Me and TurboTax
[NOTE: I did my taxes by hand this year, as usual, and once again I began to wonder about halfway through why I do such a thing. Isn’t everyone just plugging numbers into a computer program these days, or using an accountant if their taxes are remarkably complex? I remembered that last year I had tried TurboTax and had a bad experience with it, but I didn’t remember the details. Then I read this post from last year. And I remembered. Oh, how I remembered! So I thought I’d repeat the post in honor of Tax Day.]
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.
I think this is the last year I will use my accountant who has done them for me for 30 years. I started with this accountant in 1987 when I was getting divorced. I needed a forensic accountant and his partner was one. Well, I remarried my wife from that time, after 32 years we are back together. So I have a much simpler life now and my income is much much smaller. He did a good job but is a little too expensive.
I’m sorry to hear about your trials and tribulations with TurboTax. It sounds like you’ve already figured out the most important thing: the way to fill out this year’s taxes is the previous year’s taxes. The numbers change; the rules change; and people add new sources of income or change jobs. However, it’s most often a good starting point. Good luck.
My wife and I have been using TurboTax for decades. Our tax situation sounds like it’s five- or six-times easier than yours. Among other things, once you have your federal return right, doing state taxes is very, very simple. Some states are about as complex as the federal tax code.
Mike K:
What a lovely story about you and your wife!
I used TaxAct for years until their downloadable program went from $10 to $60 or $70. Now I use the IRS free fill-in forms. You have to understand the tax forms, which you need and how you’re to use them, but if you do, it’s great. Free e-file. No state tax, however.
Twenty years ago, I had always done our taxes by hand, adding our older daughter’s taxes to the mix when she got part-time jobs as a teen. Then we moved, and my father died. What with our returns in two states, and Dad’s returns for the portion of the year he lived (in another state) and his estate returns, I gave up, and took the whole pile to an accountant. Haven’t done a tax return since, haven’t regretted the cost of the accountant.
We have complicated tax returns due to many different income sources, owning rental properties, etc. We farm our tax returns out to a professional. Easier on the nerves.
Using TurboTax is alot like learning to ride a bicycle. The first experience can be painful and daunting.
Having used the business level product since 2002 the only difficulty I personally encountered has been the handling of the sale of limited partnership interests held in tax-sheltered accounts. That is such a complex tax treatment that even the IRS, the partnerships themselves and many tax practitioners get lost in the treatment of various categories of gains and losses.
Please do not give up on TurboTax. Millions of people use it successfully and it does simplify the onerous process once you get used to it. P.S. I do not work for Intuit Software, but I do have a financial background.
Sorry you had such an unpleasant experience. I’ve used TT (Small business edition) for years, but ALWAYS buying the actual disc (Costco this year) and installing it on my trusty Mac.
The OS on trusty Mac was too old, so had to install on the Spousal Unit’s Windoz machine.
Updates loaded fine and everything proceeded normally. I am slow, so I spent two hours or so. E-filing is nice!
Bill made me think of this article I read earlier today.
https://www.washingtonexaminer.com/opinion/an-unholy-alliance-is-keeping-your-tax-returns-excessively-complicated
Wilderness,
What Mac and what OS X? I have an Airbook w/ Mavericks, ugh. And 2 dead and 1 hobbling MacBook Pro 17″, all with the best OS X, 10.6.8, which unfortunately some sites won’t deal with anymore. But I’d rather fight than switch….
Heh. And a G4 PowerBook, 10.3.4, still goin’ strong, still gets a lot of sites.
Having all my tax returns done by an accountant is one of the fringe benefits of running a small business. It is just one of life’s little pleasures.
I’ve been a tax lawyer and CPA (now inactive) for almost 42 years. Since graduating from law school, I’ve never done my own return. Years ago I even consulted with one of the earliest professional computerized tax return systems, but I would never even attempt to deal with even inputting my own info — that’s a specialized art. As matter of fact, computerized tax preparation is the reason for the ever- increasing complexity of the Internal Revenue Code. Congress simply could not pass the tax laws we have if people had to do their returns by hand. In fact, if we ever really wanted to have tax simplification, the way to do it would be to require every Congressperson to do his or her return by hand.
