Don't You Just Hate Tax Time? Turbo Tax

Turbo Tax Deluxe 2007

I have been doing my taxes manually for about 30 years and this year was the first time I tried Turbo Tax. I had tried IRS E-file about a dozen years ago, but that was just taking your paper results and putting it in a format that the IRS software would recognize and transmitting it to them. For whatever reasons I only did it the one time and it worked well but I just kept doing the paper myself every year.

Every time I thought of Turbo Tax I thought paying for a piece of software that is only good one time was wasteful and besides, there is not all that much mystery to preparing income taxes anyway.

Bottom Line: After trying and successfully filing my income tax with Turbo Tax I still feel it is extravagant to buy a new piece of software each year for something that will take you an hour or two to prepare at most. Still, there is a market for income tax preparation software and Turbo Tax is fully up to the challenge.

My return has varied through the years having been married, owned rental properties, small businesses, and of course regular employee income. Handling these only takes a little research and there is really no mystery.

For example, I handle my Epinions income as a small business, reporting it on Schedule C of the US 1040 individual income tax form. Whatever monies I earn over the year I record under the income area of the schedule. Most of the other expenses, which may pertain to any sort of business imaginable) do not apply to my business, which is writing movie reviews, so I go onto the back of the form and record my rental fees and internet access as expenses. These are deducted from the income and the result (profit or loss) is carried over to the correct line on the income side of the 1040. Simple as that. I do not try to deduct office in home expenses because that gets you into more difficulties, not only from audit, but you have to recapture the deductions when you sell your home, also.

A product of Intuit, Turbo Tax comes as a single DVD that includes both federal and state tax software. After installing the disk using the normal windows protocol, it asks you if you want it to check online for updates. You do and it does and then it asks you if you want to prepare your federal tax forms.

When you start to prepare your income tax you first must specify your name, address, social security number, marital status, etc. if you haven’t used the product before. I understand if you have loaded it in for a previous year it will just fetch and retrieve the information and also any tax refund from the state that must be reported as income. Once the basic information is loaded you go through an interview process to fill out the form, beginning with the W-2 information, if any.

The income section is divided into multiple areas that can be gone though in sequence or skipped if you are familiar with the types of income captured by the 1040. For example, if you know you don't have gambling income or farm income, or things of that nature, you can skip those sections. Don't forget to report the refund if the state gave you one last year. That is ordinary income to the IRS. I think Turbo Tax needs to tickle you if you don't enter a number, but it doesn't.

Once you get through that section, you get to the deductions and again the software will walk you through step by step through some 350 possible deductions. If you haven't been through the process you might want to try this. I know in general what I have done so I choose the broad categories that include home mortgage expense, taxes and charitable contributions. Most of the other expenses are a function of having to be more than 2% of your AGI (adjusted gross income) before they are deductible so you have to incur heavy medical payments or employee expenses or you can't claim them.

Once you are through the deduction section you can check the tax credit section but you will probably know if you qualify for any, already. Once that is done, Turbo Tax will calculate your taxes and tell you if you have a refund or must make a payment. I hope you get something back.

The questions are very simple and easy to understand and Turbo Tax leads you through in straightforward manner so you won’t get lost. There are audit checks and marketing screens towards the end of the process. When the federal form is done you can go right on to the state form and that only takes a few minutes as the state draws off of the federal data in states I have seen. It will calculate your refund there, also. Finally, it will allow you to electronically file for a faster refund. This costs $35.70, payable by credit card.

I thought the software was easy to use and recommend it to those who want to try to do their own taxes but don't like to do their own research. I have read the IRS Pub 17 enough to know the gist of the things that are possible so next year I will go back to the paper version.