turbotax

8 Ways to Survive the April 18th Tax Deadline

Ashley Jacobs — Thu, 14 Apr 2011 16:00:10 +0000

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

Tax day is almost here! The last day to file your taxes is April 18th (Monday). April 18th is also the last day to make any IRA contributions or to file an extension.

If the tax deadline has crept up on you don’t worry, Wise Bread has several helpful articles to help you complete your taxes on time.

16 Great Tax Deductions You May Have Missed — If you made any non-cash charitable contributions this year or incurred any expenses relating to a job hunt, you can use these as deductions. So save some money on taxes and make sure to include these deductions.

Top 10 Red Flags That Trigger IRS Audits — Do you like to use round numbers or take advantage of the home office deduction? Then you are a prime target for an audit!

How to File Your First Tax Return — Find out all the documents you need and the most common problems you'll face as a first time tax payer.

15 Surprising Facts About Income Tax — Did you know that if you report a company for tax evasion, you can make some serious money? Or that the federal tax code is over 70,000 pages long? No wonder doing taxes is so confusing.

5 Things Tax Preparers Should Tell You — When you meet with your tax preparer, they should help you optimize your deductions, explain how your tax liability was calculated, and give you ideas for future tax planning.

5 Things Everyone Should Know About This Year’s Tax Changes — This year instead of being able to deduct up to $1,500 in energy credits, you can only deduct $500. Also, you can’t deduct over the counter medicines without a prescription.

5 Reasons Why It’s OK to Get a Tax Refund — Conventional wisdom tells us tax refunds are free loans to the government, and should be avoided at all costs. Learn why conventional wisdom is wrong and enjoy your tax refund in peace.

8 Smart Things to Do With Your Refund — Don't squander that tax refund. Use it to pay down high interest debt, start a retirement fund, or open your own business.

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

8 Smart Things to Do With Your Tax Refund

Darwins Money — Tue, 12 Apr 2011 16:00:17 +0000

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

With millions of Americans due to receive tax refunds in the coming weeks, it's worthwhile to think about what to do with that mini-windfall. After all, since refunds are somewhat unpredictable, chances are you may not have a plan in place just yet. Here are 8 ideas to get the most out of your refund this year:

1. Pay Down High Interest Debt Immediately

I intentionally listed this as the first priority. Whether it's 20% interest on a credit card or 9% interest on a car loan, chances are that even if you invested your refund in equities or other conventional asset classes, you wouldn't get a higher return than the reduction in high interest debt. Plus, debt write-downs are guaranteed and involve no uncertainty or volatility. As we've seen on numerous occasions, including recent events in Japan, stocks are highly volatile.

2. Build an Emergency Fund

This one takes a close second. Even if you have some high interest debt, if you have no emergency fund whatsoever, you need to start one right away. This isn't exactly the hottest job market. It would behoove you to plan for the unexpected. While your refund might only equate to a month or two of post-tax spending, it's better than having no buffer at all. Any calamity ranging from job loss to a medical emergency could force you to ring up more high interest credit card debt, ruin your credit, or worse. An emergency fund is there to help you sleep better at night and weather the unexpected—because life happens. Think of it as insurance and hope you never need it.

3. Upgrade Your Home and Get Another Refund Next Year

Fortunately, recent tax legislation included some tax credits for green initiatives and stimulus efforts for the appliance, HVAC and window industries (see 2011 Energy Tax Credits and What Are Energy Tax Credits for full details).

While the tax credits aren't as generous as they were from 2009-2010, homeowners can still receive credits totaling several hundred dollars while realizing lower energy costs for the life of the home. Now that's "reinvesting" that refund.

4. Start Investing

If recent headlines have taught us anything, it's that market and government forces are forcing more costs onto employees by way of higher health care contributions, higher pension contributions, lower wages and in all likelihood, some reduction in future Social Security benefits. With that in mind, it's important to start investing early and be more self-reliant in your later years. By investing just a portion of every refund you greatly reduce the burden on your budget in retirement. If you're not already an experienced investor, consider focusing on a simple low-fee index mutual fund or ETF.

Not sure how to make the best of your IRA contributions? Check out this IRA Tax Calculator to estimate your IRA contributions.

