Tuesday, March 04, 2008

Review: Turbo Tax Premier Federal + State 2007

Before anyone else jumps in with the comment, let me say that I know that Turbo Tax Premier is not necessary if all you have is simple stock sales and so forth. So you can save a few bucks there by buying Turbo Tax Deluxe instead.

I do taxes for myself, my mom, and Lisa. This year, my mom ended up running a home business, and that was too much pain for me to deal with, so I outsourced that to my aunt and Turbo Tax Business.

At this point, I'm quite a bit of a Turbo Tax power user. I no longer use step by step interviews, but for each form, simply jump directly to the section of turbo tax, fill out the form, and get it done. Unlike previous years, this year's turbo tax actually has useful download features --- downloading the W2 has always been painful, but 1099-DIVs and 1099-INTs were always fraught with danger. This year, the 1099-DIVs and 1099-INTs downloaded without a hitch (I checked them manually). 1099-Bs, however are still broken --- too often, the long names get truncated, and you're stuck scratching your head wondering what the heck it is that supposedly got bought and sold.

This year, I decided to try the TaxResources Inc. professional review. I've always bought tax audit protection, mostly so I could sleep easy knowing that I had someone to back me up with regards with IRS dealings. Having had exceptionally good experience with TaxResources through that service, I decided to try their professional review. Note that this review only reviews the resulting 1040 et al, but since I had 2210 filing this year, I decided to have them take a look as well. Note that this review will not catch any of the following:

  • Transcription errors (it does not solve the garbage-in, garbage-out problem)
  • Errors of omission (if you leave out an entire 1099, for instance, they're not going to tell you you forgot it)
  • State taxes. They only do federal taxes.

I submitted my tax forms for a review on Sunday night, and got the review back on Monday afternoon. The review is simply a PDF document, telling you what they've assessed as to your problems are. One thing they caught was that I had taken a short cut while inputting the cost basis for one of my mutual funds, and had forgotten to go back and correct it --- that saved me about $100 in both state and federal taxes, so from that point of view, the professional review paid for itself. (I probably would have caught it anyway eventually, but the reminder was good) In any case, I learned once again that reinvesting dividends is an extremely bad idea, and the increased complexity in accounting and hunting down every reinvestment outweighs any benefits you might gain from keeping your money invested all the time.

Beyond that, it gave me a list of things to watch out for (like a paid off house has property taxes, but no mortgage interest --- that's apparently a flag for auditors, since apparently Americans never pay off their homes). The review reminded me of several things, such as potentially trying to take advantage of the rollover IRA rule in 2010, and so forth. All stuff I knew, but useful if you don't spend as much time dealing with taxes as I do. For $40, it's certainly not going to break the bank, but then again, I got my copy of Turbo Tax through an Intuit employee, so you might feel different if you've already paid full price for your copy of Turbo Tax. What annoys me is that if you want another review after you've made your corrections, you have to pay $40 again. One would think that since the review looks like a generated form, they'd at least give you one revision's worth of checking.

The big bug I found this year so far in Turbo Tax is in the state portion for California, where 1099-B sales were incorrectly imported from the federal return. For some reason one of my 1099-Bs got duplicated, and I had to fix that by hand. This is unusually bad, but fortunately, I have plenty of time to run more updates before I file. This is actually one of the reasons to wait a bit before filing, especially if you owe. Fortunately, I caught this bug, but I wonder how many others are lurking.

All in all, I'm glad I'm not doing this by hand, but I'm disappointed by the bugs I've found so far this year. As for the professional review, I feel that it didn't add anything I didn't already know, but the fact that they caught something that saved me more than the $40 I paid does indicate that it's a useful service. Recommended, but watch out for the bugs, and update your copy or Turbo Tax frequently!
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