I just went to the website, put my stuff in, it said I needed self employed for 1090/9 whatevers, so I paid a few hundred, and it was done. Yes, one needs to upload a bunch of technical income form numbers, but that’s not a problem if you have solid business records.
Not that hard, Neo… I think you chose this incarnation full of technical woes for a reason.
In fact, if we ever really wanted to have tax simplification, the way to do it would be to require every Congressperson to do his or her return by hand.
That’s a good idea, but it doesn’t work. First you have to get Congress to be penalized by the laws they sign, such as O care. The aristocrats are never gonna be burned by the Laws they put you peons to work on.
I can kind of get why you don’t like UI on the computer for taxes, Neo. It is for the same reason why I refuse to get Windows 10 and Microsoft’s micro transanction shop that goes with it.
However, it is pretty much impossible to do capital gains and losses by hand. Once you exceed say 20-50 trades a month.
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.
The primary benefit of self employed turbo tax is item expense deductions for various different types of businesses.
And of course it (now) has easy website icons explaining the tax code in a general fashion, thus no need to google it up.
Combined with Quickbook’s self employed app for cataloging expenses via receipts and other stuff… that sounds strangely attractive.
I am another one that has done their taxes by hand, hard copy. I had rental property, up and down income, along with subsidized healthcare for a time. I knew exactly how this story would end. I am so used to seeing all my forms, schedules, and back up documentation all spread out – I can take it in with a glance. Yeah, way better.
Last year I sold the rental property and hired H&R Block to handle figuring that all out, since the sale was taxed at capital gains. She worked her butt off going over 10 years of taxes, finding errors that originated with the early CPAs I had used before I took it all back and did it myself again. Ten years she went through and in the end, I paid H&R $350 which was a screaming deal. You’d be better off paying a professional to do it to make it easy rather than screwing around with Turbo Tax.
My income varies by a few hundred dollars from year to year. But my deductions vary quite a bit due to medical costs, interest rates, sales tax rates, and charitable giving. So, although I do my own returns, I have to keep good records and make sure I get every last deduction allowed. Takes me a day or two to get all that done. The rest is easy.
My early calculations were that I would pay about the same under the Trump tax cut as I have before. I pay estimated taxes and try to pay enough each year as to just be legal. Surprise! I got a $1500 refund. Thank you, President Donald J. Trump.
I hope many more people got tax cuts as well.
I was surprised at how easily Turbo Tax handled transactions in cryptocurrencies. I was able to download files from Coinbase then upload them into TT. It calculated my net capital gain while documenting 19 transactions early in the year.
What is remarkworthy is that Americans file their “returns” (cute play on words-return to the Federals) voluntarily. The risk of an audit is quite remote, really. In my highest income years of the 1990s, I was audited only once. No faults no penalty no recurrence.
I used to use TurboTax and then they started the “Free” but wait, you need to pay for this that and the other, and I forget what I used. 2004 taxes I knew I needed something (multiple jobs and a failed self employ/contracting etc) so I knew going in I’d have to pay Turbo for the 1040 version and it was reasonable enough I gladly did it. After, with my simple needs it wasn’t needed, but TurboTax decided I make too much and had to pay, even though my needs were met be the “free” version.
Credit Karma is what I use now. Works fine for my needs, got more back this year than last. My employer sucks at getting deductions right. (2016 I had to file in a state I do not live in, because they messed up).
The risk of an audit is quite remote, really. In my highest income years of the 1990s, I was audited only once. No faults no penalty no recurrence.
The risk is still there, especially if you decide to red flag yourself ala Tea Party style.
Once the Red Flag is on you… well, heh.
The IRS is generally more interested in money laundering. Having businesses with more money going out (expenses) than coming in…. is usually a yellow flag at least.
I realized there are too many self employed land lords in Neo2’s comment section. Coincidence?
The status quo lives here!
I used Turbo Tax from the 1990’s until last year. I sold a stock I owned for a long time last year because the stock got a new transfer agent with whom I previously had a really bad experience. When you sell a stock you go through a terrible rigamarole figuring out the capital gains. So I went to H. & R. Block and they had a terrible time with it as well, but they guarantee their work. Our income tax system is a penny pinching, stupid waste of time.