For the first time in my life, it looks like I'll be getting a substantial tax refund this year, primarily due to being a first-time homeowner. As with most years, I did my taxes at TaxAct Online, but I have been thinking that, with my tax situation beginning to get more complicated, maybe it's time to think about getting an accountant to look things over, or going to one of the big guys like H&R Block. I was wondering if anyone else here has any advice, or if they're just going to get me the same results I can get online. Anyone have any success / horror stories to share?

Your tax situation is not very complicated. You have a mortgage, so it now makes sense for you to itemize your deductions, but your deductions are not complex, either, most likely. All a professional is going to do for you is the math. You still have to have all your receipts for everything; he's going to ask you to give them to him. Collecting those receipts is the hardest part.

But you don't have any rental property or income that you're amortizing or tax shelters or anything actually complicated. The only thing that a professional could potentially do for you that you couldn't is realize that something is deductible that you didn't realize, and it's probably very unlikely that that's going to be significant.

I'm a homeowner as well, and I used to pay a little over $200 to an accountant for my tax preparation. Four or five years ago, I decided to prepare my own taxes (also using TaxAct Online). It turns out that I got nearly the same refund. Over the years, my taxes have become a little more complicated. TaxAct doesn't do a whole lot of hand-holding, but my results are still satisfactory. I just have to be aware of what I can claim as a deduction/credit. A professional almost certainly knows this better than me and/or can fudge numbers a little better.

Paying an accountant $200 vs $18 with TaxAct would likely get me a bigger refund, but I prefer the ease and quickness of doing it myself right now.

I have my taxes done already for this year on TaxAct. I'm ready to submit, but the IRS hasn't published the final version of the 2008 Alternative Vehicle Credit form yet. I don't know how the IRS gets away with this.

I've been filing using TurboTax for years, and it does the job easily. As Bitt pointed out, things don't start getting really complex until you've got trust funds, bizarre investments, overseas income, or other situations that are well outside of the norm.

Where a traditional accountant can have value:

- telling you want to do differently next time (e.g., telling you to max out your 401(k))

- backing you up if you get audited

(TurboTax sells "Audit Defense", which is basically an insurance policy against getting audited. If you do get audited, then you've got somebody in your corner to defend you. Again, unless you've got a far more non-trivial financial situation, it's probably not worth it.)

I’ve been using Turbo Tax for years and I’ve always been very happy with the results. I’ve had multiple businesses and other mildly strange tax issues. It always worked fine for me.

I’m in a similar situation. I refinanced my house and sold another house. Turbo Tax Premier says it will walk you through those changes. I got the on-line version through Scottrade for %30 ($35 for free efile). They really nail you with state for another $35. State is easy so I just do that with paper.

I like doing it at home so I can take my time. When going to a tax preparer you need to have all your paperwork with you at the time. When doing it from home and you forget something you can just go to your file cabinet and find it.

You can do the on-line version for free. That is up until you're ready to file. If you don't like it just quit.

Or you could use TaxAct, which, including State and Federal e-filing, cost me about $20.

Despite doing so many other things in my life online, I'm suspicious of doing my taxes on somebody's web server that may or may not collapse due to load or otherwise bad engineering practice. Not everybody engineers their servers like Google.

You drop $30 on the CD and run it on your own machine and these issues go away. $30 is chump change next to the cost of screwing up your taxes.

TaxAct is downloadable.

It's beginning to look like California will be delaying refunds till they absolutely must part with the money.

Sort of illustrates why withholding shouldn't be used in place of a savings account.

Me, it won't be a problem. I've been averaging +/-$10 on my Ca taxes for the last 10 years.

On topic, I'll be using pen, paper and snail mail, for my tax returns.

If you are just going to H&R Block you might as well just use the software that's all they are doing anyway. If you don't trust doing it yourself with turbo tax I would find a real CPA.

I just filled out a 1040 by hand until I got my house now I have been using Turbotax. For each entry they tell you what box on what form to get the info from so it's pretty easy.

I always had to pay in before I got my house so I would wait until the last minute to send it in.

