Me and TurboTax, TurboTax and me
Every year around this time I’m busy with my taxes. I like to joke that I may just be the person in the US with the highest ratio of tax complexity to income, because although I don’t make much money I have to fill out a lot of tax forms beyond ye olde 1040.
Self-employed and business owner, with multiple (relatively small) sources of income. Some investments with interest or dividends, a few modest capital gains and losses, and until recently I itemized my deductions. Then there’s the state.
Well you might ask: why not an accountant? I’d be paying quite a bit for not a whole lot, except of course some savings in time and stress. Also (and this may be the real reason), each year I learn (or at least, I think I learn) from the previous one, and each year I think it’ll now be a piece of cake to do this all myself.
It never is a piece of cake. More like chewing on hard crusts of stale bread, over and over and over.
But this year I made a decision. This year I’d buy TurboTax and use that. It made perfect sense. The ads (and even some actual human beings—friends—I talked to) said TurboTax would simplify things mightily and wasn’t very expensive at all. So I decided to do a little research online to decide what version to buy.
Well, it turns out that took a while. Many hours, actually, because first you have to answer some questions, and TurboTax informed me that I needed the most extensive and expensive version, which would be (I’m doing this from memory) something like $119 at the time. That seemed a bit steep, and maybe unnecessary; it was predicated on my being a business owner, but my business taxes are actually a very simple part of the equation for me.
So the next step was seeing what forms are actually supported by the different versions, because I know what forms I need to use. That took me quite some time to find; the information was buried rather effectively, but I finally found it after a rather frustrating search. Turns out that the not-quite-as-complicated and less-expensive version (“Premier”) would do quite nicely for me.
So that was the beginning of my sense of unease about TurboTax and its recommendations. That unease would only increase.
I decided to buy the downloaded version, because it would be a bit more secure. But when I bought it (from Target, which at that moment seemed the cheapest way to go), the website automatically added more sales tax than it should have. The irony was not lost on me: I was trusting TurboTax to be accurate about my federal taxes, but the process had already made an error about sales taxes.
I spent a tedious amount of time trying to correct that error, waiting on hold with Target (or someone somewhere in Asia answering the phone for Target), who ultimately said there was nothing they could do, but would refer me to some other team there. The amount of money involved in the error was relatively small, but by that time I’d worked up quite a head of steam about it, and spent another lengthy time on hold with the new people, who immediately admitted they’d done me wrong.
But they couldn’t fix it, either. They referred it to some other group which supposedly would give me the refund in a week or so. Fine. But I’d already spent approximately four or so hours on things related to TurboTax, and I hadn’t even looked at the actual program yet. How far could I have gotten with my taxes in that amount of time, doing them by myself in the old-fashioned way?
I took the next step, which involved downloading the TurboTax program. It didn’t work. I tried everything I could think of; still didn’t work. I Googled it and read the instructions for if you encounter downloading problems; very complex and still didn’t work.
Now it had been about six hours of wasted time with TurboTax. I wanted a refund, and I had no intention of using the product. So I called Target again, and this time the person who answered the phone (after a long wait) was adamant: TurboTax was not refundable. Period.
I started ranting, or what I’d call ranting. This product was defective. I couldn’t load it. Don’t they stand by their product? The answer was “no.” After quite some time with this, I asked to speak to a higher-up. She refused to connect me. We got into quite a loop; me insisting, she resisting. Finally she said that if she even tried, “they” (the higher-ups) would not accept my call. I got to the point of just repeating “I don’t want to talk to you anymore; connect me to someone else” over and over.
So finally she did, and whoever answered the phone immediately agreed to give me a refund.
Then I took a several-hour break from the whole thing; had to decompress. When I returned to my computer, I found that in the interim my browser had crashed. When the smoke cleared, there on the screen was what had never been there before: “Welcome to TurboTax!” or some such message. The download had been successful; I have no idea how many hours it took, but it was definitely more than one or two.
My faith in the program was nil, but I was curious, so I went a little further. If the upshot was that it seemed to be working well, I’d eat crow, call Target again, and say I didn’t need the refund I’d fought for.
