Doing Your Own Taxes

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TinyTim
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Doing Your Own Taxes

Post by TinyTim » Sun Jun 16, 2019 7:49 pm

The cost of having someone else do our taxes keeps going up. It was $350 this year. It seems like a good idea to do our own, especially so now that we are using the higher standard deduction rather than itemizing.

Any suggestions for the best way to prepare our own taxes? My biggest fear is that I'll miss something important.

livesoft
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Re: Doing Your Own Taxes

Post by livesoft » Sun Jun 16, 2019 7:53 pm

A good way is to use tax prep software along with reading all the IRS forms AND their instrucitons. Forms and Instructions are free at IRS.gov.

You can get a copy of tax prep software pretty cheaply and re-do your 2019 2018 taxes that cost you $350 and compare your results.

I suggest tax prep software that you install on your home computer and not tax prep software that you only run online through a web interface.
Last edited by livesoft on Sun Jun 16, 2019 8:09 pm, edited 1 time in total.
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Golf maniac
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Re: Doing Your Own Taxes

Post by Golf maniac » Sun Jun 16, 2019 7:58 pm

No reason to have someone else do your taxes unless you have some business or other complexities. The software packages are very easy and if you are salaried with standard deduction then it is really easy and a lot cheaper. The software lead you step by step and ask questions to make sure nothing major is missed.
Last edited by Golf maniac on Sun Jun 16, 2019 8:00 pm, edited 1 time in total.

HEDGEFUNDIE
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Re: Doing Your Own Taxes

Post by HEDGEFUNDIE » Sun Jun 16, 2019 7:59 pm

I used FreeTaxUSA for the first time this year.

Pros: Almost free to complete and to file both Federal and State returns.

Cons: You have to know what you’re doing. For example, they asked how much mortgage interest I wanted to deduct. If I didn’t already know about the new tax law limiting deductions to the first $750k of principal, I would have inputted my entire interest paid. Which no doubt would have invited a nasty IRS letter right about now.

Speaking of which, the State of CA actually did send me such a letter, saying I owed them because one of calculations was wrong. I double checked, and it turned out FreeTaxUSA did screw up, but the other way. I should have gotten a bigger refund than I did. Still don’t know how that happened.

Mike Scott
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Re: Doing Your Own Taxes

Post by Mike Scott » Sun Jun 16, 2019 8:02 pm

You only need the same documents to do your own as you would give to someone else for tax prep. Pick one of the name brand software packages and see what happens. If you go beyond the software and read some of the IRS publications that relate directly to your taxes, you may find other tax savings and strategies to your advantage.

jebmke
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Re: Doing Your Own Taxes

Post by jebmke » Sun Jun 16, 2019 8:04 pm

I would suggest sitting down with the 2018 forms and instructions and attempt to re-create your 2018 tax return by hand. This will give you a feel for how the forms work. Then in 2019, use a retail package like H&R Block or Turbotax (not the online versions) and do your own fopr 2019.
When you discover that you are riding a dead horse, the best strategy is to dismount.

aristotelian
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Re: Doing Your Own Taxes

Post by aristotelian » Sun Jun 16, 2019 8:17 pm

Try it yourself. You can use FreetaxUSA to give it a shot. I f you can't get within $350 of your tax guy, you can stick with him. Either way it's a good exercise to understand the tax code and it's impacts on your situation.

tomd37
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Re: Doing Your Own Taxes

Post by tomd37 » Sun Jun 16, 2019 8:30 pm

TinyTim
It might help if we knew more about your personal situation such as age(s), filing status, any dependents, types of income and documents income is reported on, types of deductions to be considered if you were to itemize, etc. Might you consider free tax preparation services (e.g. AARP Tax-Aide or VITA) sponsored by the IRS? A number of us monitoring this site volunteer in those programs and might have comments for you.
Tom D.

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changingtimes
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Re: Doing Your Own Taxes

Post by changingtimes » Sun Jun 16, 2019 8:40 pm

I'm making the same decision. Picked up the CD version of TaxCut on Amazon for $16 a few weeks ago, and have been playing with it. Go for it!

Cyanide123
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Re: Doing Your Own Taxes

Post by Cyanide123 » Sun Jun 16, 2019 9:14 pm

I have semi complicated taxes. 2 W2 incomes, 3 1099s from business income and Three different broker accounts.

