It’s that time of year when Americans thoughts turn away from football and onto perhaps one of their least favorite diversions – income tax. I used to do my taxes completely by hand. However, for the past several years I have purchased Turbo Tax Deluxe to assist with filling out my taxes. I have been generally happy with Turbo Tax over the years, except for the hefty fees (typically around $20) to e-file. Before I opened the box I had a good feeling about Turbo Tax this year – they are now offering free federal e-file on up to 5 returns!
Here’s my experiences and observations this year, broken down by the Federal and State returns (thankfully I did not have to file any city returns this year)
- Saved me some time by importing everything from last year’s return – dependent information, address, income tax paid last year, etc.
- Guided me through all of the different sections of my return with fairly easy to answer questions.
- Did not provide a good way for me to calculate “Cost Basis” for some stock that I had sold in 2008. I wasn’t expecting anything much here, but some more explanation on how to calculate “Cost Basis” would have been helpful. I ended up using the web to determine how to do it, and a spreadsheet to calculate it.
- Its Deductible has moved online, but is free, even for people who are not using TurboTax. This tool is a huge help for determining the value of donated goods and I reccomend it to anyone no matter what tax program you are using (including the “pencil and paper” program).
- Overall I was pleased with the federal form. It took me about 3 hours to fill out & e-file (for free!) my 1040, including itemizing, spending a half hour figuring out my “Cost Basis”, and entering a few pages of chairitable good donations I had made over the year.
- The state form is always fairly lightweight because most of the information is a carry-over from the federal form, except for some state specific deductions (like 529 accounts, food bank donations, property tax credit etc)
- I was not that happy with the way TurboTax handled the state form. There were errors, omissions and surprises:
- Error: It asked me to enter the total amount of medical premiums I paid in 2008. So, I pulled out my pay stubs and entered the amount I paid in 2008. Then a red flag went up in my mind, and I thought that they certainly would not really want to know my pre-tax premiums. So I pulled up the 1040 instructions from my state’s website. Sure enough, pre-tax premiums don’t count, but auto insurance primary medical premiums do count. TurboTax did not offer any help here because not only did it ask an ambiguous question, it also didn’t have any pop-up help available to tell me what I looked up in the state’s 1040 instruction book.
- Omission: Even though I had put my direct deposit information into my federal form, it did not carry to the state form. I didn’t even find a place in “forms mode” where I could enter that information into TurboTax so that it would print on the state form. So, I am going to be getting a check in the mail instead of it going into my account. I really wanted to direct deposit (saves the state and I hassle), but TurboTax didn’t want to assist me with that.
- Surprise: It still costs $19.95 to e-file my state form. Was I going to pay this? No way!
- It took me about 1 hour to fill out the state form. It would have taken less if I didn’t have to work around the problems I described above.
- Overall I was very disappointed by the state form. I think I could have done better (though it may have taken me slightly longer) to fill the state form out by hand.
I have used TurboTax for several years now and this year had some real good things (federal worked great & e-file was “free”), but I was very disappointed with the quality of the state portion of TurboTax. If you haven’t decided how you are going to file your taxes yet, I would still consider using TurboTax, because other than the problems with my state form, it is a very good application. However, next year I think I will strongly consider going back to paper & pencil, at least for the state form.