5. Save for College

With college costs rising by roughly 2-3 times the rate of inflation annually, it's no surprise that even a state school education is out of reach for many American families. Realistically, we're talking over $100,000 per child in today's dollars. It's therefore important to start saving while your children are young, in either a college credit purchase plan or a self-directed investment plan.

6. Start a Small Business

There are so many ways to make money online these days I couldn't possibly list them all. Either online or through a particular skill set you possess, perhaps you can roll your refund into a new business. Some online examples include starting a new blog, or even buying a blog with existing traffic and income.

7. Refinance

Here's another opportunity to turn a few thousand dollars into years of annual savings. While interest rates had run up a bit over the past few months, they dipped again recently following the Earthquake in Japan when investors fled into Treasuries. The dip in the 10 Year bond yield drove mortgage rates back down so refinancing may be more attractive than it was just a few weeks ago. Often times, a refinance will run a few thousand dollars in closing fees, but if the monthly savings make sense, go for it!

8. Enjoy Life (Experiences over Materialism)

There's more to life than making and saving money. Sure, maybe it's high time you splurge and buy that iPad 2. But maybe you want to enjoy a life experience with a significant other or family. Jump on a Groupon or LivingSocial weekend getaway. Go skydiving. Learn how to fly-fish. Plan a big surprise birthday party or anniversary getaway. With an unplanned windfall, if your finances are in order already, consider a life experience you'll take with you. Technology is obsolete within months, life experiences are forever.

I hope those ideas got your creative juices flowing. Personally, I'm using this year's refund for 529 savings, topping off our 2010 IRA contributions and investing in our business we just started. And for you tax procrastinators out there—if you haven't even started your taxes yet and you're itching to know what your refund's going to look like, check out this Tax Refund Calculator for some instant gratification!

What are your refund ideas?

This article is from Darwins Money of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Reasons Why It's OK to Get a Tax Refund

Darwins Money — Mon, 21 Mar 2011 16:00:09 +0000

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

It’s that time of year when the mainstream media will begin chastising you for ending up with a tax refund instead of perfectly managing your prior year tax situation to avoid getting a check from Uncle Sam. To do otherwise would be giving the government a free loan, right? This view has been espoused annually like clockwork.

The thinking goes that since you don’t receive interest on the refund you get at the end of the year, in effect, you’re lending the government money at a 0% interest rate when you could have been investing it yourself throughout the year. Well, I view this critique as an inability to see the forest through the trees — much ado about nothing.

According to the IRS, the average tax refund was $2994 last year, a slight increase over the year prior. Based on this amount and the rationale below, you may end up feeling a little less guilty this year when you collect your refund check this spring. (See also: Find Out When Your Tax Refund Will Be Sent)

It’s Nearly Impossible to Get it Just Right

With all the various tax credits, deductions, multiple sources of income and other facets of our complex tax code, the odds of setting your withholding perfectly during the year to end up anywhere near a zero refund are quite low. Personally, I view this as a futile exercise, especially if it’s a difference of a few hundred dollars in the end. Couldn’t your time be spent on something more productive? If you put that sort of time and effort into researching ways to earn some extra money on the side, figuring out ways to save more money, or optimizing your existing investments, that may be a much better use of your time and resources. (See also: 10 Most Overlooked Tax Deductions)

The Free Government Loan Doesn’t Matter at These Rates

While many people irrationally focus so much on NOT paying taxes that they actually make poor investment decisions (like selling “losers” in December for the tax loss, even if it doesn’t align with their long-term investment strategy) or make charitable donations they can ill afford, likewise, some people abhor the idea of “loaning” the government free money so much that they can’t envision themselves receiving a refund the next year under any circumstances.

The reality is interest rates are at historic lows. With the average refund above of close to $3000, considering the fact that this amount is accrued across the whole prior year, let’s say at an annualized rate you’re “lending” the government $1500. With the risk-free interest rate over a 1 year period sitting at under 2%, you’re talking about foregoing income of around $30 or less. The horror!

A Forced Savings Account is Better Than Nothing

Right or wrong, many people find it so difficult to save throughout the year that a tax refund acts as a forced savings account. This extra money they would have taken home otherwise is basically written off throughout the year as background noise, especially since it’s often a complete mystery just what the refund will be come spring. With that in mind, many families go through the year using after-tax income on necessities and retirement contributions but the come spring — refund!