The next step was that I needed to update, said the instructions, even though the thing had just loaded. And then (you may have guessed it) the updates all failed, some of them with big warnings in red saying things like “Critical update failed!”
Not exactly trust-inducing.
Next were some questions. Very elementary questions like—where can last year’s tax return be found on your computer? Well, of course mine wasn’t even on my computer; I’d done it all by hand. But TurboTax, in its less-than-infinite wisdom, didn’t have “nowhere” as a choice. Their assumption was that of course you had your taxes somewhere on your computer; doesn’t everyone? It took some time for me to figure out how to work around that, and then get going with the next few questions.
The next questions were all geared to helping TurboTax figure out what forms I needed, but I already knew exactly what forms I needed, so it all was a waste of time. At this point what was my tally of time wasted with TurboTax—seven hours? eight? I didn’t know for sure, but I knew I’d had enough. And the stress had been greater than the stress of just doing my taxes by myself.
So I uninstalled the program from my computer and called it a day.
There, I feel better now.
My taxes are almost done, in less time than it took me to figure out that TurboTax wasn’t for me. I may even get the completed tax forms sent out before the last possible minute, although last-minute mailings are a personal tradition of mine. But TurboTax will not become one.
Good call, Neo. If you have been doing your own taxes for years and you know what forms you need, you can do it faster without the rather backasswards approach of Turbo Tax. Like you, I have been doing my own taxes for years. Each year is only slightly different than the last. Get your income, losses, and deductions together; print out the forms you need; and awaaay you go.
Neo: GRRRRRRR!!!!!!!!!
And all my sympathy, believe me.
As a self-employed person, I have found HR Block to be painless.
The price for the programs get higher every year because the software owners know they have an installed base of captive customers.
Our tax system is a huge drag on our society but it will never be fixed. Postcard filing, hah!
I figure my time is worth something per hour even if no one is paying me.
I have not done my own taxes for a long time. As co-owner of a sub-S corp, it was too complex then to even contemplate.
Now, retired, each of my hours has become more valuable and indeed precious. So I pay my CPA, and come in and write checks and sign forms when he’s done. Gladly.
It came as a startle to learn I earned more money than I’d expected in 2017, thus higher income taxes. But that’s my fault too, having learned I am not as brilliant as I once thought in terms of asset management, and having turned asset management over to a (highly vetted) resource..
I still have my accountant from when I had money. Last year was the 2nd bad year in a row, but this year there will be quite a bit of income soon.
However, a spell of poverty at this point in life has had its bad effects..
In my retirement, I’ve generated another income stream by pretending to be an accountant. People send me money, and I pretend to send it to the government. I’ll be dead before I get caught. It works like the federal deficit.
For Neo and Neo’s readers, I can offer a friendly discount.
Also, I hope it goes without saying, privacy and anonymity are guaranteed. No one will ever know anything. My slogan: ignorance is bliss. I follow mine to give you yours.
I hate Intuit and TurboTax with a passion. Intuit is creepy, arrogant, has bad security – one year their interface with Vanguard and Fidelity was insecure and both investment firms required new passwords and other security measures. Thereafter we only manually entered investment income and gains and losses.
I still stuck with TurboTax for about a decade, each year there was some simple tax form calculation that the program clearly got wrong. State tax program always had calculation and category errors, and occasionally caused the whole set of federal and state returns to lock up. Customer service at best responded “yes, we are aware of a problem with that form. No, we do not have a solution”.
And this was for relatively simple returns!
Finally I switched to H&R Block software. It is still the same idiocy of downloading the software from the company’s own site, then immediately having to download multiple updates. But at least the software generally works, and it is easy to select just the forms you need rather than go through the questionnaire process.
There is something fundamentally wrong with the system (the tax system) that requires you to go through such an ordeal.
I have used TurboTax for years and years. Occasionally I do have issues. But once you use it a lot of info automatically downloads the next yr. Yes, the questions can be a pain but I do find it fast. I have to use a higher level because my wife writes and self publishes books using Amazon and Hulu. So she gets a 1099 for the sales that they call “royalties”. It’s a real pain for about $150 a yr.