I ended up staying with TaxAct online. I'm pleased with the refund, and the questionnaires were thorough enough that I'm pretty confident I didn't leave any deductions on the table.

Looking forward to filing jointly next year for an even bigger refund.

Joint filing is a mixed bag. Your incomes add together, so you end up at a higher tax rate than two separate incomes. This would be the infamous marriage penalty.

Given our current circumstances and the state of current tax law, I think we'd end up doing better filing jointly, but this is something I will definitely be looking into next year.

Single, Married/joint, and Married/separate are all different, unfortunately. To be redundant, filing as single and filing as married/separate produce different tax liabilities. And if you're married, you cannot file single.

Yes, I understand, and based on some quick calculations, I'm pretty sure we'll do better married/filing jointly than married/filing separately, but that assumes they don't go and change the laws again this year, which they probably will.

i feel so lucky to live in a country with "source tax", meaning that my employee are forced to hold back the amount i have to pay in tax, and pay the tax for me. All based on a card, that the goverment gives me. Each year I get a new card, based on what have happend in the 3 past years. Of course i can get the card altered in something is way off or missing.

At the end of the year, everyone has to report in to the goverment. Your employee has to tell your income. The bank has to tell about loans etc. And then about 3 months from the beginning in each year, you get your refund.. or bill if there have been paid to little (automated systems can be wrong).

For the last 3 years only stuff like transport to and from work has changed the tax return for me.

That's more-or-less how it works in the US, except we probably have more after-the-fact modifications than you do.

yeah... but is not so that you have to pay the tax yourself? i would be scared to hell, would be more than very tempted to use the tax money on something else

If you work for an employer (as opposed to working for yourself), tax money is sent to the government by your employer. There's probably a situation where employers with a very small number of employees are not required to do that, but that's effectively the same as being self-employed. And if the government receives too little tax money from you throughout the year, you might have to pay penalties. Self-employed people send in estimated taxes quarterly in order to comply with that.

You have to fill out tax forms and submit them between January 1 and April 15. At that point, you might have to pay more or you might get a refund.

>quarterly

pheeww... the same stuff for employers here...

But take a guess at our tax rates....?

Maybe, but how much do you pay for a trip to the emergency room? I'm guessing zero, or nearly. I just got through paying for one that cost me well over $800, and that's after private health insurance, which paid (or negotiated away) thousands, and for which I pay $137 a month. Not to intentionally give away how much I make, but that one trip to the emergency room cost me about 1% of my annual pre-tax income, not to mention the about 2% that I pay for the privilege of getting health care that "cheaply". And I make decent money. It's not like a person making half what I do would get a further discount. In fact, it's more likely that their insurance would be worse than mine.

</rant>

>Maybe, but how much do you pay for a trip to the emergency >room?

Zip, Zero....

Also the same for a visit to the doctor. A triple bypass.. you name it.

And if i loose my job the system gives me enough money to get a very small appartment. and some food on the table. but the amount i get is not big so you are more or less forced to cut all expenses to the minimum and look for a job...

but my tax rate is 49% of the income.. but it's calculated like this:

first they take 10%... then i have a "free" amount for which i dont pay tax... then they take the last 39%....´may sound insane, but then you have to look at the benefits...

the best that i could recommend is try to live here... but watching the movie Sicko by Michael Moore... i laughed my ass off to that one. But at the same time i was surprised that on Cuba they take care of everyone.

EDIT: an benefit that came to my mind is medicine... my GF need some pretty expensive anti depressive and "the system" pays for most of it, but we pay a small share ourselfes

After all the taxes here (state, federal, local, sales, whatever else) I would guess we pay 49% or more too and what do we get for it... too depressing to think about.

I started going through taxact last night. This is my first time doing married so I figured I would go through jointly and separately and see what comes out the best.

AFAIK, anyone can direct their employer not to deduct any taxes, regardless of the size of the employer. I recall having to sign forms of that sort the last few times I was hired, anyway.

It's graduated taxes. The US, and Canada have the same sort of structure, only at different levels. You can see the brackets on wikipedia.

I nearly cried just now -- I discovered that at my current pay scale, I'd be paying less tax in Canada, than I am in the US.