I used turbo tax with the live CPA. Paid $179 I think. Got one year free of quick books that I was going to purchase anyway for my business income ($120 worth), and had a CPA review and Co sign my tax return. She was also great with answering any questions. Also, I can ask my CPA any questions throughout the year until the next tax year.

I think it was a great deal and I was pretty happy with it. Previously I had always used taxact because it's much cheaper. My taxes are getting even more complicated with a LLC, I might use an accountant next.

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scubadiver
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Re: Doing Your Own Taxes

Post by scubadiver » Sun Jun 16, 2019 9:24 pm

Golf maniac wrote:
Sun Jun 16, 2019 7:58 pm
No reason to have someone else do your taxes unless you have some business or other complexities. The software packages are very easy and if you are salaried with standard deduction then it is really easy and a lot cheaper. The software lead you step by step and ask questions to make sure nothing major is missed.
^^THIS. I have done taxes for wife and I since 2005. Last year was a little tricky since we had residency in two states and rental income, but was still doable.

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Stinky
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Re: Doing Your Own Taxes

Post by Stinky » Mon Jun 17, 2019 7:15 am

jebmke wrote:
Sun Jun 16, 2019 8:04 pm
I would suggest sitting down with the 2018 forms and instructions and attempt to re-create your 2018 tax return by hand. This will give you a feel for how the forms work. Then in 2019, use a retail package like H&R Block or Turbotax (not the online versions) and do your own for 2019.
I agree with this.

You'll definitely save money on tax preparation if you do it yourself. As a side benefit, you will get a better understanding of your tax situation, which will help you as time goes on.

Many folks on this forum do their own taxes. You can, too.
It's a GREAT day to be alive - Travis Tritt

afan
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Re: Doing Your Own Taxes

Post by afan » Mon Jun 17, 2019 10:01 am

If your income is all W2 and 1099 and you use the standard deduction, you will be able to do your taxes yourself with standard retail software. The first year most of the time required will be typing in your personal information. Then you download the W2's and 1009's. Enter your deductions, the software will walk you through it. The software will calculate your taxes and you will be done. Year 1 may take as long as an hour while you do the manual data entry and familiarize yourself with the software.

Years 2 and beyond will be much faster.

When we have needed the help of a pro- for settling an estate and dealing with rulea that I will not learn and will never use again- we hired an enrolled agent. Way cheaper than a CPA and required to be up to date on taxes. Many CPAs do lots of other things and are not necessarily that good with taxes. Plus, they charge more.
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mighty72
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Re: Doing Your Own Taxes

Post by mighty72 » Mon Jun 17, 2019 10:09 am

You can open a TurboTax account and try doing your taxes for last year. Then you can compare the results between the software and your tax professional. You would also get an idea of how easy or hard it is to do your taxes & if it is worth $350.

I believe you are only charged when you file.

armeliusc
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Re: Doing Your Own Taxes

Post by armeliusc » Mon Jun 17, 2019 10:51 am

A good way to learn is just by going through IRS forms by hand, and read the line-by-line instruction and fill in the forms. Try to reproduce your last year tax return manually. not by using some other software package that hides these details.

Start by downloading form 1040 and its instruction.

You can also request your previous year(s) tax return from IRS, then compare with what you have by doing it by hand. Reading the instructions and doing it will give you much better understanding of what's going on rather than just the guided questions from software (and you'd understand why those software ask those questions).

From year to year it's rare that one's situation changes drastically. So usually one can use last year return as sort of a guide.

I have always been doing my tax return by hand, even with SE, HSA, multiple 1099s, Child care credits, rollover 401Ks, etc etc. Never once I used tax software or pay anybody.

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Stinky
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Re: Doing Your Own Taxes

Post by Stinky » Mon Jun 17, 2019 12:09 pm

armeliusc wrote:
Mon Jun 17, 2019 10:51 am

I have always been doing my tax return by hand, even with SE, HSA, multiple 1099s, Child care credits, rollover 401Ks, etc etc. Never once I used tax software or pay anybody.
Same with me. I’ve done my taxes by hand for 40 years.

