Is tax preparation software worth it?

[Lyle]

I've already read some of the past threads in this forum about the two popular tax preparation software products (TaxCut and TurboTax) and it sounds like both have their pros and cons; that's fine, and if I decide to buy one I'll probably just flip a coin or (more likely) buy whichever one's cheaper.

My question for my MacRumors friends is this: If I've always done our taxes in the past and am comfortable doing so, is there any real benefit to my trying out one of these programs? We file jointly, and our tax situation isn't especially complicated, but there's always that nagging feeling that maybe, just maybe, there are some deductions hiding out there that we're missing out on. If only I used TurboTax, I could be like those happy people on the television commercial who found another couple of hundred dollars' worth of deductions and were thus able to buy the good Macaroni and Cheese instead of the store brand.

If you're someone who used to do his or her own taxes, and then decided to give one of the tax preparation software packages a go, I'd like to hear your take on it. Or, I suppose, anyone else who wants to throw in their two cents. And for the purposes of this discussion, it obviously doesn't really matter whether you use it on a PC or Mac; I'm more interested in how your experience and results compared to the "old" way.

 

[wordmunger]

I don't use them because I think I'll find extra deductions; I use them because it's easier than filling out all those forms. However, my taxes are relatively complicated. If yours are pretty simple, you might be better off just continuing to do them manually.

 

[Bear]

Well to start with I prefer TaxCut. The interfaces are a bit different and I just didn't like how TurboTax did things.

Will using tax software save you money on taxes? You might find something with its help, you might not. You could also use the web version (I haven't tried this) which costs less. And either way you can file electronically which is especially nice if you're getting a refund.

It does save time and helps prevent computation errors. Your results might differ. It also adds what forms you might need when you cross various thresholds which could be a real time saver.

 

[Smallville]

I used TurboTax online and it cost less than $30 for federal return and one state return. (Promotional price until 2/13, minus the referral code from our bank, which took another 15 % off).

We're getting a pretty good refund from the federal gov. based on some mutual funds my wife cashed in (but we have to pay state, so it cuts the refund in half).

But the point is that without using the thorough 1040, we would have never known to count any of that.

It's the first time we've done our own taxes, and going through the Web program is as good as an HR Block or Jackson Hewitt service, but much less expensive for the same result.

I'll do it again next year.

 

[Macky-Mac]

I like it for the convenience factor

for example, when I import my info from the previous year, Turbotax automates the process of putting my name, soc security number, address, etc, on all of the forms... it figures out what forms I used last year, organizes them for this year, and will ask about changes in this year that might require different forms...it carries over a lot of info, what 1099 forms I used, what deductions, etc, so I don't have to re-enter a bunch of names and so forth.....and I don't have to go hunt for last year's return to find out whether I said to apply an overpayment to this year's taxs and just exactly how much that amounted to......and I don't have to worry about doing the math correctly!!!!

it takes a lot of the minor hassles out of the process and leaves me to concentrate on making sure I have the right numbers to enter

 

[micvog]

I concur with some of the other previous posts. I use it more for convenience than anything else. I used to have an EA do my taxes and I haven't found any differences between that and TurboTax (the first time I used TurboTax I compared the results in detail against the last return prepared by the EA).

FWIW, the TurboTax 2004 CD contains both the Mac and Windows version. The important part being that mean you can pick it up at Costco, which after rebates cost me only $15 for both the Federal and State program. Last year I used the Windows version only because it is so cheap at Costco.

 

[skubish]

Also consider if you itemize deductions, you can deduct the cost of tax preparation software.

 

[slooksterPSV]

SAVE YOUR MONEY! Read the books that you can get at your Library or ... I think its like the ... what is it called... State Office should have them or information on where you can get them... oh I can't think. But yeah, if you read the books its so easy. I'm 17 and I was able to file my taxes with ease. Look at what you have and find deductions (don't make them up) and you'll earn/save a lot more.

 

[Gerg]

I've been using TurboTax (and its earlier iterations) for a while now, and I agree with others who've posted that the convenience is one of the biggest draws for me. I don't have to re-type info from year to year, and it basically automates the entire process, right through filing electronically.

This year, Congress mandated that there be available FREE methods to complete and file returns on-line. Intuit offers one of them, and from the looks of it, it's probably a good alternative to buying TurboTax. I don't know if it can pull information from a previous year or anything like that, but if it's free, that's OK.

 

[Lancetx]

You can prepare and e-file your federal taxes online for free. Just pick the service you prefer from the list on the IRS' website here. It's much quicker and easier than filling out all of the paperwork manually and mailing it in. Plus it's absolutely free.

 

[ShermDog]

My wife and I use TurboTax. I can certainly echo everyone else's sentiment about the convenience factor. Our taxes are fairly complicated, and we've never had any trouble navigating through TurboTax to get our taxes done.

As for the software finding deductions you normally wouldn't, I think your chances are decent, especially since this will be your first time using such software. The very FIRST time we used Turbotax instead of doing our taxes by hand, the software did find deductions we probably wouldn't have (but then, we're not tax accountants or experts by any means). We've also recently had our first child, and TurboTax was very helpful in making sure we took advantage of all the family/child tax benefits available.

One last thing...if you have any mutual funds from the bigger companies (e.g., T. Rowe Price, Vanguard, Fidelity, etc.), try asking them for a FREE copy of TurboTax. We get a free copy from T. Rowe Price every year...we just have to ask. The CD they send us has both the Mac and PC versions.

Whatever you decide, good luck, and I hope you and your wife can enjoy some of the good mac & cheese this year.

 

[snkTab]

if you look you can just find places that do it for free, like freefile. they are working with the irs, but i don't know if after all is said and done, if it is "free"

anyway, just grab a publication 17 (irs personal income tax manual) and do it yourself. that is, as long as your not juggling too many things in your life and might need software to handle complex issues.

don't forget, irs.gov (which has an online pub 17) is a great source for tax information.

 

[Lyle]

Thanks, Everyone!

Thanks very much to everyone who replied. To sort-of summarize things for posterity, here's what I took away from your responses:

• Most people cited convenience-related factors as their main reason for using tax preparation software. For example, if you use the same software from year to year, it will "remember" a lot of your personal information and fill that in for you. Also, using the software makes it easier to file electronically.
• Several people noted that if you itemize deductions, you can deduct the cost of the tax preparation software.
• There were several recommendations to check out the lower-cost (and sometimes free) on-line services.

Regarding my original theory -- that using tax preparation software could lead to finding additional deductions -- the opinions were more mixed. I think it's probably one of those things that I'm not going to know for sure until I just take the plunge and try it (and I suppose that I already knew that was the answer).

Again, thanks to everyone who responded. I think I'll go ahead and pick up a copy of either TurboTax or TaxCut this weekend and give it a whirl. I will try to make a point of following up in this thread to say how things went.