Except that the feddies really don't much like it when one fails to forward their withholding.

Even the self employed must make an estimate of what they expect to pay for the year, and forward quarterly payments.

Umm, did you remember to deduct Provincial tax on top of Canadian federal? And to be absolutely fair you can't forget the GST on just about everything purchased, 100-1000+% tax and markup on alcohol, a bunch of tax on gasoline. More tax on alcohol (tax on tax) when purchased at a restaurant or bar. And and....

Blame Canada!

There are state income taxes in most US states, too. And there are sales taxes most places in the US. And tax on gasoline.

Actually, I looked it up, and Danes pay income tax on the first x euros(?) of income, then none on the next y euros, and then more income tax on the remaining income. So it's not graduated in the manner that I would think of.

Sales tax in Canadian provinces, except Alberta, are all double-digit. 13% currently in Ontario. That's down from 15% a couple of years ago. 8% is provincial and 5% is federal. You'll pay this on pretty much anything.

Alcohol tax and gasoline tax is quite a bit higher than in the US. Especially alcohol tax in Ontario. There are two places to get alcohol in Ontario. "The Beer Store" and the "Liquor Store." It's cheaper to buy Canadian Whisky in the US than it is here. As an example, a bottle costing around $40-50 here can be bought across the border for about $9. There are booze-buying bus tours that make 3-hour return trips (free of charge) for people to stock up.

The WikiPedia page was pretty clear to mention Canadian provincial taxes needed to be calculated separately but I didn't see anything for US state taxes at the top. I haven't (ever) seen anyone mention that income tax in any state of the US is lower than Ontario (or anywhere in Canada for that matter).

We even pay tax on stamps over and above the face value of the stamp.

Also, in addition to federal and provincial taxes, there are also Canada Pension Plan and Unemployment Insurance deductions at source. What we don't have to pay any tax on however are lottery and contest winnings. But that's mainly because our lotteries are all run by the government and they keep back a huge amount prior to deciding how much the prizes will be.

How do the booze-buying bus trips handle the return border crossing? Does everyone just pay the import duty?

Just to pick my state, the state income tax is 6-7.75% and sales taxes are thus:



Oh, and liquor is sold only by the state, which runs the stores like a business, so it's hard to say what's tax/profit and what's expenses.

On border crossing you pay tax on all the alcohol at about 2-300% rate. So you end up paying around $30 total (unit price and tax) for a bottle that's $50 here. People do this and then (illegally) resell to friends. I was told by someone who's done this trip before that you can buy up to 48 bottles in one trip.

A bottle of wine that's $8 in the US at private retail, might cost $18-30 at the liquor store here (taxes in). Then another 3-4x that in a restaurant (plus additional tax).

Where we often can get a "deal" is on harder to find and desired bottles of wine that in the US you'd have to buy at auction or market price. The LCBO buys in huge volumes from producers and does get some good stuff in its classics catalogs (more selection than at the store). Their markups will often be less than the current auction/market price of that bottle. A friend used to resell higher priced wines into the US when eBay still allowed those types of auctions.

Bitt, your liquor, beer, cig and gas tax is practically non-existent compared to here.

We also pay property/municipal taxes, but those aren't rolled in with income. They're based on the value of your property and then a number of other municipal concerns. I think we're at about 1% of the assessed property value right now for our residence (per year).

It's safe to say that easily 50% of a typical person's income in Ontarrio goes to the governments.

Same here. I believe I only pay property taxes on real estate (0.9075%) and cars (1% to 1.3%, based on my two cars).

And, as far as liquor, an online liquor store sells Glenlivet 12Y for $23.98, and the NC ABC store sells it for $38.95. So that's about a 60% markup.

Yeah. But I don't care too much about the sin taxes, as I don't sin. Well... at least not via alcohol or tobacco.

Just to give you some more about taxes...

In Norway we have sales tax on more or less everything. Normally it is 25% (food bought in a store or cafeteria, if it is take-away, is 14%). Alcohol taxes are based on the strength of the alcohol, but if you bring in too much coming from abroad, you have to pay ~$40 for 1 liter spirits (you can bring 1 liter taxfree). Tobacco/sigarettes are ~$32/100 grams. Gas is $0.62/liter. Import tax for cars is just ridiculous. You can easily pay 100% of what you paid for the car just in import tax and sales tax if you import a car.

