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General Category => General Discussion => Topic started by: bpreynolds on February 04, 2015, 10:33:22 AM
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Last year for a number of complicated property issues involving inheritance and that sorta thing, I hired someone for the first time to file our taxes. It was worth it, not so much for the return but just to make sure all was done per spec. This year we sold a home and bought another one so I am again wondering if maybe I should hire someone just make sure everything gets dotted and crossed. Or maybe not. I can't seem to find the tax documents my accountant submitted last year and I need them to file this year, of course. Anyhow, what do you guys do? File your own or not?
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Ha ha, did you see my post in the Cali thread.
Yeah, we pay... have ever since the business partnership K1 started to really complicate matters.
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I think under current tax laws, the first $250k captial gain from a house sale is exempt.
having sold several houses over the years, you just have to consider the sales price of the house minus your original costs and capital improvements in the house for the capital gain. Then you don't pay taxes on it if you buy a more expensive house or the gain is less than $250k. (I haven't sold a house in 20 years, but it works something like that. The hardest part is figuring the basis which only you can do in the first place since you know how to compile those figures.)
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I had someone do my taxes for a number of years even though my return was only moderately complicated. The owner of my company, who has a very complex return (owns a company, has rental properties, etc.) started using Turbo Tax a few years ago and said it was very simple. Since he is a computer luddite, I figured I ought to be able to do it also and started last year.
For the first time, it was pretty tedious, but I feel like it was done correctly and will continue to do it till I see some reason not to. I have business expenses, get a K1 and a 10-99 in addition to W-2, have mortgage interest, etc. so it's not a simple return but not terribly complicated either.
Having said that, statistics show that people that have their return done by pros get audited less and it is nice to have someone to turn to if you do run into an issue with the IRS. At the end of the day, you just have to decide how much that is worth to you.
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Oh yeah, we bought and sold last year too...
...I'm waiting to ask my accountant if any of that is deductible.
Like I know property taxes are deductible on the fed return, how about deed transfer taxes?
Are there any other settlement costs that might be deductible?
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Ha ha, did you see my post in the Cali thread.
Yeah, we pay... have ever since the business partnership K1 started to really complicate matters.
;-T I did and it reminded me that I need to either get on the stick with ours or get on the horn with the accountant. I could never manage anything complicated tax wise by myself like last year - let alone what it sounds like you guys must manage - so I felt fine with hiring one last year. This year, dunno. Still trying to decide. I used to use Taxslayer all the time and it was handy if not a little tempting/testy; it keeps a little tab/total in the upper corner as to your refund or payment as you work through the process.
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Tax law is so complicated that even my friend Jimmy, who is an accountant, hires it done. Needless to say, we do, too.. although Dorcia does most of the grunt work after our yearly tax meeting in December. She's just finishing up, and mumbling something about not being able to do this much longer..
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Tax law is so complicated that even my friend Jimmy, who is an accountant, hires it done. Needless to say, we do, too.. although Dorcia does most of the grunt work after our yearly tax meeting in December. She's just finishing up, and mumbling something about not being able to do this much longer..
I did my own taxes on paper up through 2008. Although my affairs aren't all that involved, I do have a few foreign investments, pay some foreign tax, have "qualified" and "non-qualified" dividends, capital losses and gains from stock purchases and sales, contributions to HSAs and IRAs, and stuff like that. A W-2, a pension statement, and a dozen 1099 forms. I was hanging in there, but it got to be where I could never get both the State and Federal returns exactly right, and I'd get letters, and have to re-file, etc. Big pain in the rear.
In 2009, I gritted my teeth, quashed my luddite tendencies, and started using TurboTax. Although I HATE HATE HATE paying $90 a year for the privilege, it is really well worth it. It steps you through the whole deal, all your credits, income, deductions, asks pertinent questions, reminds you of credits and deductions you might not know about ... and I haven't had any of the 10 state/federal returns I've filed since then questioned or returned. AND takes about 1/3 of the time of doing it on paper. Couple of hours and I'm done .... So I highly recommend it.
On the other hand, if your world is more complicated than that, calling in a pro is probably a good idea ....
Lannis
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Turbo tax! Holds your hand all the way, it gets better every year. The fee is deductible Lannis
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Over the years I generally did my own taxes. Later on when I had a contracting business an accountant friend did them for a few years.Then I did them my self using Turbo Tax for then on..
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I'm a believer in turbo tax also, and my tax situation is ..uh..complicated!
mike
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My rule of thumb is:
If TurboTax shows that I get a big refund, then I stick with TurboTax.
If TurboTax shows that I owe a lot, then I call my accountant and have him do my taxes.
:BEER:
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I'm a believer in turbo tax also, and my tax situation is ..uh..complicated!
mike
;-T
Dean
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On the other hand, if your world is more complicated than that, calling in a pro is probably a good idea ....
Yeah, it is.
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I think under current tax laws, the first $250k captial gain from a house sale is exempt.
