We do our own using TurboTax. H was an accountant in his prior life, so it’s a point of honor. We have a ridiculously simple return (no business, no stock sales, can’t itemize any longer). I assemble all the documents since I do bills and organize paperwork, and when we could itemize, I entered all the charitables. I do check the return and ask questions. Not signing without doing that – one of my SILs trusted that my brother filed returns and had everything in order. Um, he didn’t file for YEARS. IRS took her to the cleaners after she had already divorced him over that and other misbehavior, so there was no getting blood from that stone. She had to pay all the arrears and penalties herself.
S2 has H do his taxes since S is overseas; S1 had an accountant for a couple of years, but I think he does his own now. His returns are complicated – stock grants, big charitables, etc.
Of course there is some complexity in determining income. But that is inescapable if you are taxing income. No matter what rates (or how many apply) or what deductions/credits you allow (if any), you have to determine what is income to tax it. There is no way around that.
But even if you believe that determining income is most of the complexity in income taxation (not clear to me that is true but that is a different issue), there is “much complexity” (using your words) on the other side of the equation which are deductions, credits, etc. that isn’t inescapable. As I noted, that doesn’t exist for revenue collection purposes but rather social engineering/political purposes. Eliminating that complexity would significantly simplify the tax code and the process of completing tax returns for the vast majority of people. And ultimately for the vast majority of taxpayers income is wages and maybe some investment income none of which is complex in terms of determining income.
Ultimately any discussion of flat (single) rate versus progressive rates isn’t meaningful because progressive rates are too engrained in the American psyche. Though really, effective tax rates are much more significant than nominal/marginal rates.
Interesting that you mention loopholes. Back several decades ago when I took my first tax classes, the idea of a loophole had a negative connotation because it was someone using a given tax provision for a purpose for which it wasn’t intended. In today’s tax discussions though, loopholes are uses for their intended purposes. Still bringing with it though the negative connotation.
Just finished taxes using Turbotax and came over here to the forum for a bit of relaxation
I do it over a week or so; work for an hour, get tired of it, save and continue the next day. That way I can be careful and double-check every entry. The tax software really walks you thru it. Every year I also buy the Audit Defense they offer.
I’ve used tax pros before, but I find them to be expensive. Turbo Tax can get me the same return for a fraction of the cost. The software was on sale at Costco this year.
I spent 20+ years at a Big4 firm. I had the opportunity to have the Tax function do my taxes, as it involved multiple work states, equalization payments, etc. I received the results in a nice fancy binder. I also had to send it back twice because it didn’t match my results from a weekend of work on Turbo Tax. TT was correct both times.
Back in my Big 8/Big 6 days, the only individual tax returns that were prepared were for execs of top corporate clients. So people in our tax department were not familiar with individual tax return matters. I remember asking a few basic questions (I was not in the tax department) about individual returns and they didn’t appear to know much more than I did (taxes were covered on the CPA exam so we all knew something).
Nrdsb4 - I feel your pain, but that’s something that almost nobody in America should have to say. The government is forcing ordinary citizens to spend a lot of money each year to prepare our taxes so they can keep loopholes for the rich and avoid the hard work of true tax reform.
We e-file our federal taxes. Turbotax comes with 5 federal e-files. They try to get you to pay them to e-file your state return. Ummm, no.
Unfortunately our state makes it dang near impossible to e-file. The dept of revenue website has links for state e-filing but they either charge everone or have a means-test which eliminates most filers. For us that is a SIN!! In this age, there is no reason why we should not be able to easily file our state tax return for free!!!
(Though I will say, our return reached its destination in 3 days, and we got our refund check a week later…)
I would enjoy filing my own taxes but as an entrepreneur, my tax life is just two complex. A C-corp, an LLC, a tech startup, a beneficiary defective trust, foreign income flowing through, etc. I have a PhD a math-y field and I can’t figure out the algorithm for foreign tax credits. I’ve gone over the form.
I worked for five years in the family office of a very wealthy family and they got tax advice (business and personal) from the top tax people at one of the Big 4 (there may have been more then). I worked with them and they were great – proactive, clever, careful.
So, when I started my own firm, I searched for an equivalent kind of accountant at a local firm and found one. The structure he suggested with some clever modifications by me has probably saved $10K+ a year for 25 years (probably a lot higher now) and also suggested that I set up a Defined Benefit Plan at the time called a 412i. I think that allowed me to defer from taxes $100K to $200K a year for a number of years. The rules changed periodically. What is great is that none of the tax savings the accountant helped me create were in any way questionable – just following tax law straight down the middle of the road. He would also suggest other things and give me an assessment of risk involved.
All of this requires careful tax filing as well. I wouldn’t think of doing it myself at this point, though I enjoy figuring out ways to use the tax code to advantage.
I used to love to do ours by hand. Ours were really easy. Then the kids went to college and started investing in their own, and some years had self employment income. I paid someone to do it the first year and was shocked and how much they charged. But I wanted to make sure it was right. Then I switched to turbo tax. Been using that ever since.
And older S does his own now thank goodness. Younger S invests some, but not as much in as many places.
I also love the audit meter at the end. We are always in the green, H and I are always all the way to the left green, so I haven’t bothered to get the insurance
I typically owe so do not file until early April. Sometimes need extension if all forms are not available. And even if we overpaid, we have estimated payment due in April so nothing comes back to us directly. Benefit of that means I always check for latest/greatest TurboTax updates before we file.
Was it Schwab? I had already entered all of the info and then received the email from Schwab with fairly significant changes. Glad I had not filed yet either!
Yea, Schwab. My husband got it sorted out. Also there were some things updated by Computershare prior to that. It may be that the Roth conversion part of the taxes, which we had initially dreaded, may be the easier part.
I talked to Vanguard yesterday and apparently somewhere in my holdings is a fund with “complicated numbers” so I won’t get the 1099-DIV until mid-March. End of year statements gave me raw numbers so I have an estimate of taxes due, but still need all those other boxes to finish.