It’s an Automatic Emergency Fund

With so few Americans having a sizable emergency fund, why not use this year’s refund to kick off such a vehicle in the event of job loss, medical emergency or other unforeseen circumstances? Since small monthly surpluses are so easy to spend and make for tough emergency fund investments, this method of getting a mini-windfall in the spring is a much more tangible and impactful way to kick it off. While this year’s refund might only be equivalent to a month’s income or so, it’s a start!

It Beats OWING Money!

Realistically, it’s unlikely that you’ll hit it just right, especially if you have investment transactions, income from savings accounts or CDs, a bonus, credits, deductions and other myriad taxable events throughout the year. With this in mind, would you rather risk actually owning money? Coming out of a costly holiday season and heading into summer, I’d much rather be seeing money coming in than going out at this time of year.

At the end of the day, you can fault the government for their taxation policies and where money gets spent, but is it really worth burdening yourself with trying to micromanage a tax return when the downside cost equates to peanuts? By taking a look at this summary of Federal tax law changes for 2010, it’s evident it’s more work trying to keep up with the latest moving target than just focusing on the low-hanging fruit.

This article is from Darwins Money of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Great Places to Get Free Tax Advice

Meg Favreau — Tue, 15 Mar 2011 16:26:35 +0000

I’d like to update the old adage of “nothing is certain but death or taxes,” and clarify it to add “…and doing those taxes will almost always be confusing.” No matter how hard the letters “EZ” at the end of the simple 1040 form try to lull us into a sense that taxes can be easy-breezy, it’s likely that while preparing your taxes, you’ll run into a question that you just aren’t sure how to answer.

Thankfully, you don’t have to wade through pages and pages of complex IRS instructions, trying to decipher the tax code all by your lonesome. Nor do you have to pay a tax professional hundreds of dollars to add and subtract every line on your tax form. If you feel confident preparing your taxes on your own and just need a little help along the way, there are several places where you can get free tax advice from experts—even the IRS itself!

In our latest article on My Life Scoop we checked out six places where you can get free tax advice. Here's a sneak peak at the top of the list:

1. The IRS

The Internal Revenue Service—what might feel like the U.S. Government’s biggest and most threatening institution (at least to your wallet)—wants to help you. Seriously. That’s why the IRS offers a toll-free hotline where individuals can call for answers to tax questions. Because really, who better to ask for clarification than the people who made the rules in the first place? The IRS’s number is 1-800-829-1040, and the service is available Monday through Friday, 7 a.m. – 10 p.m.

The IRS also offers free tax preparation for members of qualifying communities, including “low-to moderate-income (generally, $49,000 and below) people who cannot prepare their own tax returns” and the elderly. More information is available on the IRS’s Free Tax Return page.

2. TurboTax

Tax-prep software provider TurboTax offers the TurboTax Live Community. Open to everyone—whether or not you’re a TurboTax user—TurboTax Live allows taxpayers to post, read, and answer tax questions about both federal and state returns. Some of the questions are answered by actual TurboTax professionals, but many are answered by other users, including “Super Users” who are active in the community and whose answers have been highly rated by others.

TurboTax also has a free edition of their online tax preparation for completing simple federal tax returns.

3. H&R Block

Similar to TurboTax, H&R Block offers an online community called Get It Right where taxpayers can ask questions and read responses to already-answered ones. The community features several registered tax professionals who respond to users. The H&R Block Twitter feed is also a source of tips and answers about common tax questions, as well as the company’s tax calculator and tips section.

H&R Block offers free simple federal filing.

4. Tax Blogs and Sites

Several tax blogs and sites offer free advice to readers:

Tax Mama (“tax information with a mother’s touch”) provides expert answers to your questions on its forums.

Tax professional and author Roni Deutch (“The Tax Lady”) posts responses to questions she receives on Facebook, MySpace, and Twitter, along with other tax advice and news.

David Greenslit, CPA, of the Tax Tips Blog, also accepts reader questions along with posting regular advice. David does note that “Though I am busy this time of year, I’ll see what I can do”—basically, a response is not guaranteed.

