We used to do our own taxes on paper. But when the children were born, we found that we might have extra deductions and were confused about them. Thatâ€™s when we decided to buy TurboTax to help with our tax preparation. However, after a couple years, we switched to H&R Blockâ€™s TaxCut because it was cheaper. We found no difference in the quality of the software. After many years of doing our taxes via software, and filing electronically in the last couple years, it seems we have forgotten many basics about tax preparation. And what we have just realised is that using tax software was completely unnecessary.
Weâ€™ve made our mistake and I worry that we will have some difficulty in rectifying it. It was easy to go along with all the hype that TurboTax and TaxCut want you to believe – that you might be doing your taxes wrong, you might be missing out on deductions, etc. They will help you through all the new legislation, blah, blah, blah. All you have to do is punch in the numbers and data they ask for and they do all the work. In later years, you can import data from the last return. They made it so easy. But then I realise I had done our taxes by hand previously. Yet, when I look back at the paper files we had, I find that I cannot understand how we did it back then. This year, we may have to go back to paper filing and I find the task almost daunting as we have been pampered in the last several years.
Yes, there may be many advantages to using tax software. For example, it is true that they update their software (even while youâ€™re using it) to encompass any new tax legislation that come out during the tax year. And, some even offer tax help or advice via phone or email. Both TurboTax and TaxCut have different versions, with different levels of service from Basic to Premium. We were fooled into getting Premium one year, but found it was unnecessary and have stuck with Basic since. All that nonsense about getting the DeductionPro as an added benefit to either program is a waste for most people. We recently found TaxCut also has a Standard, which is cheaper than Basic. I do not have all the details but I believe it may be because the DeductionPro is not included. Do you need DeductionPro? As I said, for most people, no. To determine if you do, find out what your standard deduction is for the tax year. If you think that your gifts, donations and contributions to charities, etc., for the tax year exceeds the standard deduction, then you will want DeductionPro. This program allows you to itemise all your deductions to maximise on your refund.
In preparing for the tax season this year, we also found some free online software. One is available through H&R Block. However, in order to use it, you must answer all questions in sequential order according to what they want. Although they claim they can use your international address, the software did not accept our responses. We had to put in fake details in order to get through the program and see what our refund would be. Itâ€™s a nice way to get a preliminary. There may be others like this out there but we have not explored all of them yet. We also came onto the IRS website and found that they have two free online options. One is free software, which you need to download from one of several companies. This option is only available to those who made less than $56,000. The other option is essentially a blank IRS form which you can go through and fill in, then file electronically. This is sort of a â€˜help-yourselfâ€™ option as it only offers help by having you scroll through the instructions. If we are unable to find a software that can support our international address, we will be forced to use this option. We would rather file electronically as the refund gets deposited into our account directly and quickly. Paper filing would mean they would have to cut us a check, mail it to our international address, then weâ€™d have to mail it back to our bank.
Of course, to even complete the task of filing, I will need to dig into our boxes and find our last yearâ€™s return. That will be a task unto itself.