Over at Bogleheads we came across the following discussion:
by Morik » Thu Nov 27, 2014 2:19 pm
by Phineas J. Whoopee » Thu Nov 27, 2014 2:31 pm
by tfb » Thu Nov 27, 2014 2:36 pm
by Morik » Thu Nov 27, 2014 3:03 pm
by drawpoker » Thu Nov 27, 2014 3:06 pm
by Quince » Thu Nov 27, 2014 3:25 pm
by nisiprius » Thu Nov 27, 2014 4:03 pm
by lululu » Thu Nov 27, 2014 4:05 pm
by hyla » Thu Nov 27, 2014 4:37 pm
by JW Nearly Retired » Thu Nov 27, 2014 5:08 pm
by dodecahedron » Thu Nov 27, 2014 5:27 pm
by pshonore » Thu Nov 27, 2014 8:38 pm
by nanoanalyzer » Thu Nov 27, 2014 9:01 pm
by Morik » Thu Nov 27, 2014 9:47 pm
by Toons » Thu Nov 27, 2014 9:56 pm
by nanoanalyzer » Thu Nov 27, 2014 11:08 pm
by fposte » Fri Nov 28, 2014 10:03 am
by retiredjg » Fri Nov 28, 2014 10:39 am
by tfb » Fri Nov 28, 2014 1:53 pm
by Peter Foley » Fri Nov 28, 2014 5:45 pm
by Morik » Fri Nov 28, 2014 7:02 pm
by gvsucavie03 » Fri Nov 28, 2014 7:34 pm
by Morik » Sat Nov 29, 2014 12:18 am
by LeeMKE » Sat Nov 29, 2014 1:46 am
Do it yourself tax solutions? Should I just try turbotax?
by Morik » Thu Nov 27, 2014 2:19 pm
Hi,
I'm considering starting to do my own taxes this year. Up til now we've used a CPA to do them for us.
Should I just go try Turbotax? Anything to be careful of? (Anything it won't cover or ask about, that might bite us later? I'd use the "Premium" version since I do have taxable investments and plan to backdoor some Roth this year.)
Does it handle non-deductible IRA contributions that I want to backdoor into Roth?
Thanks for any advice!
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Re: Do it yourself tax solutions? Should I just try turbotax
by Phineas J. Whoopee » Thu Nov 27, 2014 2:31 pm
Yes, unless you're a large-ish organization or a very high income sports or performing star, it would be better to do your own taxes using Turbotax, so that you understand the issues you face for the purpose of making good tax-consequent decisions in the future.
I personally do mine by hand, not because I'm too cheap to pay for a tool, nor because I value my time at practically nothing, but precisely for the reason that I therefore do understand my issues so I can act accordingly.
In recent years I've taken to using Taxcaster, from the same company, to double-check my results. One time it disagreed with me. I tracked it down to a specific error, on one specific line, in which its programmers were misled by wording that, while not ambiguous, could have been clearer.
Accounting for the difference we agreed.
Put in the effort to discover the details of your situation. That's my advice. If there's good reason to offset the time it takes, reduce the amount of time you (I don't know you and maybe you yourself never do this but at least permit me to go for rhetorical effect, will ya) spend complaining about your taxes.
PJW
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Re: Do it yourself tax solutions? Should I just try turbotax
by tfb » Thu Nov 27, 2014 2:36 pm
Morik wrote:Should I just go try Turbotax?
If you don't mind paying the highest price among the big 3 packages. The price can be 2x or 4x the competing product, but it's should be still less than what you paid to your CPA. Maybe as your first try so that you don't give up on the idea. After you know how to do it, the competing product would be just as easy.
Harry Sit, taking a break from the forums.
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Re: Do it yourself tax solutions? Should I just try turbotax
by Morik » Thu Nov 27, 2014 3:03 pm
I'm not aware of the competing product--I'll do some research between now & tax preparation time.
I don't putting a little time in, but am not sure how to know what all forms I'll need to fill out without some sort of guidance. (Maybe the IRS posts this guidance, but I wouldn't, for instance, have known to file for a non-deductible IRA contribution.)
