Your Take 

Your Take: How Do You Prepare Your Taxes?

Busboys & PoetsLast night I had to pleasure to finally meet some of the DC personal finance bloggers and some PR folks at a happy hour (or three) hosted by TurboTax at Busboys and Poets at 5th and K Street. It was a fun event that was really casual and it was nice to meet people I’d only been emailing, instant messaging, or twittering with these last few months and years. Many thanks to the most awesome Chelsea (@TTaxChels) for inviting me!

In talking with both Scott Gulbransen (@prgully) and Dave Donohue (@davedonohue), I was surprised to learn that most people prepare their taxes the same way their parents did. If your parents did their taxes online with a service like TurboTax, you were more likely to use TurboTax. If they always went to a tax prep place like H&R Block, then you would be more likely to go to H&R Block over trying to do them yourself.

At first I was a little surprised to learn our tax preferences are influenced by our parents, but then I realized I was influenced by my parents. When I first decided to use TurboTax, I didn’t compare it to TaxCut or TaxAct or going to a tax preparer. I chose it because that’s how my dad did our taxes when I was younger. So I shouldn’t have been that surprised because I did the same thing!

So the Your Take for today is a two parter – How do you prepare your taxes and how much do you think your choice is influenced by your parents?

(Photo: daquellamanera)


File Your Taxes Now or Pay More Later

1040 Tax FormsI’ve been blogging about personal finance for four years now and I have a little tip for anyone out there who hasn’t filed their taxes yet (which may not be that many, because I went through half a dozen “winners” for the TurboTax Deluxe free filing card before I found someone who hadn’t filed their taxes yet, go pro-active Bargaineering readers!). At the end of March, most of the tax preparation companies will increase their prices.

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Free Tax Filing Resources

1040 Tax FormsWe’re deep in the throes of tax season and with the economy in the sorry shape that it’s in, I’m sure many taxpayers are looking to gain an edge. I mean we’re already paying taxes, surely it makes less sense that we have to pay to figure out how much we’re going to pay in taxes right? Fortunately, there are a lot of different ways you can get tax filing software or assistance absolutely free.

In addition to the nationally available programs I’m about the list, there are also a lot of local programs. Each state’s tax website will usually list the free tax filing resources or services available in the state. many of these are simply listings of data made available through the IRS Free File system but you might be able to find some gems in there as well.

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PC Magazine’s 2009 Editor’s Choice: TurboTax

TurboTaxPC Magazine named its 2009 Editor’s Choice for personal tax preparation software and the winner was Intuit’s TurboTax, beating out H&R Block’s TaxCut and TaxACT. Before you run out and just buy a copy of TurboTax, read the review itself. The advantage TurboTax has over the competition is in their breakdown of difficult and complicated topics. TaxCut won more points because of pricing and matches up in terms of functionality, it was TurboTax’s goes the extra mile in explanations. TaxAct is billed as the product if you’re “more budget-conscious and knowledgeable.”

PC Magazine’s Editor’s Choice

In PC Magazine’s review of TurboTax Premier 2008, a product that retails around $90, they compare the three products on a variety of levels. The real distinction is in what PC Magazine calls “guidance systems:”

There’s a much clearer distinction between the competitors when it comes to their guidance systems. TurboTax makes help more obvious in many places, and gives more—and more useful—explanations more often. Take home-office expenses, for example. After you’ve told TurboTax the dimensions of your home office, it asks for a list of expenses for your entire home, like insurance, mortgage interest, and real estate taxes. It tells you up front that it will prorate those expenses for you, and warns you not to duplicate some amounts you’ve already entered.

TurboTax also offers direct importing of W-2 data from ADP, Paychex, and ProBusiness; TaxCut doesn’t. TurboTax’s FAQs are more context sensitive, TaxCut are less so. It sounds like TurboTax has a lot of nice features that can make your life a little easier, if you’re the type who transposes numbers incorrectly often enough.


However, when it comes to pricing, H&R Block’s TaxCut wins out. Their TaxCut Premium Federal + State + E-File 2008 only runs you $45 compared to the TurboTax Premium, which goes for $90. Twice the price for a few bells and whistles? I’m not sure if it’s worth it.