But I do sympathize with you on your problems.
Though my personal taxes weren’t complicated by owning a business, they were complicated by my husband earning income in more than one state. The year I succumbed to tax software, the number of states numbered 7.
At the time, it was 2nd story software, they are now known as TaxAct. Over time, they grew more like you describe TurboTax, but never to the point that I couldn’t still control the forms myself. I last used them for 2014 taxes.
In 2015, my personal taxes got complicated by a relative’s death. I think TaxAct could have still worked for me, but I wasn’t willing to take the chance that I knew enough to even enter the information correctly.
I’ve not regretted hiring an accountant and I don’t find his fees out of line considering the time I’m not putting into figuring all this out for myself.
Of course I realize that my accountant is also using tax prep software… I just hope it’s not Turbotax!!!
I’ve been using TurboTax for twenty years. Full Disclosure: In an earlier life, I practiced tax law. I’ve always used the CDRom version. I really liked TurboTax, up until about three years ago. It let me go straight to the “Forms” menu selection, rather than the default, tedious, “step-by-step” process. I knew what forms to use, and I created my own supplemental forms. TurboTax was very good at rapidly calculating a bottom line, while I tried out various, um, “tax scenarios.” For the last several years, however, I have found it more and more difficult to make TurboTax get out of the way while I did my taxes.
I haven’t used an accountant for tax preparation because I generally find them to be too conservative.
My suggestion to simplify our tax code.
Every year -With CSPAN Watching –
make every congress critter sit down
in a large room.
The have access to the entire US TAX Code
and several #2 pencils.
They must fill out their their entire tax filing
by themselves with NO HELP.
They cannot do this while Congress
is in session.
In addition – A Full Audit for each of them.
Monte Meals: EXCELLENT IDEA!!!!!!
I have not done my own taxes for a long time.
I have not done my own taxes since about 1970 when I realized I owed more than my withholding. I was a surgery resident who had bought a house the year before. Other residents said they had used an accountant name Ephraim Sales in West LA. My wife and I went to him, got a crash course on how to save records and got all my withholding back. We bought new carpet and draperies and I have not done my own taxes since.
I owe a lot to Ephraim, who is certainly long gone.
Once I had a major landslide and submitted a capital loss. I got an IRS letter with “additional tax owed, $100,000.” A year later, after an audit, I got a letter from the IRS, “additional tax owed $0.” I had the two letters framed on my wall for years.
I have used turbo tax for years. No complaints.
I will not pay someone to do my taxes on general principles. Sorry if I am messing with someone’s rice bowl, but I am convinced that the accountant/tax lawyer lobby will insure that we never have a simplified system; but, if you do any investing/trading (which is a hobby) it can become very tedious to do it all yourself. TT is one answer; and it has served me just fine.
I used an accountant one year after using TurboTax exclusively for most of my life. When I got the copies of my tax return back from the accountant, it was in exactly the same form as my TurboTax returns. I’ve used TT ever since without regret.
Unfortunately, by waiting until the last minute to purchase new tax software, you almost guaranteed a bad experience. Next year, you need to “do your homework” first. Tax software is meant to be a time-saving assistance and can protect you against logic errors and math error, but doesn’t substitute your need for basic tax literacy.
Not to mention that product prices go up as you get close to the tax deadline. So early January or so is the best time to buy.
And if you need to do ACA calculations (Form 1095A) or a significant number of stock sales, tax software is a virtual necessity.
1) First you need to have a basic understanding how your specific tax return works, how the tax information flows between the various schedules and forms and from these forms onto your 1040. That is, to understand what your return should basically look like. Same for your resident state and local tax return, if your state has income tax.
2) Note that every software program is like a foreign language with its own grammar and vocabulary. The challenge is knowing which one fits you best.
In any case, the first year especially is going to be difficult and in the best case scenario is still going to involve a significant learning curve and multiple missteps. Worst case scenario, as you discovered, is a train wreck.
