Monday, April 16, 2012

The Obligatory Taxes Post

The IRS, going all green and paperless, is trying to encourage us to "e-file." Indeed, the IRS website claims that there is a free e-filing option for everyone.  This is true, but the fine print says: 

Free File companies have their own eligibility criteria, but none offer Free File to taxpayers with an Adjusted Gross Income of more than $57,000.

If you make more than that, but want to file online for free, you are stuck with "free fileable forms," which are, the IRS cautions, "designed for people who are comfortable preparing their own tax returns."  

If you are planning to pay to e-file, the IRS's instructions for you can be paraphrased thus:

  1. Procure tax-preparing software.
  2. Use tax-preparing software.

Last year I tried free fileable forms, and after about forty-five minutes, burst into tears and called my brother, whose advice was that Italians and Greeks make the best tax-preparers and that I must find a Greek accountant forthwith.  Charlottesville is about as ethnically diverse as a bowl of cottage cheese, so I settled for a kindly southern gentleman, who did an excellent job, but charged considerably more than the $75 my brother pays, so this year I toughed out the free fileable forms.

The biggest problem with these forms is that you are only allowed to view one of them at a time.  You start schedule A, and must enter a number from a line on the 1040 form.  But wait, you can't see it.  You have to completely close schedule A, bring the 1040 up again, jot down the number you need, close the 1040, bring up schedule A again, and so it goes.  Filling out schedule A isn't even all that bad.  It's when you get to the forms about child tax credit and the college tuition tax credits, with their multiple side worksheets and references to numerous other forms that you feel an overwhelming desire to set your hair on fire and run around in circles. Naturally, you can't view the instructions and the forms at the same time.

It would be so much better if, before you started the free fileable 1040, you could designate that you plan to itemize your deductions and also list credits you plan to take so that the appropriate forms could be queued up, and as you fill out the 1040, the appropriately shared lines on all the forms are filled out simultaneously.  I work with software, so I know this is possible.  Did I just describe Turbo Tax?  If the IRS wants to hire me to design a user-friendly free fileable form, they know where to find me.

Breaking news:  This morning I got an email from the IRS, saying that my e-file has been rejected, for various minor errors.  Below is a direct quote from the email.

0522 - The date of birth you entered on this return does not match what the IRS has in its files for you. The IRS receives this information from the Social Security Administration (SSA).Exceptions, when the Primary Date of Birth is not required in the Authentication Record of the Online Return: (1) Primary Date of Birth is not required when the Primary Date of Death on Form 1040 or 1040A or 1040EZ is significant AND the filing status is MFJ. (2) When the filing status is MFJ, and the Special Processing Literal of the Tax Return equals "DESERT STORM", "HAITI", FORMER YUGOSLAVIA", "UN OPERATION", "JOINT GUARD", "NORTHERN WATCH", OPERATION FORCE", NORTHERN FORGE", "ENDURING FREEDOM", "COMBAT ZONE", or "COMBAT ZONE YYYYMMDD", IRAQI FREEDOM", or "KOSOVO OPERATION".
Ok, so I transposed mine and Jon's birth dates, but what the F is all this shit about DESERT STORM?  The email also says that my children's social security numbers are not valid.  I double checked and I have entered the exact same SS numbers I have been using for all our previous returns.  What. Ever.  I fixed the birth date error and refiled.  If it's rejected again, I'll just mail paper copies of the forms.

Two years ago when I wrote about our tax system, I compared the US government to a clumsy bear in an apron.  I'm not feeling a jolly bear vibe from the feds this year.  Instead, I'm feeling a pissed-off rabbit.

This rabbit* wants to know if you've finished your tax return.

This rabbit wants to remind you that the tax deadline this year is April 17.

This rabbit suspects your re-filed e-file will be rejected again.

*The above rabbit is George, our dear bunny who died, right around tax time in 2010.  

Informal poll for American readers:  Do you file your tax return yourself?  Do you use the free fileable forms or do you use paper, or some sort of tax-preparing software?