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Re: Do it yourself tax solutions? Should I just try turbotax
by drawpoker » Thu Nov 27, 2014 3:06 pm
In the years before I retired I used the TurboTax service provided thru Vanguard. It seemed to work very well, there was no software to buy or update every year, I just logged on to the Vanguard site, created a password-protected account and followed the directions. Nothing to download or install. Once you started a return, you could just log off and go back and take it up where you left off anytime you were inclined.
Think last time I used this think I paid like $19.95 in order to get Schedules C, D, SE that I needed. That price covered both federal and state. If I could of got by with just the basic package I think back then it was $9.95 I do recall the bargain prices were only available to Voyager or Flagship clients; not sure what others are charged.
I found it very easy to use. It basically walks you through each and every step if that's what you want. There is also an option for skipping the walk-thru if you are already well-versed in certain parts of the tax code and you don't need guidance for inputting certain sections. Then, when you get back to more tricky stuff, invoke the help again.
I hope Vanguard is going to offer it next year (?) And keep the prices reasonable (?)
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Re: Do it yourself tax solutions? Should I just try turbotax
by Quince » Thu Nov 27, 2014 3:25 pm
I used Turbo Tax 3-4 years ago. Last few years I used H&R and my only complaint is that they didn't make it clear from the very beginning that I will have to pay extra for state e-file. I like that they keep your previous years history, but everybody does the same.
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Re: Do it yourself tax solutions? Should I just try turbotax
by nisiprius » Thu Nov 27, 2014 4:03 pm
I've used both TurboTax and H&R Block. I actually switched from TurboTax to H&R Block then back to TurboTax and back to H&R Block because each company in turn did something I felt was "unforgivable," sigh. Anyway, having switched back and forth, I can state that for my purposes the overall functionality and usability of the two programs really seemed to be pretty much the same. I have typically used 1040, schedules A, B, C-EZ, D, E, and SE.
BOTH companies feature insultingly sucky customer service and total nonsense, like the time in which I was trying to report an obvious gross bug (the very simple written instructions said to fill out the form in a certain way, and the program did it a different way which did NOT result in equivalent taxes) and being told that "the program has no bugs," and refusing to let me read them the simple language of the instruction booklet because "we cannot give tax advice."
Last edited by nisiprius on Thu Nov 27, 2014 4:06 pm, edited 2 times in total.
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Re: Do it yourself tax solutions? Should I just try turbotax
by lululu » Thu Nov 27, 2014 4:05 pm
nisiprius wrote:I have typically used 1040, schedules A, B, C-EZ, D, E, and SE.
Also 8606 for some IRA stuff.
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Re: Do it yourself tax solutions? Should I just try turbotax
by hyla » Thu Nov 27, 2014 4:37 pm
Agree that turbotax is fine for most non-complex tax situation, with one note of caution -
In addition to doing your turbotax return and letting turbotax search for deductions, spend some time reading IRS literature about rules, deductions, credits etc. which may pertain to your situation. I know, that sounds really boring, but it might save you money. Two years ago, turbotax decided to treat my (nontaxable) tuition waivers for grad school as income and I ended up paying extra income tax... boo! I later dug up the IRS rules regarding student status and tuition waivers and found out I did not have to count it as income, so the next year, I knew not to enter those tuition forms into turbo tax. But then I ended up filing on paper anyway, because turbotax tried to put in some educational expenses deductions for me, but when my mom and I dug around in the IRS literature ourselves, we found out that the saver's credit gave me a much bigger refund than the deductions turbotax found.
So, if you use turbotax, just spend a bit of time doublechecking that everything looks good before you submit. And in case the above examples sound pretty bad, I should mention there were probably four other years I used turbotax it did a fine job.
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Re: Do it yourself tax solutions? Should I just try turbotax
by JW Nearly Retired » Thu Nov 27, 2014 5:08 pm
Morik wrote:I'm not aware of the competing product--I'll do some research between now & tax preparation time.
I don't putting a little time in, but am not sure how to know what all forms I'll need to fill out without some sort of guidance. (Maybe the IRS posts this guidance, but I wouldn't, for instance, have known to file for a non-deductible IRA contribution.)