Which is another reason to start early in the season, as not only can you try things out in a less pressurized context, but you also might be able to return for refund if things just don’t work and try a different program.
3) I am very familiar with TurboTax as I’ve been using it for nearly 30 years (going back its DOS version era) and thus am very familiar with the internal logic (i.e. grammar) as well as being able to adapt incrementally to the major changes that have occurred in that time period. (Disclosure: I have no financial interest in nor employment relationship with Intuit.)
Some 30 year ago choices were very limited (essentially TurboTax versus H&R Block) and I found to TurboTax to be more compatible and adaptable. Now that I know the ins-and-outs and can thus avoid most of the traps that Intuit sets up,
But for somebody starting out today, there are many more choices, and I’m not sure as to the best program for you. While just about all the programs have an “interview” structure, which is very helpful, I would first restrict the universe of choices to those programs that include a “forms” view that allows you to see a replica copy of your return (without having to pay additional filing fees) so that you can check if your info from the interview is ending up in the correct locations on the tax forms.
Unfortunately, companies like Intuit are increasingly trying to keep the actual forms out of sight (apparently they view their consumers as becoming increasingly illiterate and uniformed) and view their tax programs as a entry point for upselling you to all sorts of pricey and almost always unnecessary add-on services that will increase their profits.
But if you can navigate around these traps, tax preparation software is a tremendous improvement over manual entry, helps you keep control over your tax information, and can save you a fair amount of money (especially if you’re also preparing returns for multiple family members/relatives using the software).
I have used TurboTax for many years without much difficulty. It probably doesn’t make the federal tax submission that much faster but where I feel it really saves time is in doing the state (CA) because it just transfers all the information automatically. One thing – I have never downloaded it, I originally bought a disk when I started and now I get one in the mail every year. This seems to have been a significant portion of Neo’s problem. Although I still have to go through the “automatic updates”.
I have NEVER had an accountant do my income taxes and I’ve been filing federal income taxes for more than 60 years. I’ve used TT for about the last 20 years and have had no trouble with it. I day trade with stocks, options, and futures contracts so my taxes are fairly complicated plus I have had my own business at times.
I even follow the step by step interview for the most part but switch to the forms function when needed. I get my federal income taxes done in one morning.
I ordered the CD disk version years ago and get a new copy in the mail well before tax time. I live in Texas so I don’t have to file a state income tax return.
Because I live in a poorly served DSL area far, far away from the optic cable and must rely on ancient phone lines which deliver internet service one tiny step above dial up, I always use CD disk versions of programs and usually have few problems. Until they insist on those damnable updates. What should be short and simple can take hours and will often time out. Ugh.
Nothing but sympathy for you Neo.
I settled on Tax Act because I don’t live in the US and therefore hove no state of residence and it was the only program I could find that didn’t insist that I had to have a state of residence. That was maybe 10 years ago, and I would not be surprised if the situation hasn’t improved with Turbo Tax and others.My sister is aretired accountant and uses TurboTax and had an interstate move complicating her state returns, but said that Turbo Tax help got her through her questions. I used TaxAct’s eFile this year and the IRS accepted my electronic payment and the return, but we’ll see if they accept the whole thing or bounce it. I also have to do Australian Tax every year offset by six months because Australia operates on a fiscal year. Our Tax Department does its own browser based tax prep software and all in all it is better than the US programs. I’ve had a few dramas over the years but it generally works better every year . It prefills all my Australia based income so all I have to do is tot up my US based income and convert it Australian dollars and I’m right. I have to do the reverse for the IRS of course and varying exchange rates can cause one one country’s tax liability to increase alarmingly.
I used Turbo Tax for about 2 decades. Then, about 3 years ago, they started being cute about requiring you to order and install updates, and I switched to H&R Block.
I’ve used H&R Block Deluxe since, and found it easier and reliable. I get the downloadable version, which has given me no problems. The cost is about $40 per year.
I’m old fashioned, I still do mine with a #2 pencil. I worked for H&R Block one tax season back in the 80’s and will never go to one of them knowing what I know. The tax prep people have put the fear of God into so many that could fill out their own forms probably in about 20 minutes. And that horrible scary IRS notice! We’ve gotten our fair share of them over the years but if you actually just reply with facts they go away happy. Sorry you had to waste so much time trying to make it faster.
