filing Taxes myself in the future

Post by mhadden1 » Mon Mar 12, 2018 10:06 pm

ThisJustIn wrote:
Mon Mar 12, 2018 10:04 pm
Luckily, my company is reimbursing post-tax amount
Sweet!
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

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BL
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Re: Filing Taxes myself in the future

Post by BL » Tue Mar 13, 2018 2:57 am

I was going to recommend Pub. 17, also. It is all online. Also they have the instruction booklet for 1040 as well as instructions for individual forms. All these are available on IRS website. If you search for a particular subject, you may get good info. I never get around to ordering them to get a paper version.

Try doing the 1040 your tax preparer did for you by using IRS guidelines, forms, schedules, and instructions. The best way to learn is by doing. Next best is using a program like TT or H&R Block.

I agree that doing free volunteer tax prep through VISTA or TCE is also a great way to learn. They should have training for you before the time you start doing it. You will get exclusive reference books on the current year tax information. They have, or at least they did have, the same software so you could choose whichever suits you if both are available. TCE caters more to retired folks, perhaps with some income limits.

Complicated investments, etc., make for more expensive tax prep., if you don't do them yourself.

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dodecahedron
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Re: Filing Taxes myself in the future

Post by dodecahedron » Tue Mar 13, 2018 6:17 am

ThisJustIn wrote:
Mon Mar 12, 2018 10:02 pm
@arcticpineapplecorp: Thank you for explaining Series 7 and Series 65 exams and what they cover. Also, thank you for pointing out becoming a certified volunteer for VITA (volunteer income tax assistance). This is something I can do and will want to do, once I'm more equipped to file taxes.
There is free online training for VITA that you can do on your own as interactive lessons:
https://apps.irs.gov/app/vita/

If you prefer a book format rather than an interactive lesson format, the material in the lessons is contained in this PDF:

https://docs.google.com/viewer?url=http ... Fp4491.pdf

These resources use 2017 tax law. They will be updated to 2018 at some point in the fall.

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tractorguy
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Re: Filing Taxes myself in the future

Post by tractorguy » Tue Mar 13, 2018 7:16 am

While it is fresh in your mind, you may want to consider running this year's data through one of the tax software packages to verify that you get the same answer as HR Block. I think that you can start an online return with any of them and not pay until you actually file. I did this when I was comparing them to see which one I wanted to use. This is a good learning experience and will give you confidence in the software.

Learning about the rules is a good idea but I do not recommend that you try to fill out the forms yourself if your situation includes the complications that you mention. It's too easy to miss a deduction or do something else wrong. Those of us who have filled out paper forms or created spreadsheets started when we didn't have investment income to deal with.
Lorne

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mhadden1
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Re: Filing Taxes myself in the future

Post by mhadden1 » Tue Mar 13, 2018 12:42 pm

tractorguy wrote:
Tue Mar 13, 2018 7:16 am
Those of us who have filled out paper forms or created spreadsheets started when we didn't have investment income to deal with.
+1
Oh I can't, can I? That's what they said to Thomas Edison, mighty inventor, Thomas Lindberg, mighty flyer,and Thomas Shefsky, mighty like a rose.

wrongfunds
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Re: Filing Taxes myself in the future

Post by wrongfunds » Tue Mar 13, 2018 3:43 pm

Wouldn't H&R or TurboTax if followed via "interview" method ask you about the vehicle registration taxes paid in prior year?

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FiveK
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Re: Filing Taxes myself in the future

Post by FiveK » Tue Mar 13, 2018 4:28 pm

wrongfunds wrote:
Tue Mar 13, 2018 3:43 pm
Wouldn't H&R or TurboTax if followed via "interview" method ask you about the vehicle registration taxes paid in prior year?
TT would. The help screen looks much like
Image
Last edited by FiveK on Sun Jul 22, 2018 11:58 am, edited 1 time in total.

wrongfunds
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Re: Filing Taxes myself in the future

Post by wrongfunds » Tue Mar 13, 2018 7:57 pm

Collect all the tax related paperwork either received via us mail or via online. google TT (or HRB) AND the form's number. If you have a form which is NOT handled by one of those software, then you will need to get a real CPA to help you do the taxes. Otherwise, you could input the numbers as well as your high priced CPA in the software.

ThisJustIn
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Re: Filing Taxes myself in the future

Post by ThisJustIn » Tue Mar 13, 2018 9:55 pm

Thank you all for your suggestions.
@dodecahedron: Thank you for the pointer to VITA online training and its book.
It looks like I have everything I need to prepare my taxes myself with no cost in the following years.

Parthenon
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Re: Filing Taxes myself in the future

Post by Parthenon » Tue Mar 13, 2018 11:18 pm

I've found a useful spreadsheet at https://sites.google.com/site/excel1040/ for playing with filing federal taxes over the years.

Ed
"What am I gonna do if I run out of money?"

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