Stig

Is there any reason the tax software can't make a recommendation on jointly Vs separately? After all all it needs to do it run the math on the numbers twice and let you pick the one you like best. Or is there more to it than that? Asks he who has always filed jointly.

You have to buy the upgraded version of TaxAct for that feature, but no, there's no reason the software can't do it automatically.

Try denmark.... 180% in fees for a new car
then another fee for the license plates
and another for the inspection hall

Taxact did do something like that and told me which would be better. I ended up using turbotax though. I guess I just trusted it more irrational i'm sure but oh well. The both came up with about the same refund numbers.

just goto H&R Block. Watch them prepare your taxes on their computer. They will sit right there and ask you all the questions. They just do data entry for you.

Then when they are done and tell you what your refund will be, you can act a bit unsatisfied and not pleased. Then pickup your papers go home and do it yourself. They have a satisfaction guranteed and cannot charge you a dime until you sign a bazillion papers and pay out the arse fees.

I feel no guilt of shame in doing this. H&R are crooks and charge people way too much. Jackson Hewitt does the same.

Like others said, This is simple math really. If you miss a deduction it probably won't be a major big difference maker.

Maybe that's why they have to charge so much to other people since they are wasting time on people like you.

As long as you seal from a large company no one suffers.

Well, if your satisfaction is guaranteed, and all they do is read out TurboTax's questions (or its equivalent) and then type in your answers for you, then I know I wouldn't be satisfied with paying $80 or however much they charge.

When you go to a tax service you enter into a contact with them to prepare your taxes. You are hiring them (and whatever tools they have) to prepare your taxes for you to your satisfaction. If they do NOT prepare your taxes to your satisfaction you do not have to pay.

How they prepare your taxes is irrelevant, you are paying for the service.

They have to ask you questions to retrieve the answers from you. If they read from a computer or the tax forms it does not matter. The outcome, your taxes prepared, is what you contracted for.

To go the tax service and make note of what they are asking you so you can use those deductions yourself, and not paying them, is stealing.

So with you’re logic. If it took you two hours to resolve a UNIX problem for someone, then told them the problem, they should be able to say they were unsatisfied with the tools you used to trouble shoot the problem, not pay you, take your answer and fix it themselves.

If you don’t like the $80 fee don’t go. Don’t steal their time and knowledge. They have to eat too.

No, I have expertise that would have been used to resolve the problem. The folks at H&R Block charged you for expertise that can be had for free. If your expectation was that they were going to do something more than what you could do for free, and which took up the same amount of time as if you had done it yourself for free (probably more time, really, especially including travel), then I see no problem with rejecting their offer.

In fact, turn it around for a second. Say you did your taxes for free with TaxAct and you felt like a professional might do a better job. So you go to H&R Block expecting that they're going to provide you with their expertise to help. You get there and they effectively run through the same program you just did, asking you the same questions, and getting the same result. Would you be satisfied?

In addition, I wouldn't offer a guarantee of satisfaction up front.

Very well said, Mr. Redrum.

tanstaafl.

You are missing the point. You are going to a tax service to enter into a contract for them to prepare your taxes and receive a product – your taxes prepared.

If they prepare your taxes then you should pay them for thier time. Not glean any information you can from them so you can do an equal if not better job.

Yes, if I prepared my taxes and came up with the same number as them all that proves is I did my taxes correctly. 1 + 1 = 2, you can’t say you are not satisfied with that answer just because you came up with the same answer. If you paid a tax service to add 1 + 1 and they came up with two they should be paid for their work and knowledge. In addition you know up front that it costs X dollars for this and agree.

To take this further many people know how to change their oil in their car. They can do the same job as a Lube shop. To not pay them for changing oil just because you can change oil with the same results is ridiculous

By saying you are not satisfied because the sky is cloudy and do not want to pay is a breach of contract on your part.

Exodus 20:15 Thou shalt not steal.