I used TurboTax.
I don’t know why I switched to HR Block which was called something else at the time, TaxCut I think.
I’ve found it painless. Got Deluxe with the state included and e-filing.
I bought it this year, but having purchased a newspaper last year I decided I should use an accountant.
I don’t yet know the wisdom of that move.
I saw a cartoon on FB today where Snoopy is at a typewriter telling the IRS that he is cancelling his subscription, asking them to remove him from their mailing list.
I use an accountant still because I used to have a small SCorp and in my real job, I can work in multiple states. I only pay $150 (which is a lot, I suppose) but he has represented me to the IRS before, so I consider it a form of insurance.
I just weened my SO off his accountant and used freetaxusa. com to do his taxes. I also got my sister hooked on it. The fed part is free, the state is 12.95. (each state costs an additional $12.95). They also offer a service to represent you for an additional 6.95 in case of error. I bought it last year, but not this. I cross referenced both my SO’s and my sister’s taxes to ones done by accountant, and it worked.
It was pretty easy, and I could do multiple states through it if I wanted, so I may make the personal switch in the future.
You might want to take a run though it, Neo, with the forms you submitted for this year to see if it’s easier and if you end up with the same numbers. At least for the feds..
Another bonus – I went through through ebates and made 25% cash back.
I use a tax accountant because my taxes are pretty complicated — income from multiple states, rental properties, etc. Even so, I spend many hours compiling my info to send to the accountant, which I find very stressful. And even though I check their drafts very carefully, they do make mistakes. When that happened I submitted a revised federal return which then triggered both CA and VA to come after me.
Both of these states have a bad habit of trolling for extra taxes from anyone who has filed in those states. They send you threatening tax notices with some random amount you supposedly owe with no explanation of how they came up with that number or what you did wrong. Once they find a mistake in one year, they just start sending you notices about any year. They have even come after me multiple times for the same tax year.
Neo: So sorry you had such trouble. I’ve used T-Tax for at least the last fifteen years with great success and satisfaction. (Downloads included). Only this year have I chosen to hire an accountant (10X the cost of T-Tax) for the reason that I had an estate settlement to deal with. Maybe next year, I’ll go back to it.
The really most peculiar aspect of this whole income tax business is that most people are diligent, dutiful, and file timely and honestly. It is not without some remote sarcasm that the income tax filings are called “Returns”. Returned to whom, to what? Returned to the gummint, the gummint that giveth and that taketh away. Blessed be the name of the gummint!
This in the face of a government agency that features lizards like Koskinen and felons like Lois Lerner.
We are moral idealists and we are nuts!
Precious few people today know the Constitution was amended in 1913, not coincidentally the year Woodrow Wilson became POTUS, to allow the income tax. The Amendment reads,”The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
It was, I believe, sold to the public as applicable to only a very, very few extremely wealthy people who needed to pay tax out of fairness. Does the fairness argument sound familiar? The same case was since made for the AMT, which has since plastered the middle class for the crime of too many medical deductions, etc. As we all know, we have to pay the regular income tax or the AMT, whichever is higher!
The Income Tax was the first real present to the American population of the Progressive movement, then a-birthing, and has been the means of growing the Federal Government into today’s monster. Most Federales are, not oddly, Progressive Democrats! Quelle surprise!
I’ve used H&R Block’s software. Went to one of their offices one year, but they knew less than I do and messed up the taxes. My taxes have been relatively simple in recent years. Taxes aren’t due until the 17th this year.
Today, I was commenting on Arnold Kling’s blog regarding “working class”. I pointed out education wasn’t a good indicator. Many, if not most, of those with graduate degrees are mainly wage earners. But many of those with less education are business owners even if they also work everyday.
The “class” divisions might be more indicative of attitudes and voting behavior if we discriminated based on tax hassle. Wage earners, easy. Big corporate “owners”, pros handle their taxes so they are closer to wage earners. But small business/contract people bleed over taxes. This will impact their attitude toward government.