Some people would call me a Luddite for not adopting technology. But I understand my taxes very well.
It's a GREAT day to be alive - Travis Tritt

oldfatguy
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Re: Doing Your Own Taxes

Post by oldfatguy » Mon Jun 17, 2019 12:12 pm

armeliusc wrote:
Mon Jun 17, 2019 10:51 am
A good way to learn is just by going through IRS forms by hand, and read the line-by-line instruction and fill in the forms. Try to reproduce your last year tax return manually. not by using some other software package that hides these details.
Agree. I've used the Free File Fillable Forms for years.

life in slices
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Re: Doing Your Own Taxes

Post by life in slices » Mon Jun 17, 2019 12:14 pm

I have always done my taxes, even with multiple W-2s, 1099 from side jobs, investments including ISOs, RSUs, ESPPS, etc., and haven't found it too challenging or scary to do it.

I have used TurboTax for the last decade (or two perhaps) to do my taxes- but I always hand-check everything to confirm the math and the decision the software makes to confirm.

Taxes are relatively easy to do if you are willing to learn as you go through it

delamer
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Re: Doing Your Own Taxes

Post by delamer » Mon Jun 17, 2019 12:23 pm

If your financial situation in 2019 won’t change much from 2018, you can use tax prep software for 2019 and compare that return line-by-line to the 2018 return prepared by your accountant.

Hopefully, the type of income, deductions, etc. will be very similar and you can feel comfortable with the 2019 results.

If not, then you can go back to your accountant.

Note that you can download a lot of your tax information from brokerage houses and even payroll processors into the software, so your data entry could be minimal (depending on your personal situation, of course).

HawkeyePierce
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Re: Doing Your Own Taxes

Post by HawkeyePierce » Mon Jun 17, 2019 12:34 pm

This year I realized that TurboTax is more confusing in my situation than simply filling out the IRS forms. In my case the complications are RSU/ESPP shares and a backdoor Roth.

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Euclidian
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Re: Doing Your Own Taxes

Post by Euclidian » Mon Jun 17, 2019 12:57 pm

If your desire is to do the taxes yourself then I agree with the above suggestions to use one of the free tax software programs – they are quite easy to use and the interview format will help you to avoid missing items. You can then compare the result to your previous year’s return as a double check.

If you are just looking for a way to avoid paying $350 then I second tomd37’s suggestion to consider free preparation at a VITA or AARP Tax-Aide site. VITA can do most normal returns but is limited to preparing returns with income of $55,000 or less. AARP Tax-Aide has no income limit and can do a bit more than VITA but check with your site next February if you want to see if your return is within their IRS certification. However, if you are paying $350 then you probably have a very simple return that is easily within their guidelines.

sarahjane
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Re: Doing Your Own Taxes

Post by sarahjane » Mon Jun 17, 2019 2:46 pm

Why the reluctance to use web based versions of tax prep software?

tesuzuki2002
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Re: Doing Your Own Taxes

Post by tesuzuki2002 » Mon Jun 17, 2019 3:06 pm

livesoft wrote:
Sun Jun 16, 2019 7:53 pm
A good way is to use tax prep software along with reading all the IRS forms AND their instrucitons. Forms and Instructions are free at IRS.gov.

You can get a copy of tax prep software pretty cheaply and re-do your 2019 2018 taxes that cost you $350 and compare your results.

I suggest tax prep software that you install on your home computer and not tax prep software that you only run online through a web interface.
I great way to compare... Do it and run the numbers all yourself for this past year and see that you come out the same amount... going forward you can decide what you want to do.

I have been doing my taxes since I started having earned income. I have lots of investments, work as an employee, manage a rental house, and do contact work in 2 different service industries so my taxes are not simple.

I suppose I've missed some things a few years... and gained them back in other years.

I like knowing what is happening on the back end of things as well as the front end which is why I stay up on the changes...

tesuzuki2002
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Re: Doing Your Own Taxes

Post by tesuzuki2002 » Mon Jun 17, 2019 3:09 pm

Stinky wrote:
Mon Jun 17, 2019 12:09 pm
armeliusc wrote:
Mon Jun 17, 2019 10:51 am

I have always been doing my tax return by hand, even with SE, HSA, multiple 1099s, Child care credits, rollover 401Ks, etc etc. Never once I used tax software or pay anybody.
Same with me. I’ve done my taxes by hand for 40 years.

Some people would call me a Luddite for not adopting technology. But I understand my taxes very well.
That takes a lot of patience as the IRS continues to inflate the taxes rules and forms...

well done for sticking with it!!