About.com’s Guide to Taxes, William Perez, offers extensive advice and has an active forum for tax discussion.

For the rest of the list, please continue reading our full article on My Life Scoop.

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This article is from Meg Favreau of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Things Everyone Should Know About This Year's Tax Changes

Darwins Money — Thu, 03 Feb 2011 14:36:12 +0000

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile

We saw 2010 close with last-minute wheeling and dealing to satisfy various objectives on both sides of the aisle. Politics aside, the bottom line is that many special tax breaks, credits, and pieces of legislation that were set to expire in 2010 ended up being extended into 2011 and beyond. Additionally, some parts of the tax code are distinctly different in 2011 compared to last year. With a focus on what's different (as opposed to unchanged extensions), here are some key tax changes you'll see in 2011:

1. Temporary Payroll Tax Cut

The payroll tax that most employees face on their first $106,800 of earnings will be reduced by 2% this year only, from 6.4% to 4.2%. The intent of this tax break is to stimulate the economy by having a little extra money show up in each paycheck, which is believed to be more stimulative than a simple one-time "rebate" check like we've seen in the past.

Whatever the ultimate outcome for the economy at large, what this means to you is a virtual 2% raise (tax-free!) up to that $106,800 cap, at which point the payroll tax phases out anyway. This break is currently slated for 2011 only, and it would be highly unlikely to see this extended again since the payroll tax funds Social Security. (See also: What is the Social Security Tax?)

2. FSA Deductions Changed

Part of the health care reform legislation recently enacted is a key change to Flex Savings Accounts (FSAs): You can no longer deduct over-the-counter (OTC) medicines without a prescription. While this may not have a sizable impact on many people, a common year-end activity for people who had unused FSA contributions was to run down the pharmacy and stock up on aspirin and other medications, since you have to "use it or lose it."

The net impact is that you'll have to be a little more careful in how you plan your contributions in future years. And if you used to spend heavily on OTC meds, note that the deduction is gone and is not coming back. (See also: How Healthcare Reform Change the Way You Pay Taxes.)

3. Energy Efficient Tax Credits Diminished

Where in 2009 and 2010 you could deduct 30% of up to $5,000 spent for various energy-efficient upgrades to your home for a total of $1,500 in credits, in 2011, this credit is now capped at $500. The credit is also more restrictive, with a maximum of $200 for windows and $300 for heating systems, and if you took credits in the 2009-2010 session, you cannot participate in this year's $500 credit program (i.e. no double-dipping).

In effect, given the sizable investments new windows and heating units often require and the comparatively small credit, you may not be enticed to jump on a home upgrade just because of the credit. However, if any of these upgrades are required anyway, you'll want to confirm that the upgrade adheres to the government specifications (see Energy Star Requirements), save the documentation, and realize the credit on your tax return.

4. New Estate Tax Criteria Established

With the estate tax moratorium set to expire at the end of 2010, legislation was enacted to set new criteria for the estate tax in 2011 and 2012. Now individuals will see the first $5 million exempt, and couples will see $10 million exempt from federal estate taxes. If that amount is exceeded, a 35% tax will be levied.

5. Business Investment Incentive

A program was established for businesses meant to spur near-term capital investment instead of extending such decisions into the future. Companies will now be able to fully depreciate capital investments in the year of purchase. Specifically, the IRS code Section 179 limits were increased over last year, thus allowing a business to deduct up to $500,000 of qualified capital expenditures subject to a dollar-for-dollar phase-out once these expenditures surpass $2 million.

While this piece may not seem relevant to most individual taxpayers, many small business owners may consider this enough to push them over the threshold and pull the trigger on new equipment upgrades now as opposed to waiting for the economy to fully recover.

These were five significant tax law changes for 2011, but there are some more out there, as well as plans for future tax changes already in the works. For advance planning, check out this nifty tax change summary showing changes anticipated all the way out to 2017.

This article is from Darwins Money of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Things Tax Preparers Should Tell You

Darwins Money — Tue, 25 Jan 2011 16:02:00 +0000

Brought to you by TurboTax Federal Free Edition — Free to prepare, Free to print, Free to efile.