  1. When I was married and doing business taxes I used TurboTax. Now that I'm single and filing very simple taxes I use the free online TurboTax version. I never e-file because I am paranoid about identity theft, even though I give out my credit card number to every online retailer out there.

  2. I have been a devoted Turbo Tax user for over 10 years now. The first year I used them, I was skeptical - I didn't want to pay to do my taxes, which were relatively simple at the time (they are very not-at-all simple these days). So that first time, I did them by hand. And then I entered the info into Turbo Tax (they don't charge you unless you actually tell them to file the forms - just putting all the details in is free). Turbo Tax calculated I was owed $300 more in refund than I had figured by hand. The cost of filing through the software (for my simple return, at that time) was about $40. Worth it! I've never looked back. Following IRS instructions is about as easy as following a recipe written in German, and Turbo Tax mostly asks you normal, plain-English questions and then plugs it all into the right spots on the form for you. Our taxes are complex enough these days that it costs me about $80 (with the discount we get through our bank), but I promise that the 4 hours it took me to fill in all the forms this year was at least half of what it would have taken me to do it all myself. I've never had a return rejected since then, and (knock on wood) I've never been audited (though you can purchase audit protection through TT also if you want - if you do and you're audited, one of their people will handle your whole audit so you never have to deal with it).

  3. I am one of the luckiest slobs out there--my good friend is a tax professional who has done my taxes for FREE for years (including re-filing for some years where a well-paid CPA left plenty of my money on the IRS's table). But I hear plenty of good things about Turbo-Tax. Because of being unemployed this year--and not having enough withheld--I owed for the first time; but Larry chipped away at it until it wasn't too painful. Everyone needs a Larry! He's a gem. (Desert Storm? For real?)

  4. I've been using Turbo Tax since our taxes got complex --baby and house was too complex for me. I'm willing to pay to e-file, since my return is always pretty good and it is SO simple to use. And I do our taxes in Feb, when we get out W-2s.

  5. I too benefit from the friendship of a tax professional who does ours for free. In exchange, we take her four kids so she & her husband can have a date night.

  6. I am convinced that whatever we pay our accountant is not enough. Loathsome task.

  7. Oh my goodness, I had no idea life in the USofA was so complex.
    Our IRD introduced free online tax returns 4 years ago, and it's very popular, but our tax system is much more simple than yours.

    It took me 12 minutes to file ours, and we gota $2800 rebate transferred straight into our bank account within 10 days.

    BTW,seeing you're having problems in checking and cross-referring back and forth, a solution might be a wee program called Greenshot (freeware )
    It can take selected snapshots of whichever part of the form is on your secreen and will save it for future reference. It can even allow you to annotate the image giving you the opportunity to add reminders or notes)

    Hopeit goes through this time, without invoking Deseet Storm et al.

    PS George was really cute.

  8. I'm also a TurboTax user. I dislike paying the annual fee, but both federal & state e-filing are included in the price. The big deal for me is that TurboTax remembers stuff, like social security numbers, and brings up last year's info into this year's return. This greatly reduces the probability of typos.

    I'm a tax preparer in the VITA program and use professional level tax prep software. I could do my taxes through the program, but choose to buy my own software so that I fully "own" my tax data. My husband is self-employed for part of his income, so access to records is important for me. TurboTax does a good job when compared to TaxWise, the pro software. I suspect that all tax prep software programs (like all accounting software) are very, very similar.

    I love the IRS fill-in forms for that odd form that I need but they are not designed to link to each other. It's so onerous to me to reenter the same data every year (addresses, ss numbers, birthdates & the like), I'll pay TurboTax every year and skip the data entry.

  9. I use TaxActOnline. I don't have to buy any software, and I pay 18 dollars to file both state and federal. Sounds worth it to me, compared to what you are putting yourself through...

    Also, you can use TaxActOnline free and then print out your forms and mail them in yourself. I really like the program, too. Easy to use...

  10. Test comment. :)