Is TurboTax Worth the Price?

Last year I used TaxCut to prepare my income tax returns. I did it because TurboTax - the program I used for the prior five or six years - kept asking me about a leased car that was long gone from my life. Many years ago I used the car for business, then returned it to the leasing company when the lease ran out. After that, the car was sold, probably more than once. Meantime, TurboTax kept obsessing about it, kept demanding information about its mileage and expenses, kept refusing to let me delete the thing from my tax preparations and move on with my life. TaxCut made the deletion simple, just as I hoped it would. My prior experience with both programs indicated that TaxCut always performed better than TurboTax in regard to deletion of irrelevant, obsolete data. Maybe its makers should go into the divorce business? This year I went back to TurboTax because I got a better software bundle and rebate with it. But when I got to the end of the filing procedure, the program disappointed me. It charged me $17.95 to electronically file my federal return, just as the package said it would. Then it whacked me another $17.95 to file state tax forms. This charge is a large bump-up from last year, when I used TaxCut. Was it really worth almost 36 bucks to file electronically? Probably not. So what's a frugal person to consider in regard to tax preparation software? First, do you need it all? Well, probably you do:

• For all but the simplest tax situations, a computer program for doing your tax returns is a must! If your tax situation is complicated enough to require you to use the long Form 1040, it's unwise (errors will occur) and very difficult to do your return by hand.

• All major tax preparation programs guide you through an interview which will allow you to prepare an accurate form. Needed information is automatically placed in all the proper spaces and all calculations are guaranteed correct.

• Using a program saves a lot of time compared to doing taxes by hand. It might even be faster for you than using a tax preparer! I still shake my head over how long it took to gather tax materials, organize them, write notes and then drop the package off with my accountant. Even more time was burned up in inevitable phone calls and emails needed to clarify things. When I started using software to prepare my own taxes, I saved time.

• Using even the most expensive program probably costs less than taking your stuff to a tax preparer.

The big problem with tax preparation software is that it is way overpriced! This is especially true of the most popular programs like TurboTax or TaxCut. No matter that you factor in rebates and bundles, your final cost for such programs has steadily increased far more than inflation during the past several years. What justifies the increase? Even when there are huge changes in the tax code, the bulk of the material in the tax forms filed by individuals changes little from year to year. When tax regulations require program adjustments, the software manufacturers need do little except tweak the code and the programs will compute taxes perfectly for their targeted tax year. If you use these programs long enough, you will see that any advertised "improvements" are mostly marketing hypes that ultimately benefit the software company, not you. Real improvements occur slowly and incrementally. That's why there are no substantial differences between the most popular tax products - competitors have plenty of time to copy one another. Any minor differences that exist are probably going to be undiscoverable until you purchase and install the product and fill out your tax forms. By that time, you are not going to ask for your money back so you can start from scratch with something else. Confronted by these unjustifiable price increases, most people just suck it up: They pay a bloated price for software that remains, from the user's perspective, basically unimproved from year to year. Then they get over it! But there are other things you can do:

• Watch for the best sale prices you can find. For example, consider what I thought was a good deal at Staples. Here's an update. I got Quicken Starter bundled with TurboTax but had to pay for electronic filing. The Quicken, TurboTax and filing fees finally cost about $75. At the Intuit website, I would have gotten "free" filing, but would have paid $84.90 for state and federal tax programs and would have gotten no free Quicken. Total savings: Around $40 on $85 purchase.

• You have many more choices than TurboTax or TaxCut. See the IRS Partners or google for software or reviews.

• State and federal tax sites are improving every year. Be sure to check out how they can help you deal with regular income taxes. What do they offer in the way of free filing, online or otherwise? What do they do for you in terms of free electronic payments or refunds? Practice frugality by exploring these resources well before you need them. For example, do it around December or January instead of shopping and partying.....Weeeeell, NOT! Just do it early.

• If you should pay estimated federal or state taxes, check government websites for programs which will automate the process for you without any charge.

• There are three reasons to electronically transmit your tax forms: Transmission leads to fewer errors than scanning paper forms, it is said. Transmission is faster if you let things go to the last minute and the post office has closed. Finally, your government likes it because it makes things easier. Should you pay $35 for someone to transmit your forms and payment to the government after you have already paid a bloated price for software? That doesn't seem fair.

