Turbo Tax Handout by Joan Pannenborg
Vero Beach Computer Group
March, 2012 by Joan Pannenborg [email protected]
1)Tax Filing Strategies • Do it yourself – inexpensive ……….but laborious, – need good tax knowledge, – error possibility • Use Tax Professional – good for complex filings, – thorough, – audit support ……….but expensive!!
• Use AARP Tax Aid Program – free (e-file), joint IRS program lRS software – trained, certified preparers ………..but restrictions • •Use Other Free Tax Online Programs
• Use IRS.gov Web site
Tax Software (All Brands)/Pros • Avoids arithmetical errors • Step by step interview process — simplifies tax code – reduces need for tax code knowledge • Interview process minimizes errors from tax situation changes – e.g. new deductions because of life changes — retirement • Convenient import of previous years info — speeds up process – support for Quicken, direct import from banks and brokers…… • Can do ―what if‖ scenarios — see impact of different filing strategies
• E-file available & convenient storage in PDF format (backup!!) Software buys convenience
Tax Software – Cons • Expense • Accuracy in data entry important! • All-in-one solution leads to lengthy interview process • Program errors in updating changes to forms – requires careful monitoring of calculations during data entry • Requires updates for complete accuracy
2) E-file vs Snail Mail Pros • Return won’t get lost in mail (or use certified mail $$)
• Faster returns with direct deposit • Check out free IRS e-file site (AGI restrictions) www.irs.gov/freefile Cons • Cost although some (most) software offer free e-file • Subject to e-file errors E-file is vastly improved — convenient and fast
3)Common e-File Rejection Errors • Name, birth date, SSN don’t match – enter name exactly as on SS card • Payer’s name and EIN don’t match W2, 1099 etc – enter name exactly without punctuation – exception: commonly used abbreviations OK after first few words — e.g. Dept – hyphens allowed
4)Tax Software Options *
• Turbo Tax– Turbo Tax is still 4.5 (out of 5) stars by PC magazine – clean and intuitive interface – clear guidance with multi-level help system – deduction maximizer — $30-$91
• TaxACT Online Ultimate Bundle- 4 stars -Price. Speed. Easily-accessible, thorough guidance throughout.
• H&R Block At Home Deluxe Online (2011) – 4 stars -Trusted tax advice from H&R Block and The Tax Institute. Clean, simple, fast user interface and competent coverage of the 1040. Help targeted better than anyone’s. Smartphone app
• TaxSlayer .com Premium Edition – 2 stars- Some things going for it, including a well-designed interface, good support for forms and schedules, and general tax acumen. But it doesn’t provide the guidance needed for such a complex operation.
• H&R Block At Home Deluxe for the iPad – 3 stars- good job of creating an iPad versions of its Free and Deluxe versions, with a couple of exceptions, one serious: The online help center wouldn’t open properly in their tests. Loading your online return in Safari on the iPad works fine overall
• Turbo Tax for the iPad – 3 ½ stars – Intuit has produced two versions of TurboTax for the iPad for the 2011 tax year: a native iPad application and a tweaked version that runs in Safari.
*All these reviews are from PC Magazines ―Best Tax Software‖
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Turbo Tax on CD $29.99 Basic to $129.99 for Turbo Tax Business • Find different versions online versus retail • Online versions include efile but no State • Watch ads, shop around for rebates and software bundles!!!!!
Turbo Tax (Desktop versions) Turbo Tax Basic
• Interview process and error check • Time saving year to year data import • Quicken and Quickbooks import Turbo Tax Deluxe Federal and State
• Free state download • ―It’s Deductible‖ software, bluebook for donated items • Deduction Maximizer looks for deductions, tracks savings • Summary of deductions — how to qualify and eligibility
Turbo Tax premier and Home & Business • Help for stock, bond, mutual fund sales, stock options, • Basis Pro tracks and calculates historical cost basis • Rental property income guidance and refinancing • Expanded Schedule C and business deductions guidance • Expense categorizing, start-up deduction and depreciation
Note: the program will list errors after entry as well as showing red when information is not consistent
TaxCut (H&R Block) • Find different versions online -versus retail • Online versions include e-file for basic federal • Similar to Turbo Tax in progression of features – increasing cost • Some variation from store to store — watch ads shop around!!!! On line — much more cost effective
Note:the program will periodically ask for data verification to aid in avoiding errors
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5 .Remember:Set up your information before starting
Spreadsheet or printed reports from software
Copies of 1099, W-2, 1099R, 1099P
Print out of ALL transactions to check for category error
Common Missing Information • Stock sale — Cost basis and purchase date — Broker can assist if stock dividends or spin off, also check web site of company • Real Estate Sale other than primary residence — 1099-S, closing statements, capital improvements • Interest, tax exempt interest, dividends and foreign tax paid may be included in broker consolidated statement • 1099-B and KI may be late • For IRA holders (age 70+)….did you take your RMD?
Review: Are Documents Correct? — Review income statements • W2, 1099, SS Statement, etc — SSN & amounts correct — If not STOP and get corrected copy
Don’t File Too Early • Ensure all tax documents have been received and are correct ………BUT Don’t Delay Filing • Seek tax advice from AARP or professional on correct option •File and amend later •Ask for extension, pay estimated tax, file later