That isn't true anymore. All gains from the sale of a primary residence are exempt from all capital gains taxes. You are confusing it with a new ACA law that adds a different tax (and much smaller than the capital gains tax) on home sales with a PROFIT of $250K or more for people making above a certain amount (ie, rich people selling big houses for big profit). I doubt many of us here have sold a house and PROFITed more than $250K. If you have, you are good investor or have struck oil on your property.
health.burgess.house.gov/uploadedfiles/one_page_on_unearned_medicare_tax.pdf (http://health.burgess.house.gov/uploadedfiles/one_page_on_unearned_medicare_tax.pdf)
I also have a K-1 from a LLC with my sister. We have an accountant to do the business returns and give us K-1s. TurboTax handles that K-1 just fine for our personal return.
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The wife and I drop all our tax stuff off to a local tax service. It's a one lady show and the prices are inexpensive enough that I'm fooling it.
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I use turbo tax. I was paying more to the accountants than I was saving by using them. For $99 TT saves my last year's stuff and gives me a start point for the current return. As others said, they do a LOT of handholding and warm/fuzzy rechecking and 'final answer' stuff that can be annoying until you realize that wisdom tooth reduction tax credit doesn't apply to a toothless person no matter how many times they recheck your status for you.
Other things that are good about TT are that they give you a sense of your audit risk at the end of the process. They also run you through your state process if your state has one. They also know what forms and schedules you need to use based on the questions they ask, and you have the option of either electronically filing or having the paper printed and send it in the old fashioned way*. Finally, it's a non-linear process. You can work on your slumlord numbers in the morning, spend lunch with your dependents, and return to your rentals in the PM.
* Be really careful on the fees and refund choices. That's where TT is making the money on the 'free' personal returns. Some of the 'conveniences' they offer for payment and refund delivery can cost a snotload of money. My guess is that this is true for any of these kinds of companies.
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I've used Turbo tax deluxe over the years and have been very happy with it. This year I found I need to upgrade to the next level to get some of the features I had and need. Also computer system requirements have changed. Some of the reviews on Amazon tell the story better than I can. Going to try the H&R this time.
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I used H&R until I did tech support for the local office. It's a "company store" operation that's more like a Tupperware business model than what you'd expect in that they require the local office to purchase all materials and equipment from them, usually at ridiculously inflated prices for obsolete computers and such. They keep their claims of minimal audits true by being extremely conservative with your return. Also, if you do have a problem, H&R goes to bat for 'you' by explaining to the IRS how they prepare taxes. They in effect defend themselves as the preparer, not you as the taxpayer.
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rodekyll, thanks for the heads up. I meant their software. Know a couple of the locals that actually work there. Not the sharpest knives in the drawer.
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I'v used Turbo for years. Tried H & R Block 3-4 years back because it was cheaper, but the interface was not nearly as slick, went back to Turbo the next year.
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That isn't true anymore. All gains from the sale of a primary residence are exempt from all capital gains taxes. You are confusing it with a new ACA law that adds a different tax (and much smaller than the capital gains tax) on home sales with a PROFIT of $250K or more for people making above a certain amount (ie, rich people selling big houses for big profit). I doubt many of us here have sold a house and PROFITed more than $250K. If you have, you are good investor or have struck oil on your property.
health.burgess.house.gov/uploadedfiles/one_page_on_unearned_medicare_tax.pdf (http://health.burgess.house.gov/uploadedfiles/one_page_on_unearned_medicare_tax.pdf)
I also have a K-1 from a LLC with my sister. We have an accountant to do the business returns and give us K-1s. TurboTax handles that K-1 just fine for our personal return.
Profit = Capital Gain (same thang)
"When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes."
Read more: http://www.bankrate.com/finance/money-guides/home-sale-capital-gains-1.aspx#ixzz3QotoeGLF
Follow us: @Bankrate on Twitter | Bankrate on Facebook
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rodekyll, thanks for the heads up. I meant their software. Know a couple of the locals that actually work there. Not the sharpest knives in the drawer.
I have no experience with their software. I agree about their people.
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LowRyter has repaired a misconception re capital gains tax exclusion on the sale of a principal residence, having stated that it is $250K for a single homeowner, $500K for a couple. Note: The term primary residence carries certain IRS code requirements that must be met. The residence must be your homesteaded property (if your state has this deduction from property taxes, as many, including California, do). You must vote from that residence. Your drivers license must indicate that address. Your IRS forms 1040 should have that address, too. The period of principal residence to qualify a property for the exemption is "24 of the 60 months prior to sale". When I sold my first house qualifying for this exemption, I had, as I do now, two homes. To prove the 24 months of residence, I saved my credit card receipts for more than that many months. These showed purchases all made in the immediate area of the home claimed as a "principal residence.
Next year, I plan to do the same tax exempt sale and am already assembling the data to support the legitimacy of our principal residence, tax exempt claim. The IRS may or may not chose to contest the validity of your principal residence claim. Careful documentation, with iron clad records, is the key to a "clean audit". Been there, done that.
Brian; don't be so cheap. Pay a professional. Or, at least get Turbo Tax. Anyone who admits to drilling the wrong idle jet plugs on a Triumph T'Bird is not to be trusted with complex regulations. Just sayin'.
Ralph
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Brian; don't be so cheap. Pay a professional. Or, at least get Turbo Tax. Anyone who admits to drilling the wrong idle jet plugs on a Triumph T'Bird is not to be trusted with complex regulations. Just sayin'.
Ralph
Mr. Kentucky acknowledges your point and may leave tax filing to the tax men. That way I can get back to work on the T-Bird. Btw, the floats, they go outside the carb, right?
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LowRyter has repaired a misconception re capital gains tax exclusion on the sale of a principal residence, having stated that it is $250K for a single homeowner, $500K for a couple. Note: The term primary residence carries certain IRS code requirements that must be met. The residence must be your homesteaded property (if your state has this deduction from property taxes, as many, including California, do). You must vote from that residence. Your drivers license must indicate that address. Your IRS forms 1040 should have that address, too. The period of principal residence to qualify a property for the exemption is "24 of the 60 months prior to sale". When I sold my first house qualifying for this exemption, I had, as I do now, two homes. To prove the 24 months of residence, I saved my credit card receipts for more than that many months. These showed purchases all made in the immediate area of the home claimed as a "principal residence.
Next year, I plan to do the same tax exempt sale and am already assembling the data to support the legitimacy of our principal residence, tax exempt claim. The IRS may or may not chose to contest the validity of your principal residence claim. Careful documentation, with iron clad records, is the key to a "clean audit". Been there, done that.
Brian; don't be so cheap. Pay a professional. Or, at least get Turbo Tax. Anyone who admits to drilling the wrong idle jet plugs on a Triumph T'Bird is not to be trusted with complex regulations. Just sayin'.
Ralph
I guess to bottom line this (my original point), if you made less than $250k profit on sale of your house, you don't have to worry about it affecting your taxes.
BTW- I use H&R Block Tax Cut. Only because I want the program to "read" last year's taxes, so I don't have to fill out all the paperwork again. It just picks up my bank, investment, charities and I just edit. For some reason Turbo Tax won't do it unless you used Turbo Tax the previous year. I find that this is the most time consuming part of doing taxes.
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Interesting - I used turbo tax for years, did it myself the past few and have just completed a dry run using the irs fill it in forms . All we have a 3 1099-R from retirements, 1099-SSA for my mini SS payment, and 2 1099-R for some tax sheltered annuities (they got me on these, we had them hold some pre-tax money out of my wife's pay so we could take possession of it when we are retired and making less money-theoretically less tax, yeah well harummph). After all the skullduggery and crap, it comes out tax is about 10% of income...couldn't we simply tithe on it all and call it a day? ;D ps..used to have K-1 partnership, sales of stocks etc and boy did it fatten up the files.
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Once you have all the receipts and what not added up, you have done the most tedious part of the job. Plugging in the numbers is easy, why pay some joker to do that? Used to use Turbo Tax, switched to H & R Block a few years ago, works great for my one man electrical contracting business.
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We use TurboTax as well. Works great, even with our home business.
Like above, once you have all the receipts sorted out it's pretty simple.
If you have a lot of investments and such that are not clear cut, then I'd hire someone (like my brother :) )
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I have used the same crazy accountant for 25 years. I had a problem with the IRS, which started about 10 years ago and it was a nightmare, he dealt with them as I refuse to talk to an IRS agent. In the end the IRS admitted fault but for some reason I have not been compensated for all the money I paid the accountant to deal with their mistake.
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OP here. I started off today using the Turbo Tax online filing, using their upgraded $35 option (TT is offering a completely free option as well). Boy, was I disappointed. It was going great and I was finding the site a bit easier to use overall and friendlier than the Taxslayer I had used in previous years. All this came to a grinding halt, however, when an hour into the process it asked if I had sold a home in the last year - no questions about profit or anything. I selected yes and then it stopped my entire filing process and said that if I sold a home, any home for any price in the last year, that I would be required to upgrade even further to the $50 plus module. Of course, I knew I could totally just lie and skip reporting since we didn't earn anything close to the 250k required for taxable profit; however, this annoyed me a bit and I just stopped, went back to Taxslayer and filed my return no problem for an updgraded $35 bucks. It even asked me if I had sold a home or not and didn't request any further money or upgrade to file.
Anyhow, aside from this it took me several hours to still get through it but I think it was worth it as I went back over everything 3 times to make sure we were all good. Ours was somewhat straightforward though many things like mortgage interest, property taxes, and all that jazz I had to enter. If we had kids or a business too, I would certainly have to hire someone.
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I'm glad you found the program that works for you, and goodonya for getting your taxes done so early!
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good going BP. Glad it worked out.
;-T
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Thank you guys. I was ready just to plunk down my $400 at my accountant's office until I posted this thread here and read the responses; convinced me to at least put away the time and patience to attempt them. Nothing wrong with hiring an accountant and many folks should, but in our case I'm really glad I did it myself again this year. By the same token, glad I paid someone last year when our taxes were greatly more complicated.