What's the most frugal solution to the problem? Before the tax deadline, check with your friends and relatives. Who will be installing tax software on their computers? Prepare your return on one of those computers and print the return. Then drink some beer with your benefactor. Later, mail the return to IRS with a check. Frugal and fun! If you are in a hurry to file and your form is simple enough, another alternative might be to transfer the information to forms on a free government website and pay taxes or get your refund electronically. That would be frugal and fast. Either way, you're not paying $36 for a service which would be fairly priced if it were reduced by 50 to 75 percent.

Organize Your Life With Computer Freebies

The JOTT sounds the best to me, but others might be worthwhile. http://www.pcworld.com/article/id,144204/article.html?tk=nl_wbxhow

Wasteful Citizenship Rule Costs States Millions: Thank You Wacky Congress!

2005: Radicals in Congress plant bad seed with extremist legislation. 2008: Poisonous fruit emerges: A citizenship rule costs states millions but nets few illegals

Using Government Websites to Pay Taxes: Practical Tips

At the end of the tax season, it makes sense to think about what you might have learned that could make tax payments easier or cheaper next year. My lesson this year involved using government websites to manage tax payments: Income tax payments and, more aggravating for me, payments of estimated taxes. Paying estimated taxes is a hassle, especially when you pay them by check . You have to remember to put them on your calendar for four payments a year. Then you have to actually look at your calendar at weird times. It's easy to overlook the mid-year payments because vacations occur in June and, in September, the kids go back to school and you are depressed about the end of summer. To top it off, the final payment is due in January, after the holidays leave you dazed and broke! Who thinks about income taxes at such times of the year? This year I used TurboTax to prepare my returns. At the end of the procedure, I caught myself staring morosely at the pile of paper forms TurboTax had generated for paying estimated taxes. How long I had been immobilized? When I finally woke up, well, you know what people do when they recognize they face something that desperately needs to be done. We'll feel better if we surf the net for a few minutes! Intuit had already emailed me to say that my returns had been electronically filed with the Illinois Department of Revenue. The filing process was easy and made me wonder whether estimated taxes could be electronically filed equally easily. I went to the Department's home and thence to the start of the Estimated Tax Payment Process. Now I have to apologize. I am going to sound like I am pimping for a tax collector: It took just a few painless minutes to schedule the first electronic 2008 Estimated Tax payment so that it would occur automatically on time and keep my money in its interest-earning checking account as long as possible. Even far better, the remaining three payments were scheduled so they would happen automatically! No fuss, no muss, no more penalties for forgetting the payments when they were due and no more dealing with complex forms that by which you try to escape the penalties! That success led me to investigate federal resources to e-file or make electronic payments. I found that there are two different websites for these tasks. First, learn about regulations, forms and procedures at the regular IRS federal website with its faqs and e-filing pages. (Notice the logo on the federal site is similar to the e-file logo at TurboTax. Are all these tax programs charging you for payment services that state or federal government gives you for free?). At the IRS site, I eventually found an old news release describing a program for electronic payment of estimated taxes. A link at the bottom of the news release takes you away from the IRS home to a second website, EFTPS Online. At EFTPS Online, you pay taxes rather than just learn about them. I gathered links to post, but none of them worked when I entered them in the blog. Pages from the website time out pretty quickly, probably for security reasons, so you have to enter the site from the IRS website or from its home portal: https://www.eftps.gov/eftps/home.do. Individuals can pay virtually all their federal taxes from this site. The only problem is that you have to register in advance for EFT payment of estimated taxes and it might take 10-15 days for your account to open. So here's two frugal tax things you might want to think about for next year:

First, at the federal tax site, you can schedule automatic payments of your federal estimated taxes. You can also pay income taxes. There are no charges for these services. Second, some (maybe all?) states provide the same free services.

It's well worth investigating these and other services your state and federal websites might provide to help you with your particular tax problems. Just do so well before you need them! You don't want to be farting around with new websites and new procedures when it's April 14 and you're over the top with stress.

Charles Givens, Jesse Jackson Jr. and James

One of the more useful things I ever schwagged was a magnifying ruler from a mutual fund company. It has little labels above the magnifier. If you laid the ruler across the stock pages of the business section, you could easily read the data about a mutual fund or a stock without reaching for bifocals. I'm embarrassed to say I thought these things were so cool that I grabbed four of them from a display table at a shareholder relations meeting in Chicago around ten or fifteen years ago. Invesco Funds had taken over The Financial Funds Group operating out of Denver and one purpose of the the meeting was to familiarize Financial Funds shareholders with Invesco. I attended the meeting with my friend James. James has been I my mind recently because he's having some health problems. He is a very sweet man -- a strange thing to say about someone who served as an M.P when he was in the service. He's sweet and smart and conscientious. At the meeting, we walked and filled our paws with cheese, crackers, veggies, wine and schwag like the aforementioned rulers. After a couple of drinks, James remarked that "There's a lot of salt here, but no pepper!" I had been wondering how long it would take him to say something about the absence of blacks, Hispanics, women or just about anyone else except geezers who were far older than me and far whiter than James. Actually, neither of us was surprised at the lack of pepper even before he brought it up. He had told me many times that his friends and family were extremely suspicious about getting screwed if they put their money into anything that was harder to understand than a savings account. We laughed a bit about his joke, but I was secretly wondering whether the person at the display table had given me a cold eye because I grabbed four rulers or because our presence stirred Guess Who's Coming to Dinner memories. This stuff from the meeting came back to me when I was googling Charles Givens to prepare an earlier post and came across other people influenced by Givens. It turns out that Givens exerted a powerful impact on Congressman Jesse Jackson Jr. at about the same time he influenced me. Interviewed in 2000 in connection with his new book, Jackson indicated he might have attended the same seminar that I did.

Representative Jackson's introduction to the world of investing came while he was in law school at the University of Illinois in 1991. He saw an infomercial for an investment seminar being led by Charles J. Givens, the author of ''Wealth Without Risk.'' He bought the book and attended one of Mr. Givens's seminars. ''I learned more about personal finance in an hour-and-a-half seminar than I had in three years in business school,'' he said.

Jackson's book came out shortly before the DJIA hit its high of 11723 on January 10, 2000. His theme of getting minorities to invest in Wall Street was picked up and sounded elsewhere. By 2001, blacks were being encouraged from the pulpit to practice frugality and invest in stocks. On September 17, 2001, the DJIA fell to 8848. Then the market rallied and again collapsed to a low of 7850 in 2003. If you were black, the market treated you just as if you were white. Someone who bought the market high and was forced to sell at the bottom would have lost 33% of the investment. Were the Congressman and the ministers on the cutting edge of social change, opening peoples' minds to the importance of investing and saving? Or were they simply victims of mob psychology themselves as they encouraged people to chase an unsustainable market bubble? Would they have served everyone better had they recommended bonds, not stocks? Were the Congressman and ministers too quick in dismissing the historical suspicion minorities have shown to the financial industry? Were James's family and friends correct to be suspicious about investing in stocks or mutual funds? Should I have been suspicious about a mutual fund manager who made me a lot of money before he was banned from the business? In regard to the rulers, the two I kept still sit on my workspace, even though the stock pages in the newspaper are gone forever. The magnifiers are still handy for keeping a place on a page, the odd 8-inch length is perfect for making lines across typing paper and, most importantly, the rulers daily remind me that investors best protect their families by thinking critically and giving constant attention to the big picture. More tomorrow.

Items on the Freecycle Network - Oh, Gross!

If you ever needed to know why some temperance and prudence are needed when you Freecycle, see the Chicago Tribune story about pet urine and other Items Offered. After I finished chuckling about the eccentricities the Trib uncovered, I remembered some of the really good experiences I had when Freecycling. For the most part, useful small items were involved. But the best transaction was when a young man showed up and dug out a 6' pinetree to replant in front of his own house. To me, the tree was indeed a weed - a "plant out of place". I was glad to have it gone and he even filled the hole. For him, it was a gorgeous evergreen at a great price.

Condo Hotels Good Investments? NOT!

From the Wall Street Journal: ROOMS WITH A BUBBLE VIEW By MICHAEL CORKERY, SARA LIN and RUTH SIMON

April 5, 2008; Page B1

For many investors, the condo hotel may go down as the Pets.com of the real-estate bubble.

Many buyers purchased the hotel rooms from developers hoping to get paid every time the room was rented. But condo hotels, which account for as much as 10% of all hotel rooms under construction and a much greater percentage in resort markets such as Orlando, Fla., and Las Vegas, are coming back to haunt many of the people who bought the units, the developers that constructed the buildings, and the operators hired to run the hotels.

Continued

Called to TS attention by BloodhoundBlog