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Toons
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Re: Doing Your Own Taxes

Post by Toons » Mon Jun 17, 2019 4:14 pm

TinyTim wrote:
Sun Jun 16, 2019 7:49 pm
The cost of having someone else do our taxes keeps going up. It was $350 this year. It seems like a good idea to do our own, especially so now that we are using the higher standard deduction rather than itemizing.

Any suggestions for the best way to prepare our own taxes? My biggest fear is that I'll miss something important.
Do your own.
I started in 1997 with Turbo Tax
Now using TaxAct.
Software has improved dramatically.
Instilling fear is a strategy used by the IRS as they can't audit everybody,
Fret not,
Tax software has alerts and warnings if info is missing.
There is a multitude of help inside the software ,IRS publications,,,etc.
Go to any online tax site,
Username/Password,and start experimenting ,,,no obligation unless you file with them
You got me thinking
1997-2018
At Minimum 400 a year for me,,,,,
21 years-8400.00 after tax dollars
That was a couple yearly Roth IRA Contributions
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

tomd37
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Re: Doing Your Own Taxes

Post by tomd37 » Mon Jun 17, 2019 4:35 pm

A number of good recommendations have been made thus far, but we have not heard back from the OP (Tiny Tim) regarding some of his/her specifics. The OP may be of sufficient age and unable to do his/her own return. Or the OP may have complicated types of income or expenses. That's why I suggested the OP post more info yesterday. Nothing heard as yet.
Tom D.

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FIREchief
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Re: Doing Your Own Taxes

Post by FIREchief » Mon Jun 17, 2019 7:30 pm

Stinky wrote:
Mon Jun 17, 2019 12:09 pm
armeliusc wrote:
Mon Jun 17, 2019 10:51 am

I have always been doing my tax return by hand, even with SE, HSA, multiple 1099s, Child care credits, rollover 401Ks, etc etc. Never once I used tax software or pay anybody.
Same with me. I’ve done my taxes by hand for 40 years.

Some people would call me a Luddite for not adopting technology. But I understand my taxes very well.
+1. For me it has been more than 40 years. I forced myself to learn about every new tax situation as it occured. Itemized deductions, capital gains, Roth conversions, many flavors of 1099, AMT, etc. I still use a spread sheet to gather all my numbers and crank out results. The only new thing is I have been using TurboTax to double-check since we started getting it for free. That said, I still send in the paper forms to the IRS via certified mail each year.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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fortfun
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Re: Doing Your Own Taxes

Post by fortfun » Mon Jun 17, 2019 7:53 pm

If you have rentals, try Turbo Tax deluxe. I've really enjoyed it the past three years and got much bigger refunds than when I paid a "professional."

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arcticpineapplecorp.
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Re: Doing Your Own Taxes

Post by arcticpineapplecorp. » Mon Jun 17, 2019 8:02 pm

good advice so far. one other thing I didn't see mentioned (maybe I missed it, i was scrolling through):

you can have h&r block do a "second look" for free on an older tax return (within amended time period) to see if you did it right or missed anything:

https://www.hrblock.com/tax-offices/ext ... taxes.html
https://www.google.com/search?client=fi ... %26r+block

I did it once and was pleased to see they didn't find anything I didn't already (and it was involving a k-1).
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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FiveK
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Re: Doing Your Own Taxes

Post by FiveK » Mon Jun 17, 2019 8:24 pm

sarahjane wrote:
Mon Jun 17, 2019 2:46 pm
Why the reluctance to use web based versions of tax prep software?
In some cases, downloaded versions have more functionality than the "same level" (e.g., Basic, Premium, etc.) in the online version.

E.g., see viewtopic.php?p=3224633#p3224607.

wyoming82240
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Re: Doing Your Own Taxes

Post by wyoming82240 » Mon Jun 17, 2019 11:01 pm

Credit Karma has free tax filing service regardless of the income. I have used it to double check my filing with other service. In inconvenience or regrets with that service. Anybody have tried this?

jebmke
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Re: Doing Your Own Taxes

Post by jebmke » Tue Jun 18, 2019 7:25 am

fortfun wrote:
Mon Jun 17, 2019 7:53 pm
If you have rentals, try Turbo Tax deluxe. I've really enjoyed it the past three years and got much bigger refunds than when I paid a "professional."
I'd be interested in hearing what errors and/or omissions you found in the "professional" tax return. I prepare a lot of returns for TaxAide and we see a lot of people who have previously had their return done by a paid preparer. While we sometimes find errors, most of the time the returns were correct.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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dodecahedron
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Re: Doing Your Own Taxes

Post by dodecahedron » Tue Jun 18, 2019 7:36 am

HEDGEFUNDIE wrote:
Sun Jun 16, 2019 7:59 pm
I used FreeTaxUSA for the first time this year.