With tax season upon us soon, it's helpful to go into the tax preparation process with reasonable expectations and knowledge of how the process will work, what the roles and responsibilities are, and what you should anticipate as an output from your interactions with your preparer.

1. What You Need to Bring

It's not always obvious which documents are even required to complete a tax return. It seems as though we’re receiving a tax document per day in the mail, sometimes in a redundant and confusing fashion. Conversely, with the heavy reliance on electronic record-keeping, people are rightfully confused over whether they should always be getting a paper statement for tax purposes or whether they need to print out electronic copies.

You should plan to have in your possession all documents related to income, investments, interest, deductions, credits, and anything else that might reasonably result in an entry on your tax return. If you do any sort of investing outside a tax-deferred retirement account, chances are that any transactions will have to be reported. Just holding on to a dividend-paying stock requires reporting of dividend income. Interest from CDs, money market accounts, and savings accounts is fair game as well.

On the credit side, if you sought to take advantage of any of the various government stimulus programs like the home energy tax credits, cash for clunkers, the new homebuyer tax credit, or others, documentation related to those transactions should be shared with your preparer. Several such topics are outlined in much more detail in this nifty tax preparation checklist. If in doubt, bring it!

2. How to Optimize Your Deductions and Credits

Some like to think of tax preparation and advice as an art more than a science. There are various ways to approach how you set up your income and expenses in your personal life, as well as in any businesses you run, in order to optimize your returns by minimizing your tax liability. Your preparer may recommend anything from optimizing your small-business expenses to pulling forward contributions and expenses into the current tax year to beat the clock and realize the larger deduction come spring.

The preparer may point out credits and deductions you didn't even know existed. Likewise, he may also warn against being too aggressive with certain tax deduction claims to decrease the risk of generating an audit. An oft-cited red flag is the home office deduction, but there are others as well that seasoned tax preparers may recommend you avoid. (See also: 10 most overlooked tax deductions.)

3. How Your Tax Liability or Refund Was Calculated

Rather than just spitting out a number at the end of a session, your tax preparer should walk you through a methodical explanation of both the income side and deduction side, share any notable impacts of various tax rules, and then highlight how and why your ultimate liability or deduction came out the way it did. There should be a full double-check of the information you provided and a chance to point out any omissions or mistakes. While there are ways to amend tax returns later, it may come at additional expense and delay. It's ideal to get it right the first time – and get that refund on time!

4. When Will Your Refund Arrive

With most tax returns resulting in a refund of some sort, it's helpful to know when your refund will arrive. Many people know they're getting a sizable refund each year and plan to use those funds to do anything from pay the annual tax bill to fund the summer family vacation. Be it days, weeks, or longer, the preparer should be able to give an indication of when to expect a refund based on her own internal timeline for submission and the typical turnaround time from the federal government. It may not be evident at the time, but the initial preparer you meet with may or may not be conducting the actual calculations and generating the return herself. Outsourcing is a common business practice now in the field, so that may add to the cycle time considerably.

5. Ideas to Better Manage Your Taxes

Aside from simply completing your return based on historical information, an adept preparer should be able to make suggestions to better manage your taxable liabilities. Suggestions may include highlighting any legislative changes that may affect you, new stimulus and tax-credit programs, how to best incorporate a small business, common deductions worth considering that you may not have tracked and documented in the prior year, and some basic investment concepts related to taxable versus tax-deferred accounts.

These are just a few of the topics an adept tax preparer should be sharing with you. Otherwise, you may be leaving thousands of dollars in tax-saving opportunities on the table each year.

This article is from Darwins Money of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Warning: TurboTax Missing Minnesota Tax Info (Updated With TurboTax Response)

Elizabeth Lang — Wed, 10 Mar 2010 19:00:02 +0000

[Editor's note: See TurboTax's response.]

Rarely do I get to a point where I’m so frustrated I could cry. But that’s where I sit right now. I have spent 120 minutes trying to help a company I like (TurboTax) fix a glitch in their system. But, after these two hours I failed at helping them understand the problem and was even hung up after waiting on hold for 45 minutes. Luckily, I can help you avoid the same mistakes I made.

The biggest problem that you should know about right now:

If you are a Minnesotan: When TurboTax completes your M1PR Property Tax Refund, between lines 10 and 11 you need to fill in your property tax ID and your county. TurboTax online doesn’t ask you for this information and subsequently leaves it blank. Also, you need to put the name of other people who you are including in household income.