Keep in mind, it only took 7 years for them to realize the income tax was a gold mine. And you are the shaft
” Not until 1917 did the income tax yield as much money to the federal government as customs duties did. But by 1920 it was contributing ten times as much money as the customs; and that was only the beginning of the rise of the graduated income tax to a predominant place in the financing of a hugely expanded government, and to an important place among the instruments for the redistribution of wealth in America. ”
–‘The Big Change: America Transforms Itself 1900-1950’ (1952), Frederick Allen Lewis
My experience with TT is probably typical.
Most years we have only W-2s and simple 1099s for income. And deductions are mostly local property taxes and charitable donations. No mortgage interest because of no mortgage. It would probably be just as easy to do mine by paper. But it was suggested we use TT instead.
YMMV
But some years … when dealing with inheritances … capital gains generated by stocks sold and bought because of company mergers … well THOSE years … we have our accountant do the taxes.
He’s the guy who suggested using TT in the first place.
Why would he give up an easy tax return to complete?
His father was my wife’s parents accountant.
And he was a classmate of my wife during grade and high schools.
Some very good information and advice here, especially suiting the tax product to one’s preferences, and starting early with a new product.
Have used TT since our returns got too complex for paper, and don’t want to have to keep up with all the new wrinkles on our own.
Get the disks.
And copy your results onto a flash drive and put in the vault.
Oldflyer Says:
April 15th, 2018 at 12:34 am… I am convinced that the accountant/tax lawyer lobby will insure that we never have a simplified system….
monte meals Says:
April 14th, 2018 at 9:44 pm
My suggestion to simplify our tax code….
Every year -With CSPAN Watching —
make every congress critter sit down
in a large room.
The have access to the entire US TAX Code
and several #2 pencils.
They must fill out their their entire tax filing
by themselves with NO HELP.
They cannot do this while Congress
is in session.
In addition — A Full Audit for each of them.
* *
Somehow those two comments seemed to go together.
I would add: all vendors of tax products & their employees have to use what they sell.
BTW, were you aware that the IRS has no legal obligation to give you correct answers or authoritative advice about filling out your forms?
I’ve been a tax lawyer (and CPA, although I don’t practice as such) for 41 years now. I’ve always used an accountant to do my return. I spend some time reviewing my QuickBooks financials to pick up any misclassifications, include any non-cash contributions, and send the file to my accountant. A day or two later he e-files my return and sends me a copy.
No problems, no sweat.
The answer:
http://static.tinyletter.com/AZJunk/img/beam/4492077/81.jpg
> I have found it more and more difficult to make TurboTax get out of the way while I did my taxes.
Software in general seems headed down that path. I think the underlying idea is to “make things simple”, which means the software is dedicated to holding hands and hiding the nasty details.
Re Turbo Tax, I’ve used the online version the last couple of years and am generally happy. Having it download and process records from my bank and brokerage accounts certainly helps, and it is handy to have all the forms when paying taxes in two states. Is it worth it? For twice the price or less I could have it done by an accountant, or I could do it all by myself. If I ever switch it will probably be to the accountant, it’s sweet and stress free if you get them the information early in the season.
I gave in 3 years ago, and went to H&R Block. Made my life easier. Worth every penny.
Another Turbotax guy here. I have a fairly complicated financial life so downloading data directly from my investment accounts saves me hours of error-prone entry. I do not use the questions–just go directly to the forms ctrl-2. Your main mistake was going to Target to buy the download. Bricks and mortar companies do not have their act together with online sales. Amazon does OK and you can get a decent price.
Frog–regarding the 16th amendment. I heard/read a story that we owe it to the drive for prohibition. It seems a large part of the guvmint’s revenue at the time was excise taxes on liquor so they needed a way to replace them. Another strike against do-gooders.
skeptic:
I don’t think a person can go directly to forms unless he or she has submitted an online return before. I certainly couldn’t find a way to do it, and I doubt it had anything to do with Target. Target’s only connection to my troubles was the sales tax problem.