With just over six weeks until Tax Day 2011, many have already done their taxes, and most have at least started thinking about doing do so. With that in mind, I thought it would be interesting to run a poll about your preferred method for preparing your federal income taxes.
As for us… After years of doing our taxes myself, first with paper and pencil and later with TurboTax, we ultimately switched over to a tax pro. This decision was mainly driven by a dramatic increase in the complexity of our taxes, as well as a desire to simplify our lives.
I’m still firmly convinced that most people can do a good job on their taxes using something like TurboTax, but there are certainly instances in which enlisting the help of a pro is worth the added cost. This is especially true if you own a small business.
10 Responses to “How Are You Preparing Your Taxes?”
Good point Bridget. I file estimated taxes so I always have an idea where I’m going to end up. Usually pretty close. Small refund or small amount due. Must say that with 2 kids in college and finally being retired, I love the tax breaks there. I can pull a bunch of $$$$ from my IRAs with no tax implications.
I use TaxAct online too – deluxe package, which costs me between $14 – $17.00, depending on the deal that year. It asks a bunch of questions and guides me through the forms, but I also make sure to read up on tax changes that affect my family so I know what is going on. Tax software is like a GPS system – you still need a general idea of where you are going in order to understand the directions.
Been using TaxAct online for many years. With some fairly complicated stuff. Alternative Minimum Tax, Company stock options, self-employed for a while, rental property, etc. I think it’s a crime how much HRB charges folks for incredibly simple returns. Full disclosure…I own stock in HRB !
Donna: When I say that we go to a tax pro, I’m not talking about a storefront operation, but rather a business/tax attorney that we use throughout the year. Thus, he has a very good feel for our situation – unlike a preparer that you meet for two minutes before handing over your paperwork. You might also try a local CPA that specializes in taxes. I’ve heard enough horror stories from the storefront operations that I’d never use one. My impression has been that they mostly just plug your numbers into the software without providing much in the way of additional value.
After years and years of doing our taxes myself, I finally succumbed to the “am I doing them right?” idea and went to HR Block. What a terrible mistake! …sure the guy was fairly new …but they must take pretty much anyone who wants to work for them?? is that possible??
Our taxes are a very simple 1040 with just a few itemized deductions ….but boy … here I sit this year … I still need to file the amended return for last year to fix the fact that the guy did not properly handle the previous year’s state income tax refund on the 1040 form. I will have to amend the state one as well.
I just have been too demoralized to do it. We paid $238 … they gave us $50 back … but still $188 is what I paid for the headache of fixing and doing alot more paperwork.
This month I will fix last year’s return and go back to the tried and true … my own pen and pencil. Ahhh… it will feel good just to do them myself.
We did it ourselves using TaxAct for years. Once we incorporated in 2006, it was time to give up the reins and let a professional handle it.
I am a professional tax preparer, and I see many people who prepare their own returns, or go to a chain-type preparer who set up temporary shop from January-April, and they bring it to us when they get a letter from a taxing agency because of an error. Just as I don’t do my own car repairs, I leave it to a trained expert, most people should leave their tax prep to a trained expert. The desktop software is good, however sometimes people don’t fully understand the questions it asks and that causes errors in a return, which could cost you money, either in missed deductions or in penalties & interest due to underpaid tax.
I use desktop tax prep software to verify what I’ve done with pencil and paper, and vice-versa, and then submit manually written forms. Just because you use software does not mean that you’ve entered everything, and doing it separately, manually, not only let’s you verify but it also helps you understand your taxes.
I’m using tax software and then taking it into a tax pro for a review. It’s cheaper but allows me to double-check my work.
We continue to use TurboTax, but look forward to the day when either
a) We have figured out how to live on an income below that level which is taxed, or
b) We are making money on our small biz efforts, and are forced for sanity’s sake to hire a tax pro.