Let’s back up.

I’ve been a faithful TurboTax user ever since I’ve filed my own taxes. In fact, as you might recall, I sort of enjoy taxes. I enjoy doing my taxes so much that I help extensively with my wife’s (given that our marriage isn’t recognized federally or in our state we file separately).

This year, as first-time homebuyers we got to fill out all sorts of new information. One form is the M1PR Minnesota Property Tax Refund. TurboTax seemingly helped us through this process. We answered a few questions and voila — it spit out a nifty completed form to mail in. (You can’t electronically file the M1PR form.)

Well, as is recommended, we go through our forms line by line before filing to make sure things make sense. Every year things added up. Until this year.

My wife Kimberly was taking the property tax credit. And on her property tax form several lines were blank. Lines that said "REQUIRED" and "ALL HOMEOWNERS." (Yes, in all bold caps).

Hmm, that’s odd. Why would Turbo Tax leave the required lines blank? I went through the process online again and found that Turbo Tax still didn’t ask these questions so they never filled them in.

So I did what any good consumer would do. I sent a support email explaining the problem. I wanted to help them fix the system so that hundreds of thousands of other people didn’t get the same blank spaces and file incorrect forms. Since the form wasn’t filled out correctly and TurboTax has a guarantee, I also requested a refund.

We got a reply email within 24 hours. The email told us to call a number because they couldn’t help via email.

So last night I called. I spent the first 45 minutes patiently trying to explain the problem to the support tech. Because it’s not easy to find the form on Turbo Taxes site I suggested she visit the MN Department of Revenue site to view the form. But despite all my explanations and even having her view my screen she just wasn’t getting the problem.

After 45 minutes of genuinely trying to help her understand the problem so they could fix the system, she still wasn’t understanding. So, I requested a supervisor. In fact, I requested talking to a supervisor 3 times during the next 15 minutes during which the support tech kept telling me that someone would be coming but that she had a few more questions.

Finally, after an hour on the phone I just requested a refund. I told her that I wanted to be able to help TurboTax with the glitch in their system, but that I really needed to go and would just like to get my money back through the TurboTax guarantee. She told me she couldn’t refund my money because I filed the other tax forms already. So, I asked to talk to a supervisor.

I waited over 40 minutes on hold to talk to a supervisor. Then, I heard a voice, a hang up, and then a dial tone. That’s right — after waiting for 40 minutes to talk to a supervisor — I got hung up on. So being even more convinced that I needed to explain the problem to someone, I called back. And waited on hold for another 20 minutes just to try to talk to someone. I gave myself a time limit (and wrote this story while on hold). Finally, I had had enough. Who knows how long I would have to wait to talk to someone — much less a supervisor.

[Editor's note: See TurboTax's response below.]

Luckily, my frustrations weren’t for naught. I have this story and some key takeaways for the world of the internet.

What You Need To Know

1. If you’re a Minnesota who will be filing M1PR: I highly recommend that you just go to MN Department of Revenue site and print the form and instructions. They are not too difficult to understand. Another option would be to use TurboTax’s forms and hand-correct the errors yourself. Besides the two errors previously mentioned, on line 5 if you are including income from a co-tenant/owner, you need to include their name. (TurboTax just lists “other person’s income,” but according to the M1PR instructions you need to include their name.)

2. Always double check your tax forms.

3. If there is a mistake, it’s probably not worth your time to call and try to explain the problem. Right now we’ve paid TurboTax over $140 for the two filings and I’ve wasted 2 hours of my evening trying to help them fix the problem.

Disclaimer: There may be other problems with the M1PR that I didn't catch. I am not an accountant and should not be relied upon for tax advice. I just read the tax forms and follow the instructions.

Have you ever found a major mistake in software? Did you try to help the company correct the problem?

Update: TurboTax Response From VP Bob Meighan

Dear Elizabeth,

At TurboTax, we take our commitment to helping our customers get their taxes done easily and accurately very seriously. We were recently made aware of the issue that you experienced while filing your Minnesota state tax return. We have corrected this issue and it will be available as an update by this Saturday, 3/13. However, I would like to correct one point you made. TurboTax handles line 5 of the Minnesota 2009 Property Tax Refund (M1PR) correctly. All that needs to be reported is the type of income, not the names of individuals.

