Tax day finally came last week and went by in the blink of an eye. I was one of the people who took care of my federal, state, and local obligations to file each respective tax months in advance. I received my federal tax return in late February and the money was spent even before the direct deposit transaction was recorded in my checking account.
For the past 3 years, my older sister and I have eFiled our taxes using the Turbo Tax product. We all hear horror stories of those people that have numerous issues when filing their taxes, we were not one of those nightmarish stories. Turbo Tax is an unbelievable product if your tax filing is of the simple nature, meaning you do not have many itemized claims or other special tax breaks that you are trying to claim. Obviously, the more complex your situation is, the more difficult it would be to file on your own.
Every situation is different and much of it is based on how you set up your W2 filing with your employer. My friends and I have an email listserv going on daily and last week the major topic was tax returns. One friend of my wanted all of our advice on why the heck he had to pay $425 back to the government. Many of our replies to him was interrogating how he set up his W2 form with his employer. He was not sure what we meant and there was the answer to his question.
Some people view getting a large tax return as a good thing. However, there are many people out there who view it in a different way. Getting a large tax return can be viewed as the government using your money as a loan with 0%. If the government were to loan anyone money, there is no way they would charge even the children of the poor 0%. The closer to $0 your tax return is come April, the more precise your tax witholdings are set up.
Does this mean if you have to pay $500 in federal taxes that you are using the government's money for a 0% interest loan? It could be interpreted that way, but not many people see Mr. Bright Side when they are writing a check out to Uncle Sam.
I also have a few other friends who use accountants to file their taxes. They claim that their accountant "hooks them up", which may be true. I pose this question to all my CPA's out there, what on earth could an accountant do to "hook you up"?
Are there really that many deductions that the common person misses when using Turbo Tax?
Hopefully we can gather enough information to determine whether or not we are better off sticking to Turbo Tax or whether my sis and I should find an accountant next year. If I am leaving some money on the table that I could potentially land, then I would definitely want to maximize my return. If it all is just a bunch of mumbo jumbo then so be it.
Tax day is gone and many accountants out there probably took this Monday off, that is, unless they have a bunch of people who filed for an extension!
Monday, April 20, 2009
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3 comments:
never tried using any of those tax programs myself, but i'm still to chick $hit to try ;) it does suck spending $200 every year to have someone do my taxes for me, but at the same time it's totally worth the peace of mind....and plus, i'm kinda lazy. haha...
Doctor S... You are absolutely correct in stating that it's not how big your refund is but rather what your bottom line tax liability is. You can adjust your withholding as you please to either get a big refund or pay a big balance at tax time. Tweaking your withholding exemptions does the trick.
I can assure you that by following the TurboTax interview, you'll get all the tax write-offs and tax breaks available to you. TurboTax prompts you for all the various deductions available to you based on your tax situation. Not all tax preparers will take the time to ask you the same.
The reality is that the vast majority of Americans have fairly simple tax returns (even if they think they are complex). Whether your return is simple or complex, tax software like TurboTax is the ideal solution because it makes it easy to get all the deductions to which you're entitled.
By the way, I stopped fighting the battle over whether taxpayers should change their withholding (or estimates) so their refund is not so big each year. Given that most Americans live paycheck to paycheck, this once a year "financial pay day" is not so bad since it gives Americans a chance to pay off some debt and save. This wouldn't happen if they opted for reduced tax withholding from their paychecks (and thus had more take home pay each pay period).
Thanks for allowing me to respond.
Bob Meighan
VP, TurboTax
@J - You need to suck it up and give it a try. If you stop being lazy you can get rid of one expense from you Sexy Budget for the accountant!
@Bob - Thank you for providing with such a great perspective from the inside of TurboTax. I agree with you that the large tax returns to serve a large purpose in providing taxpayers with that lump sum to use wisely. I think it is great that someone of your corporate status provide us with your insights as it demonstrates a transparent look inside your product. Thank you for detailed response and hope you chime in more!
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