I think TT would have asked you if you made IRA contributions, and if you made too much for them to be deductible then it would have told you about that too and added an 8606. I believe it would also ask about IRA withdrawals and conversions and any previous IRA basis. I don't use TurboTax but the competing lower cost software (H&R Block at home) that I do use does all this.
All the tax software uses an interview type data input where it asks about various type of W-2 & 1099 income info/deductible expenses/taxes & credits/IRA transactions/and other tax important matters, and you feed them the information as they ask it in the interview. It will decide what forms are needed and put your data in the appropriate place on the right forms. The main thing you need to be somewhat careful of is knowing the right terminology so you don't misidentify something. An IRA conversion is not a rollover and both are not a withdrawal, for example.
For practice, you might buy the 2013 software (should be cheap) and redo your 2013 taxes with it; then compare your result with your CPA's return for 2013. Or just dive in with 2014 and people here will answer questions.
JW
Retired Summer 2013
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Re: Do it yourself tax solutions? Should I just try turbotax
by dodecahedron » Thu Nov 27, 2014 5:27 pm
I like the previous poster's suggestion that you try to replicate last year's tax return in 2013 software to help you get a sense of what you are doing.
Many vendors will let you prepare your taxes in their online interface without actually asking you to pay anything until if and when you actually want to efile the return (or to print a paper return formatted for paper filing.)
This makes it easy to "kick the tires" of several different interfaces until you find one you are comfortable you can use with some degree of confidence.
You can also use this free simulator on the NBER's website to "sanity check" the numbers you get from commercial software. (The numbers won't be exact and they may not cover every wrinkle on your taxes, but they may give you a quick and dirty look at the big picture.)
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Re: Do it yourself tax solutions? Should I just try turbotax
by pshonore » Thu Nov 27, 2014 8:38 pm
hyla wrote:Agree that turbotax is fine for most non-complex tax situation, with one note of caution -
In addition to doing your turbotax return and letting turbotax search for deductions, spend some time reading IRS literature about rules, deductions, credits etc. which may pertain to your situation. I know, that sounds really boring, but it might save you money. Two years ago, turbotax decided to treat my (nontaxable) tuition waivers for grad school as income and I ended up paying extra income tax... boo! I later dug up the IRS rules regarding student status and tuition waivers and found out I did not have to count it as income, so the next year, I knew not to enter those tuition forms into turbo tax. But then I ended up filing on paper anyway, because turbotax tried to put in some educational expenses deductions for me, but when my mom and I dug around in the IRS literature ourselves, we found out that the saver's credit gave me a much bigger refund than the deductions turbotax found.
So, if you use turbotax, just spend a bit of time doublechecking that everything looks good before you submit. And in case the above examples sound pretty bad, I should mention there were probably four other years I used turbotax it did a fine job.
It sounds like you were a full time student that year. Hopefully that is not the case since students are NOT eligible for the Savers credit.
Eligibility requirements To be eligible for the Savers credit you must have been born before January 2, 1993, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person’s return.
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Re: Do it yourself tax solutions? Should I just try turbotax
by nanoanalyzer » Thu Nov 27, 2014 9:01 pm
I have done my own since I was 18 by following the free instructions and various publications from the IRS. As my tax situation has become more complicated over time, I have really appreciated the incremental experience I gain each year. Nice to have a complete understanding of tax implications of various actions without asking/paying someone or running through software.
Jumping into the deep end in your situation might be too much to handle, so a tax prep software could help you dip your toes in the water. However, I always encourage everyone to just follow the free instructions, especially my single friends with nothing but a W2 under 50k who pay $200-300 for a preparer...
Maybe try the tax software and the DIY instructions route for 2013? See if you can handle going it alone for 2014.
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Re: Do it yourself tax solutions? Should I just try turbotax
by Morik » Thu Nov 27, 2014 9:47 pm
So I can't try turbotax free for replicating 2013 because they took that down in October. I could buy the 2013 desktop software for 70 bucks or so.
I tend to like digging into things like the tax code--I might not actually mind doing them myself.
For those who do your own--how long does it generally take you after the first few times?