/me ducks and puts on flame-retardant suit

Look, I wouldn't do it, because I know that that's what they're going to do. For one thing, it's just going to waste my time. But what if you went without preexisting knowledge of what they were likely to do and were surprised that they did exactly what you, the inexpert person, did.

What if you had a problem with your car where, let's say, the trunk wouldn't stay closed? You put a bungee cord on it so it doesn't fly open and take it to the mechanic. You hang around for an hour or so while they fix your trunk. You pay them your $80 or whatever. Then you get home and find that they've removed your bungee cord and replaced it with their own bungee cord. Would you be satisfied? Would you be arguing that demanding your money back would be stealing?

When you take your car to a lube shop, you are paying for the fact that they can do it faster, they have all of the parts on hand, you're not the one getting grimy, you don't have to crawl under your car, etc. When you go to H&R Block, the only advantage you get is that your fingers don't have to touch the keyboard; everything else that has to be done is still done by you and you alone. In addition, it takes longer because you have to drive there and back, and a verbal interview takes longer than reading. Not to mention that that one document you forgot is no longer in the next room, but across town.

I'm not suggesting that you go and waste their time; that would be stealing, but I think there's a reasonable expectation that a company running a services business provides some advantage to you doing it yourself, and with tax preparers doing relatively simple returns, that's just not true. If you go with that expectation and it is not met, I don't think being unsatisfied is at all unreasonable. And they explicitly state that if you are not satisfied, you don't pay. I'm sure they also don't give you the forms in those circumstances. It's not like you got something for nothing, other than the knowledge that these "experts" are no better than you are.

If you think $80 (or whatever) is too much then do it yourself. Some people do not have the knowledge, interest or skills to prepare their taxes.

I have a friend that is PC illiterate and frankly not that bright about taxes. He goes every year and pays whatever to get his taxes done. He is happy as can be every year.

If you don’t want, or need their service fine. But don’t enter into a contract with someone to do your taxes for you with no intention of paying them.

To your trunk point – You have gone to the repair place and entered into a contract with them to fix your trunk better than how you fixed it. If they do NOT follow up with that contract they are in breach, or if you were not clear on the fact that you wanted it fixed better, then there was not contract or meeting of the minds. If they just plain do a crap ass job and guaranteed their work you get your money back.. A crap ass job is what the tax services are guaranteeing against. If they do a crap ass job, and you don’t like what they have done, or you know you could get more $ back, then walk away. They are NOT guaranteeing that you could do the same job or that it’s cloudy outside so you can take their knowledge and leave.

It all boils down to paying someone when they provide you a service or item. Not tricking them into providing you with their knowledge while wasting their time and resources.

It’s pretty simple. Pay someone for what they do for you. Creating a satisfactory tax return is what they provide.

Wouldn't just having a simpler taxation system so anyone can understand it and eliminating all this crap be better

I have never used a place like H&R Block or a real account because even if they screw it up they aren't liable for it anyway so I don't see any value in going to them. But even though I think there service is worthless I would feel bad having them do it then saying I am unsatisfied then going home and entering in their data.

In this instance, their knowledge is worthless. Literally. You can get the exact same service for free, and that's what we're comparing against. If your friend doesn't have the requisite computer skills or the requisite reading comprehension skills to do his own simple tax return, then their service is worth it for him. For the rest of us, it is not worth it, and they advertise their services as if laymen couldn't do it as well. (When, in fact, I'm sure, they hire laymen during tax season to do all the simple returns and give them virtually no training.)

In addition, again, I'm sure it's not as if they give you the completed forms after you tell them that you're not happy with the service. The only knowledge you've gained is the amount of taxes that you'd pay if you used their service. You cannot provide them information that you don't bring with you, and they tell you everything to bring with you anyway, so it's not even as if you're getting the knowledge of a document that might be useful.

And your argument about the contract is specious. Part of their contract is that if you're not satisfied, you don't pay. I don't see how you can argue that exercising a provision of their contract is in violation of their contract.

I'd argue what they provide is a crap-ass job. And if you don't know that going into the situation, I still think it's perfectly reasonable to be unsatisfied with the result. If you do know that going in, and you still go in, that money would be better spent at a psychiatrist's office anyway.

