Tax Time

[kib]

Ugh! I guess I should look forward to this because we usually get money back, but somehow ... not so much. Every year I think it's going to get easier and instead it gets worse.

I have two questions:

1. do you use computer software to do your taxes, and if so, do you think one brand is superior?

2. this year DH did some consulting work, about $3,000 total. This is not his primary employment, just a weekend sideline. He worked for a small company that sent him a 1099-misc. This is new for me. He doesn't have a business, per se, no overhead or inventory or sales, he just goes to their place and teaches some classes. Tax Act seems to feel I need to fill out a schedule C including a business name and on and on to high heaven. I have no separate EIN or taxpayer number for any of this, he isn't registered as a business. Does anyone have advice on this or know of a reliable place online (or - gasp, even a book) I can use read up on how to handle this "business" income? I thought he'd get a W2, no idea it would be such a nightmare.

[catherine]

I can answer Q.1 but not Q.2:

I use TurboTax and have done that for years. I did go to a CPA for 3 years when we had my MILs house, but I'm back to doing my own now. I don't have anything complicated anymore. Even though I have a business, I have no payroll or inventory or anything like that. I think TurboTax is great.

[ApatheticNoMore]

I've used TaxCut before because my mom usually buys it which enables me to use it for free on that computer. I used to be able to do taxes by hand, but taxes have gotten a lot more complex since then (and we're talking in the last decade or two), so that it's no longer possible. I've gone to tax preparers when taxes got too hard to figure out - having to pay for tax help is nothing to feel bad about, the tax code is literally too complex to make heads or tails of, without computer and sometimes human help.

[RoseFI]

I can pipe in re: Q2... a schedule C is not that big of a deal for simple contract work, so don't be intimidated by IRS-ness.
* you'd just use his SSN, you don't need to get a separate Tax ID.
* You should do the process of figuring his "real hourly wage" (Financial Integrity Step 2) because that is what a schedule C basically does. (So if you already do the 9 steps, you're practically done already!) Make sure you capture all expenses that are specifically related to his work -- e.g. if he's traveling/driving to teach classes, there are costs associated with that. (Since it is not regular work for an employer, that is a travel expense, not a commute.) If he prints materials at home, that costs, etc. If he uses his home computer to prepare, he should track how much time he takes and you can deduct a portion of your electricity, etc.
* You can make it as detailed as you want -- or NOT. Since it's such a small amount of income you might not want to bother. To the extent that you don't figure out % of work at home, etc, it is a benefit to the IRS, not to you, so they are fine with it if you just want to declare the income and not deduct expenses associated with generating that income. Just don't do the opposite and over-estimate expenses.
* If you decide not to deduct any related expenses, I don't think you actually have to do a Schedule C, just declare the income on your 1040 page one on line 21 instead of 12 (at least those were the lines on previous forms - I haven't looked at this year's yet.)

Re: Q1, I do mine on paper and am very detailed -- surprise, surprise!

[jp1]

I have used turbotax for several years and appreciate how easy it is to use. Also, it remembers everything from previous years like my employer and so it,will automatically download my w-2 so it's quick and simple. That ease has caused me to be willing to spend more for it versus trying something else or doing them by hand.

[rodeosweetheart]

I used to use the tax software programs and then hit a horrible year, tax wise. A friend recommended her tax preparer, and I went to her and saved thousands of dollars. She recommended against the tax software programs. I now use her services, well worth it.

It was not expensive. She is independent, not part of something like HR Block.

[Tammy]

I've used OLT.com for about 4 years now. Pretty easy. But our taxes are simple. We don't even itemize.

[ToomuchStuff]

Quick thoughts
A W2 is for employees. If he was an outside consultant, then a 1099 is proper and you two need to remember besides income taxes, he is responsible for and has to file his unemployement taxes, social security, etc. (all the things typically on a W2 and both halves, since he is the employer)
I don't use software for a couple of reasons, it doesn't support my OS, both a relative and several others I know work for the IRS so if I was confused I could call, and the software certainly isn't as complete as the forms (doesn't contain all of them). Hopefully you kept good records (mileage, etc), as a business where your selling your services, won't have as many deductions, but still might have the red flag ones. I'd prefer a conservative tax preparer (and we have one that does our stuff and have been told by a couple of IRS offices that when they see his name, they know that an audit is more likely to go in our favor then theirs).

[Tradd]

I've used TurboTax on and off for some years. I used it again this year. I got my refund in 9 days! I have no issues with the software. I use the online version. I have a simple 1040EZ form. I'm sure experiences would differ if you had a more complicated return to do.

[Reyes]

We are going back to doing our own this year. The past several years we've used a CPA as with not having state and/or federal recognition of our marriage and having to create "fake" returns in order to create the real returns, the process was over our heads:-). Now with the federal and state (Oregon) governments on board, we are going to use Turbo Tax.

[SteveinMN]

I used TaxCut for years; never really cared for the way Intuit does business, so TurboTax was not anything I considered. At that, however, there was always the "make sure you've downloaded the latest version" reminder (since writing tax software is aiming at a moving target). And the software which is so conversational in asking for your income and deductions and demographics can really get blown into the weeds by exceptions or figures put in the wrong fields and then removed. !thumbsup!

Now, however, DW and I hand our stuff to an accountant. It started the year we married, which included the disposition of some property DW had and the question of whether we were better off filing jointly. Our tax person has been well worth what we've paid, both in terms of getting refunds and eliminating most of the hassle of doing it ourselves.

DW points her mom at one of the free tax-prep services for seniors in her county. I still do the taxes for my mom and brother since they'e incredibly simple and the numbers only change a few dollars one way or the other each year. It probably would take more time to remind my mom to get all the paperwork for someone else to do it.

[Blackdog Lin]

Steve - me too, I employ a CPA that we've used for 12 years. Though our taxes are simple enough that I probably could use a tax program, or a mass-marketer like H&R, I like her and trust her and the few years that I've had tax questions mid-year (not at tax time), she has always responded promptly and professionally and at no extra charge. And there is zero hassle.

DH grumbles every year at the cost of the prep. To me it's worth the extra cost.

[iris lilies]

We use an outside tax preparer here as well. The annual fee is I think around $400. It's tax-deductible.

Our taxes are a little bit complicated because DH has a business and we have a couple properties.

[goodlife]

Any time you get a 1099-misc a Schedule C is required. On the Schedule C you can also add any expenses you incurred to offset the 1099- misc income (advertising, mileage, cell phone, etc). Tax Act or Turbotax should have the capability to get a simple Schedule C correct.

[CP1970]

This was the first year I used Turbo Tax, mostly because I waited almost to the last minute. I file 1040ez and was happy with the process and ease of use. I most likely file this way next year.

[JaneV2.0]

I scribbled my return out in pencil, made an ink copy, and finished in record time. Just a 1040, standard deduction, electronic refund. Easier than ever. Talk about simpicity.

[TVRodriguez]

DH buys TaxCut online because he doesn't like TurboTax. I do the 1120S for DH's business and for mine, as well as our 1040. I've used both TurboTax and Tax Cut (as well as done them by hand as well as hired a CPA before) and don't care which method. Just in general, I prefer to do them myself, but I still use a program. I prefer to go straight to the forms (and I think I remember that TurboTax made this easier than Tax Cut), but it is kind of convenient to have the program do the calculations, so I suffer through the "interview" questions in TaxCut. Caveat being that I always research all the tax questions that I have, either directly on the irs website or using the online legal tax library that I subscribe to for my law practice.