I have to deal with:
- Both me and my spouse work
- We may make non-deductible IRA contributions (and if we do we will convert them to Roth, we have pre-tax IRA dollars, but they will be gone by 12/31, rolled into 401k).
- We have taxable brokerage accounts. I took them over from an investment advisor/manager this year, and incurred some (large) capital gains transitioning them around. We may have losses from 2008 still hanging around, not sure, will have to check our 2013 return. (I assume the carried over losses would be there somewhere?)
- I contribute to 401k, wife contributes to 403b
- I contribute to after-tax 401k and do in-plan conversions to Roth 401k
- My wife is a teacher; someone mentioned there are tax benefits for teachers
I'll probably start with something like Turbotax.
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Re: Do it yourself tax solutions? Should I just try turbotax
by Toons » Thu Nov 27, 2014 9:56 pm
TaxAct 
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Re: Do it yourself tax solutions? Should I just try turbotax
by nanoanalyzer » Thu Nov 27, 2014 11:08 pm
Quick disclaimer, I am not a lawyer nor an accountant, and this should not be considered tax advice. Just making you aware of the free materials offered by the IRS.
Morik wrote:I tend to like digging into things like the tax code--I might not actually mind doing them myself.
For those who do your own--how long does it generally take you after the first few times?
I had a similar motivation at first. In some twisted way, I have fun doing my taxes. Takes me around 5-10 hours each year, but I'm very thorough and triple-check everything. Like I said, things have gotten more complicated, so the lines that took me 6 hours when I was 18 now only take 10 minutes. But, there are always new obligations or deduction/credit opportunities coming up in my situation each year that keeps my average around 8 hours.
With what you have going on, it could take you 10-20 hours the first time depending on your degree of thoroughness. Next year should go much faster once you have the practice under your belt. It's amazing how much of the 200+ page instructions you can just skip because high earners are ineligible, or you don't have a child in the house.
Morik wrote:- Both me and my spouse work
Easy, as long as you both get W2s. If either is self-employed or paid on a 1099, definitely use the software at first. Schedule SE can be daunting.
Morik wrote:- We may make non-deductible IRA contributions (and if we do we will convert them to Roth, we have pre-tax IRA dollars, but they will be gone by 12/31, rolled into 401k).
Pretty easy, just follow the instructions for form 8606
Morik wrote:- We have taxable brokerage accounts. I took them over from an investment advisor/manager this year, and incurred some (large) capital gains transitioning them around. We may have losses from 2008 still hanging around, not sure, will have to check our 2013 return. (I assume the carried over losses would be there somewhere?)
This can be a hassle if you want to optimize your tax paid. There are three ways to calculate cost basis (specific, FIFO, average), and you might want to check all 3. But, once again, just browse Publication 550 in the relevant sections and follow instructions for Schedule D.
Morik wrote:- I contribute to 401k, wife contributes to 403b
These amounts, if deductible (non-Roth), should already be reduced from W2 box 1 and included in one of the box 12s. After-tax contributions may be in a different box 12.
Morik wrote:- I contribute to after-tax 401k and do in-plan conversions to Roth 401k
Can of worms for me, sorry, I can't really help you. Some recent developments in this area, though:
And, of course, some wisdom of threads past:
Morik wrote:- My wife is a teacher; someone mentioned there are tax benefits for teachers
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Re: Do it yourself tax solutions? Should I just try turbotax
by fposte » Fri Nov 28, 2014 10:03 am
hyla wrote:Two years ago, turbotax decided to treat my (nontaxable) tuition waivers for grad school as income and I ended up paying extra income tax... boo! I later dug up the IRS rules regarding student status and tuition waivers and found out I did not have to count it as income, so the next year, I knew not to enter those tuition forms into turbo tax.
I'm curious about the problem. Did it tax before the threshold, or did it not differentiate between GAs and RAs/TAs as far as exemption for the waiver is concerned?
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Re: Do it yourself tax solutions? Should I just try turbotax
by retiredjg » Fri Nov 28, 2014 10:39 am
Morik wrote:I'm considering starting to do my own taxes this year. Up til now we've used a CPA to do them for us.
The first year you do this, you might want to do both or at least have your CPA go over it for a lesser fee. Yes, it will cost more money.