At TurboTax we have a satisfaction guarantee and I apologize that our agent did not honor that commitment. I will ensure that your TurboTax fees are refunded promptly. Also, TurboTax has an accuracy guarantee that pays penalty and interest if our calculations are in error.

We have also recently increased staff in our customer service organization and now have significantly shorter wait times. As we approach the April 15 deadline, we will be adding even more staff to provide the responsiveness and quality all our customers deserve. We are also revising our escalation procedures for state-specific issues since agents cannot reasonably be expected to be knowledgeable in each state's unique laws and forms (as you learned from your experience).

I apologize that TurboTax did not meet your expectations this year. We value you as a customer and take your experience very seriously.

Sincerely,
Bob Meighan
VP, TurboTax

This article is from Elizabeth Lang of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

TurboTax: New features, and a chance to win a copy

Philip Brewer — Mon, 28 Jan 2008 10:24:45 +0000

The kind folks at Intuit have given us ten free copies of TurboTax to share with our readers. We'll be giving two copies away per week for the next five weeks in a forum contest. To enter, simply leave a comment in our forums.

I snagged one that I'm going to use to do my taxes, and once I'm done, I'll post a review and tell you how it worked for me. In the meantime, here's a brief rundown of the latest features.

In the interests of full disclosure, I should mention that I've been using TurboTax (and before that, its predecessor MacInTax) since 1995. This is the first year that I got a free copy.

For Mac users like me, there are a bunch of new Mac-only features in TurboTax. For the past several years, the Mac version has been essentially a straight port of the PC version. This year, though, Intuit decided to build a Mac version from the ground up, letting them use the features in the latest versions of MacOS. (They mentioned that the latest version of Quicken is getting the same treatment.)

Cool new stuff, specific to the Mac version:

Better access to the actual tax forms For people who have done their own taxes in the past, the Mac version now has improved access to the actual IRS tax forms. Anytime while TurboTax is walking you through the process, you can click on a button and (via a cool animation of the window flipping around as if to show you the back) see the IRS form and line that the information that you're providing will go on.

Download state return software at any time In the past, the state return came at the end, after the federal return was done. Now you can download the software for your state return at any time and see what the effect on state taxes will be as you're making decisions about how to fill in the forms on your federal taxes.

Backup to CD and .Mac--including software! When you finish your taxes, there's a tool that lets you burn a CD (or save to .Mac) all the data that you provided--plus all the software, including all the updates from Intuit. That means that, if you have to go back to this year's taxes, you won't have to track down the original install disk and repeat the process of getting the updates. (I've still got all the data files from 1995 on, but I doubt if I could actually use them, except maybe the last two or three years worth. This feature will help a lot with that problem.)

Cool new stuff for everyone:

Life-event questions Right at the beginning, TurboTax gives you a screen that asks about life-events that can affect your taxes: Did you change jobs? Did you get married or divorced? Did you start a business? By getting that information up front, they can make the process of gathering your data more efficient. They also have a screen of related follow-up questions (if you changed jobs, did you also move?).

Enhanced audit support #1--warnings When you do something that might make an audit more likely--or that might prompt the IRS to ask for documentation--they give you a heads-up about possible issues, and tell you what documentation to keep. For example, if you deduct expenses related to rental property, they remind you that you must not have lived in the property more than 14 days during the year, and remind you to keep receipts for the deductions.

Enhanced audit support #2--downloadable tool If you get a letter from the IRS, you can download this new tool, match the letter that you got to samples that the tool provides, and get a step-by-step process for dealing with it. The tool tells you what documentation you need to track down, what you need to make copies of, and then provides a template letter for you to print with your response to the IRS. If it's going to take more than that, the tool will tell you that, too.

My own taxes are going to be quite a bit more complicated this year than in past years. I got a big chunk of severance pay when I left my former employer, plus I started working as a full-time writer. It'll be good to have a tool to help me deal with the new complications.

It'll probably be several weeks before I get the last forms I need and plow through them all. Once I do, though, I'll get an article up with a proper review.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: