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TurboTax – limited free offers

As I mentioned the other day, I have been using TurboTax Online to file my taxes for years and have always been very happy with it. I gave you my opinion of the software so you could use the info to move forward with your own taxes… I hope it helps out.

Today I wanted to offer DFA readers more tax help by addressing three specific areas of interest:

TurboTax – Free returns
TurboTax – Free efile
TurboTax – Free tax help

Regardless of your situation you will be able to take advantage of some of the free offers from TurboTax this year so make sure you know what you can get and what you cannot.

Does TurboTax offer free returns?

Yes – as long as you use TurboTax Online and only require a 1040EZ form then you can file your federal return for free. The state is not free. If your return is too complex for the 1040EZ then you will have to pay according to the following levels (filing a state return is always optional):

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Does TurboTax offer free efile?

Yes – as long as you use TurboTax Online you can file both your state and federal returns free of charge.

Here are the details of what you can efile for free and what you have to pay for when using TurboTax:

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Does TurboTax offer free tax help?

Yes. Actually they offer quite a well of free tax knowledge… a lot of which I refer to quite often to answer questions of my own. 🙂

Here are a few great topics I have found helpful in the past that I’m sure many others will be able to use:

Tax Preparation Checklist – Before you prepare your 2009 income tax return, go through the following checklist. Not every category will apply to you, so just pick those that do, and make sure you have that information available. When you’re ready to prepare your tax return using TurboTax software, you’ll be surprised at how much time you’ll save by organizing your information beforehand.
2009 Stimulus Package: What’s In It For You — and When – There’s good news ahead for most taxpayers. On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act into law — an economic stimulus bill that gives tax breaks to a large portion of Americans of all ages and income levels, as well as to businesses.
A Stimulus Boost for Some Earned Income Tax Filers – Two recent changes to the Earned Income Tax Credit (EITC) may put more money in your pocket in 2009 and in 2010 if you are married, or if you have three or more qualifying children.
The 11 Most Overlooked Tax Deductions – Don’t overpay taxes by overlooking tax deductions. See the most common errors taxpayers make on their tax returns, so you don’t make the same mistakes.
Top 10 Oddball Tax Deductions – TurboTax helps you find every deduction and credit you deserve to help you get your maximum tax refund. But just for fun, we’ve uncovered what we think are the weirdest deductions allowed, from pet food to free beer to (we’re not kidding) a girlfriend.

Quick returns quick refunds

If you have an income tax refund due you this year be sure to get your return filed as soon as possible. The sooner you get your return filed the sooner you will get your refund.

Make sure you use the refund wisely. Here are a few ideas: debt reduction, emergency fund savings, other liquid savings, retirement savings, or if you have already funded each of those… go on vacation with your return. Whatever you do, just make sure you are responsible so you can continue to set yourself up to win financially!

More Tax Preparation Help

Matt has already looked at TurboTax online this week. While TurboTax is still my personal favorite tax program and I will be using the PC based TurboTax Deluxe this year, there are many other options for tax preparation. Let’s review a few of them today.

Computer software and online tax preparation

This is how I like to do my taxes. There are now more choices than ever, with programs for your computer, and lower cost options available over the Internet. The most important part of any tax software is making sure it will work for your situation. The cheaper programs are usually lighter on features. If you choose a program that only does simple (1040EZ) returns but you need a full 1040, you might end up costing yourself more than the $20 you saved.

Also consider user-friendliness. Some programs work better for beginners, others are cheaper but are suited for those with a better understanding of their tax situation.

Here are a few options for software and online tax preparation:

TurboTax is the original in this field. If you can take a bubble quiz, you can do your own taxes. In fact check out this nifty little quiz tool they made called the TurboTax TaxCaster that helps you estimate your 2009 taxes.
H & R block has joined the party and now offers online tax preparation and computer software. Both are priced to compete with TurboTax.
Tax Act is very favorably priced although it lacks TurboTaxes’ Q & A format. I have been told it is better suited for the more experienced, but I have not used it.
IRS FreeFile allows those with incomes under $57,000 to use this list of services free. Lots of choices, and all the cautions about picking an appropriate one for your situation apply. I am unable to review any of them, as my income is over $57,000. IRS FreeFile offers no state option, only federal.

The Professional

Probably the most popular way to handle tax season is to just let someone else do it for you. Personally, I believe each of us should make every effort to prepare our own taxes before handing off the responsibility to another. We sign our returns, making us liable for their contents, so it makes sense to educate ourselves to ensure they are prepared correctly. Additionally, no one cares about your money like you do – so it makes sense to assume that most professionals will be motivated by revenue first and your personal situation second.

H & R block says:

“Tax laws and IRS rules are complicated, and the language of the tax code is difficult to understand.”

I don’t think they give us enough credit… I believe we’re smarter than that! There are a lot of tools out there to help us.

In most situations you don’t have to be an accountant to understand your tax situation, and it is never a bad idea to learn how to file for yourself rather than automatically assuming it too complicated. We cannot shift the responsibility if something goes wrong, so we should not be so quick to shift the responsibility to file. Tax professionals claim to guarantee their work, but will not answer to the IRS if there is a problem. We will.

If you must use a tax professional, choose carefully. They are everywhere this time of year, and the whole lot of them are promising to get you more money than anyone else. As previously mentioned there is nothing arcane about tax preparation. It is a complex math problem, nothing more. We just need to work through the problem to find the best solution for our tax situation, and all the rules are public knowledge. You do not want to be accomplice to a tax professional with questionable practices who bends the rules to get you a little more, and we do not want to hire someone who is incompetent.

With all that said, we will now focus on tools for those who choose to shoulder the responsibility of filing their own taxes on paper.

Paper

Filing on paper is the oldest way to file our taxes – outside of armed men coming straight to our doors and taking their share.

One of the biggest advantages of filing on paper is cost – it is completely free. All you need is a stack of forms and booklets. A disadvantage is that the stack can get VERY thick really quick. Another factor to consider into the equation of filing on paper is the time spent reading all the booklets in order to fully understand what forms you need, and how best to file them. This will improve with time as your understanding and experience grow.

For the bona fide do-it-yourself-er filing on paper is an excellent option. People who use paper usually tend to have the best understanding of what exactly is going on with their tax situation. If you tend to pay in at the end of the year, I would recommend paper. Why spend $50 to spend more money… right?

The IRS now provides fillable electronic forms to make things easier. You still have to read the booklets, but these eliminate the need for a #2 pencil, and do basic computations on each form. Here are a the fillable form FAQs to help you along the way.

Final Thoughts

The most important step to finding the right tax solution is to understand what you need to pay and why. The more you learn, the better able you will be to find a product that meets your unique needs. It will also allow for better big picture financial management.

What do you think?

How are you doing your taxes this year? What positive/negative experiences have you had with various methods in the past?

Free TurboTax – Free Returns, Free eFile, and Free Tax Help