Should I just go try Turbotax? Anything to be careful of? (Anything it won't cover or ask about, that might bite us later? I'd use the "Premium" version since I do have taxable investments and plan to backdoor some Roth this year.)
I don't think you need premium for the back door. But you might need it for the taxable investments, at least this year.
Does it handle non-deductible IRA contributions that I want to backdoor into Roth?
Yes. This is easily handled with Form 8606. When you do the taxes for the "back door" remember that you didn't make a contribution to Roth IRA (so when TT asks if you contributed to Roth IRA, you say "no"). What you do is make a contribution to tIRA and then convert it to Roth IRA (without having deducted it from your income). These are two separate steps. Both are reported on Form 8606.
If you actually want to learn how taxes work, do it with pencil and paper, starting with Schedules A, B, etc.... You don't actually start on Form 1040 - it is a summary of all the other forms. In other words, work backwards.
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Re: Do it yourself tax solutions? Should I just try turbotax
by tfb » Fri Nov 28, 2014 1:53 pm
Morik wrote:So I can't try turbotax free for replicating 2013 because they took that down in October. I could buy the 2013 desktop software for 70 bucks or so.
You can buy one on eBay for $30. Or buy the 2013 desktop deluxe version for still less since it handled capital gains.
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Re: Do it yourself tax solutions? Should I just try turbotax
by Peter Foley » Fri Nov 28, 2014 5:45 pm
I would look at multiple products, not just Turbo Tax. I've used Turbo Tax for about 20 years. Over the past 5-7 years they have been increasing the cost of the product while reducing features.
If I were starting from scratch, I would use a different product.
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Re: Do it yourself tax solutions? Should I just try turbotax
by Morik » Fri Nov 28, 2014 7:02 pm
I may try to just do everything by hand... it doesn't seem horribly hard (I spent an hour looking over our 2013 return and following along on blank worksheets and forms online), just lots of details.
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Re: Do it yourself tax solutions? Should I just try turbotax
by gvsucavie03 » Fri Nov 28, 2014 7:34 pm
Morik wrote:I may try to just do everything by hand... it doesn't seem horribly hard (I spent an hour looking over our 2013 return and following along on blank worksheets and forms online), just lots of details.
This is how I do ours. Stay on top of the "What's new for 2014," the rest is simple math with a bit of reading. I'd say ours took about an hour, too.
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Re: Do it yourself tax solutions? Should I just try turbotax
by Morik » Sat Nov 29, 2014 12:18 am
I'm sure it will take me longer than an hour as I've never done my own taxes before. 
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Re: Do it yourself tax solutions? Should I just try turbotax
by LeeMKE » Sat Nov 29, 2014 1:46 am
When I transitioned from having a CPA do my returns, I did the returns using tax software the last year, compared my results to his, and actually found an error he made that the tax software caught. So I mailed in the return from the tax software.
Ever since, I've done my own with one or another of the tax softwares (I've used all three mentioned so far -- they are all very similar). I only read the IRS regs if I get doubtful about something. So far, the tax software has always been correct, and I've thrown an awful lot at it (house sales and purchases, marriage, divorce, plenty of movement of money) and all of your issues except a Backdoor Roth and being a teacher.
TRUE STORY: One year I had a complicated return and was sure the software would not be able to handle the expenses and settlement from a lawsuit in the same year I changed employment. So, I overrode the software in several places to make my "corrections." I've been called for audits before since I'm self employed and often have a variety of the red flags that attract review. So when I got a letter from the IRA, I went in ready to answer their questions. Turns out, every question was about the "corrections" I'd made. Sure enough, the tax software was correct in parsing the entries, and I was incorrect in my reading of the regs.
Now I have some investments that are throwing OID income/deductions and I follow the instructions and don't mess with what the software calculates. I know better.
P.S. Our tax returns take me many hours to do. However, if I just sat down and did them once, it would probably be 4 hours. Instead, I enter the data, and then start using the software like a video game, kneading over the levers to see if I can move the tax amount down. I'm ridiculous in treating this like a game, but I'm probably having more fun paying taxes than most folks.
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