We haven’t been doing our taxes since we got married in mid 1980s. We are happy to let our CPAs do it. We gather all the info and let them handle it.
We decided to use TT again, even though our taxes are much more complicated this year.
In 2021 we had roth ira conversion, a complicated stock sale from employee purchase going back decades so no cost basis info form computershare, an odd inherited investment that my husband sold. We had considered hiring a CPA recommended by our financial advisor, but he got booked up early. We figured the hard part was going to be gathering all the info (including credible method to determine cost basis across the multiple stock splits), so my husband is forging ahead. We do have the benefit of having “second set of eyes” to unofficially review at our financial advisor office, and last year he did find something we had entered incorrectly from HSA forms.
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I’m finishing up our taxes today using TT which I’ve done for maybe 15 years. My H is self-employed, so they aren’t simple, but I’m also of the opinion that after I’ve organized all the info needed to file, I’m 75% there.
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I am adding my dad’s taxes this year because the accountants who had done them for 20+ years decided to only handle their corporate clients so no individual returns. I get it based on the fees they collect (and its too much for the complicated-less return that he has but not enough for them to care about). Reminds me to ask them for a copy of his old returns. Not sure what happened to them when we sold my dad’s house.
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@BelknapPoint do you know?
As I consider myself a math person… D (the real math person) figured it out on the phone while unloading the kids from the car. We double checked it from previous forms. I watched at least 5 videos and read all about it and it kept saying follow the next instructions (like it was self explanatory). The ‘Table for Computing Gift Tax’ was counterintuitive. The column D ‘rate of tax on excess over amount in column A’. The ‘on excess’ got me.
I also realized the gift tax is based on the person giving the amount, not the person receiving it. So, it is MY total not theirs.
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I think that is what happened to us. Our accountant’s firm does corporate taxes mainly now. We are small peanuts but high cost. When they asked me to download all my account info to them in their tax program it seems that is exactly what I am doing on TT at less than 1/10th the cost. It has been a learning experience on how taxes work, too.
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If you were supposed to file a gift tax return last year for a gift given in 2000, doing it now (late) is better than doing it even later, right? Yes, you can file Form 709 now for a gift given in 2000. I’m guessing that no tax is actually owed and this is just for the reporting requirement. Given your circumstances last year, completely forgetting to file may have a reasonable explanation acceptable to the IRS, but now that you remember you were supposed to file, not filing at all would probably be considered a willful failure to file.
I’m doing our own taxes on H&R Block as usual but am waiting for my last 1099-DIV. Apparently the company is waiting as long as possible to send it out (allowed up to mid-March with extensions) because it includes one of those mutual funds that had huge capital gain distributions. Arggh on paying taxes on that!
I also did son’s return last weekend - his is relatively simple and I get five e-files included with my software. He’s talking about doing it himself in the future but it is nice to have so much autofilled and I don’t mind.
Do you mean 2020?
Yup. Where did my coffee go?
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I’ve been doing mine using TT for years, in the last few years I get a free copy from Fidelity so that makes it even cheaper. I notice with TT, I need to be careful about Roth conversion, they don’t always fill the form 8696, so I have to do one separately.
One of my kids has K-1 form because she’s a business owner, and I did her tax and her business partner’s taxes before, it’s not that difficult. But now they have a good CPA to do their taxes so I’m not involved anymore.
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H is doing ours again using Tax Act which he’s used for eons now. He’ll also be doing our medical son’s since he asked and got the response, “Thanks - that will be very helpful!”
He’s a very Type A, notices all details, type of person and finds doing taxes to be quite easy, even as a business owner - esp with Tax Act.
If it were up to me to do them, we’d use an accountant or perhaps our financial son now. I do everything else with our money from paying bills to investing, but I have no desire to handle taxes. Since H doesn’t mind it and has a personality suited well for it, I’m willing to sign my name where needed.
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H has the accounting major but both he and I prefer having the cpa do it, so we are happy to let him do it.
My attitude is that you SHOULD be able to do your own taxes. The government should make it so that 95% of the population feels comfortable with doing so. It’s crazy to have something that everyone is required to do be so intimidating that a professional has to be paid to take care of it.
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While I COULD do our taxes, to me the cost of paying our CPA is worth it because he is available during the year for consultations on things for our small business or other investment moves we might make. He helps us decide whether to put money in a Roth or other IRA at tax time etc. Worth the peace of mind to me.
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There are a few things at play:
- The tax preparation companies lobbied for rules to prevent the IRS from offering its own tax software or pre-filled simple returns.
- Many government subsidies and “pork” are given in the form of income tax deductions and credits, rather than outright payments. Obviously, this makes income tax calculations more complicated. This has two politician-desired effects:
a. High income people can gain larger benefits from them (low income people may have little or no tax liability to cancel with them).
b. Removing them is politically more difficult because it is “raising taxes” rather than “cutting wasteful government spending”.
If you were just looking to raise revenue, you would have a flat tax. Could even have one with progressive rates. 95% of the people could prepare their own with that type of system in place (though some may decide to pay to have someone else do it). Only issue would be determining what is income and that could be very simple for the vast majority of the people.
But purpose isn’t just to raise revenue. Its to influence behavior. Reward certain groups; punish others. Reward supports and punish people on the other team.
At this point the US tax code is based on 1986 law with 35+ years of amendments/changes/“simplifications” layered on top of it. Patchwork quilt that is a total mess. Few returns are prepared by hand. Some type of automatic process involved that helps simplify the morass.
Exactly. Among many other issues. This needs to stop and we need a reset. Perhaps another discussion of a flat tax?
Determining what is (taxable) income is most of the complexity in income taxation. Whether the basic tax rates are flat or progressive is only a tiny bit of the complexity. Deductions, credits, special types of income subject to special rates, tax accounting rules to create or close loopholes, etc. make up much of the complexity.
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