In this instance, their knowledge is worthless. Literally. You can get the exact same service for free, and that's what we're comparing against. If your friend doesn't have the requisite computer skills or the requisite reading comprehension skills to do his own simple tax return, then their service is worth it for him. For the rest of us, it is not worth it, and they advertise their services as if laymen couldn't do it as well. (When, in fact, I'm sure, they hire laymen during tax season to do all the simple returns and give them virtually no training.)

In addition, again, I'm sure it's not as if they give you the completed forms after you tell them that you're not happy with the service. The only knowledge you've gained is the amount of taxes that you'd pay if you used their service. You cannot provide them information that you don't bring with you, and they tell you everything to bring with you anyway, so it's not even as if you're getting the knowledge of a document that might be useful.

And your argument about the contract is specious. Part of their contract is that if you're not satisfied, you don't pay. I don't see how you can argue that exercising a provision of their contract is in violation of their contract.

I'd argue what they provide is a crap-ass job. And if you don't know that going into the situation, I still think it's perfectly reasonable to be unsatisfied with the result. If you do know that going in, and you still go in, that money would be better spent at a psychiatrist's office anyway.

Oh! I just read this entire discussion thinking that this sort of liability coverage was what the $80 was buying. (Or, at least, that having used a tax accountant was a "good faith" defence if tax auditors came a-knocking.) If that's not the case then it certainly does seem overpriced.

Peter

This conversation started with mrtech’s post. He indicated that he has them do his taxes so he can find “the answer” which is how much he gets back. He also takes note of what they are asking so he can do his taxes likewise. He is using their knowledge to see if he can get the right answer. If you can not see this is stealing their knowledge I don’t’ know what to tell you. Just because you can get the answer elsewhere for free does not mean their service is unsatisfactory. If you contract with someone to give you the answer, and they give you the answer, you will be lying when you tell them you are not satisfied.




You can say you are not satisfied with the outcome. While the entire time be satisfied with what you got for nothing (how much you got back) and lie so you don’t have to pay. Large companies and the rich are accused of using “Part of their contract” or loopholes to evade paying taxes. While not illegal (when done correctly) most people find this dishonest and distasteful. So if you have no moral regret for having someone provide you a service while the entire time never intending to pay, go for it. It’s a large company they can just pass the cost of the time wasted on to my friend. No one gets hurt and you get something for nothing. Just don’t bitch when Shell Oil finds every loop hole under the sun and then pays no taxes.

I know lots of people that pay for things they can do themselves for free (paint their house, wash their car. etc…). I don’t know how you can come to the conclusion that when someone does you a service that you can do for free it’s unsatisfactory.

That's not how I read his post. I interpreted it as "this is all they do; if you don't believe me, you can see for yourself without liability". Looking back, I can see how one might interpret his post as "I do this every year". But that seems totally pointless. Maybe he's one of the people I accuse of needing to spend that money on a psychiatrist.

First, I totally pulled that $80 figure out of my ass. I have no idea how much they charge, though this about.com page says that $125 is the price floor. And if you're getting them to fill out a basic tax return with no itemization, you're stupid enough that you deserve to waste that $125.

Second, at least H&R Block does provide some sort of liability coverage: "if we do make an error in the preparatio...st and penalty."

..but no such recourse if they goof in the other direction, costing you more in taxes than you should have paid..

Actually, the same page says that they'll refund your fee if they don't get you the maximum refund. Sounds chintzy, but, at this level, that $125 is likely to be more than any error they might make.

Back to the original post. I recently experienced an error in Tubo Tax that lends credence to having a person do your taxes if you’re not familiar with taxation.

I’m sure Tubo Tax would say the issue is due to my data entry but I don’t think so.

The issue – I work for a company in a different state than where I reside. My company pays my resident county tax. However, Tubro Tax is convinced that I am paying the local tax to the state where my company is located. My W-2 was imported (not keyed by me) with the correct locality code. I tried several things to convince Turbo Tax that I am paying my county tax. If not caught this error would have cost me about $800. Luckily I didn’t blindly rely on Tubo Tax to do the correct thing.