All that goes out the window if you qualify for free tax filing. If you qualify for free tax filing, just go with the one you’ve always used and the one you feel most comfortable with. I have always used TurboTax because I could file for free and it didn’t matter which I used. When you’re filling out a 1040EZ and you aren’t paying a cent (except the e-filing fee), it doesn’t really matter which one you use!


If I had to choose which one to use, I’d go with the cheaper one. I have a pretty simple tax situation without any crazy investments or schedules I need to account for. If you have a more complicated tax situation, but not so complicated you need a living breathing accountant, maybe it would serve you better to use TurboTax and it’s superior interface and greater degree of handholding. Either way, using one of these packages beats walking into a tax accountant’s office!

Which do you prefer? Do you agree with PC Magazine that TurboTax is better? Or are you a TaxCut fan?


List of Free Tax Preparation Services

I bet the first thing you thought after you screamed “Happy New Year!” was how it was now time to do your taxes. (no? me neither) Unfortunately, it’s now February and it’s time to start thinking about doing taxes! Wheee! To help you along, I wanted to outline all the free resources you have for tax preparation. By this I mean I’m listing every single way I think you can get absolutely free tax preparation based on your financial situation. Some tax prep companies offer free tax filing if your situation is simple (1040EZ, or plain 1040), the IRS offers free tax filing if your adjusted gross income was under $54,000 in 2007 (it’s through third party companies), and some other companies offer free tax preparation for their customers as a fringe benefit. I’ll try to list them all. If I miss one that you know of (one that expands on the group of eligible taxpayers, we don’t need another company that offers free tax prep for the same groups already covered below), please leave a comment or email me and I’ll add to this list.

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Free Tax Preparation Software – TaxAct Product Review – (B+)

I finally decided to bite the bullet and give TaxAct (one of the free tax preparation resources out there) a try last night, despite registering for it a few days ago. All in all, my taxes took about 15 minutes to complete and it was a relatively painless process. The result was that I owe around $350 in taxes ($155 attributed to my side business), which made be a bit skeptical because that meant that the company I work for withheld an incorrect amount ($200 less). One problem with using a free product is that sometimes you doubt its correctness. (I’ve sinced used TurboTax and have confirmed the results, TaxAct was and is correctly calculating my taxes)

TaxAct was nice and quick, which I appreciated, but it kept asking me to upgrade to their Deluxe version for $15, which I didn’t appreciate. There was a stretch of about three or four screens where it asked me over and over again to upgrade. I suppose it’s a necessary evil because they need to make money but it was getting ridiculous. Then it would ask me to purchase TaxAct State a couple times and finally it would remind me that to e-File it would cost me. Printing out the forms was free though so I printed them out.

The program itself was good, but not as good as TurboTax in terms of navigation. After you entered in something you still had to navigate the mouse over to the Next button (instead of just hitting Enter) and to go back you had to hit the back button, no quick navigation to a specific screen. Then again, the program was free…

Overall, I was satisfied with the product, even if it asked me about a dozen times to buy a product, but I still am doubting it’s correctness. I think I’ll jump on one of those free after rebate tax product offers as a double check to see if things really are correct. Is it on par with TurboTax? No way. It scores a B+ in my book for moderate ease of use and it’s free-ness, probably an A- if it wasn’t for all the requests to pay pay pay. It doesn’t “look” as pretty as TurboTax and I just didn’t have faith in it. I would’ve rated TurboTax (last year’s edition, which would be doing 2003 taxes) around an A since I also got that for free after rebate.

If you have the time (15 minutes), give TaxAct a try. If you’ve already done your taxes and you paid for them, try TaxAct anyway since it’s free. If you get the same numbers, let me know. If you don’t, please definitely let me know. Also, if you yourself have used a free tax preparation product, let me know what you think about it and I’ll give it a try and see how it stacks up.

Update: TurboTax is also free… maybe I’ll give them a try tonight. (I did try them, review is available here) Also, I have no qualms about TaxAct’s accuracy anymore as TurboTax confirmed the results.

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