Pros: Almost free to complete and to file both Federal and State returns.

Cons: You have to know what you’re doing. For example, they asked how much mortgage interest I wanted to deduct. If I didn’t already know about the new tax law limiting deductions to the first $750k of principal, I would have inputted my entire interest paid. Which no doubt would have invited a nasty IRS letter right about now.

Speaking of which, the State of CA actually did send me such a letter, saying I owed them because one of calculations was wrong. I double checked, and it turned out FreeTaxUSA did screw up, but the other way. I should have gotten a bigger refund than I did. Still don’t know how that happened.
My experience is that software screwups are more common on state (and local, if applicable) rather than federal returns. It is not cost-effective for software publishers to spend as many resources fine-tuning the software to catch all the varied nuances of the many different state income tax regimes. Some states are very straightforward and essentially just ¨piggyback¨ on federal definitions of AGI, taxable income, etc. with a few minor exceptions but many others do not. That said, I would expect the most effort goes into the largest states, e.g., CA and NY, since those are such large markets.

Even if you use software, it is a very good idea to read the instructions for the applicable provisions and to understand what underlies the numbers on your return.

hehasnoidea
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Re: Doing Your Own Taxes

Post by hehasnoidea » Tue Jun 18, 2019 8:02 am

wyoming82240 wrote:
Mon Jun 17, 2019 11:01 pm
Credit Karma has free tax filing service regardless of the income. I have used it to double check my filing with other service. In inconvenience or regrets with that service. Anybody have tried this?
I like credit karma but they still do not support doing a back door Roth through their website as far as I could tell

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fortfun
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Re: Doing Your Own Taxes

Post by fortfun » Tue Jun 18, 2019 9:11 am

jebmke wrote:
Tue Jun 18, 2019 7:25 am
fortfun wrote:
Mon Jun 17, 2019 7:53 pm
If you have rentals, try Turbo Tax deluxe. I've really enjoyed it the past three years and got much bigger refunds than when I paid a "professional."
I'd be interested in hearing what errors and/or omissions you found in the "professional" tax return. I prepare a lot of returns for TaxAide and we see a lot of people who have previously had their return done by a paid preparer. While we sometimes find errors, most of the time the returns were correct.
I find the professionals are just in a hurry to finish as many tax returns as they can and they don't prompt you for all of the deductions that TurboTax does. Sadly, over the past 20 years or so, I've paid way more taxes than I should have. It's only over the past four years, that I've been doing my own taxes, that I've been getting all of the deductions associated with child care, rental property, business expenses, etc.

brianH
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Re: Doing Your Own Taxes

Post by brianH » Tue Jun 18, 2019 1:03 pm

I've also been a happy user of FreeTaxUSA for the past few years (after TaxAct jacked up prices.) They usually send out a discount code towards the end of the year (10% off), which makes Fed+1 State cost $13.

I've always done my own taxes, so I know far more about the tax code than I would like to, but I think even a beginner with an uncomplicated return would have an easy time. The key, using either software or a preparer, is to keep good notes and records through the year. I scan and keep all documents, plus a text file of miscellaneous things like 529/HSA contributions, in a computer folder. When it's time to file, it's easy to go file by file to make sure I haven't forgotten anything.

Slapshot
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Re: Doing Your Own Taxes

Post by Slapshot » Tue Jun 18, 2019 1:21 pm

A number of years ago, I tried out TurboTax after having had my taxes done by a pro. In doing so, I found that the pro had made a major error that had a significant impact on my refund to the tune of over $1,000. Since then I've done my own taxes. The pros all use TurboTax or something similar anyway. Plus you have to gather all the supporting info yourself. So why not do your own? And I found that in any grey area, the pro always took the conservative route instead of doing it to my advantage.
This time, like all times, is the best of times if we but know what to do with it.

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