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Tuesday, March 04, 2008

Review: Turbo Tax Premier Federal + State 2007

Before anyone else jumps in with the comment, let me say that I know that Turbo Tax Premier is not necessary if all you have is simple stock sales and so forth. So you can save a few bucks there by buying Turbo Tax Deluxe instead.

I do taxes for myself, my mom, and Lisa. This year, my mom ended up running a home business, and that was too much pain for me to deal with, so I outsourced that to my aunt and Turbo Tax Business.

At this point, I'm quite a bit of a Turbo Tax power user. I no longer use step by step interviews, but for each form, simply jump directly to the section of turbo tax, fill out the form, and get it done. Unlike previous years, this year's turbo tax actually has useful download features --- downloading the W2 has always been painful, but 1099-DIVs and 1099-INTs were always fraught with danger. This year, the 1099-DIVs and 1099-INTs downloaded without a hitch (I checked them manually). 1099-Bs, however are still broken --- too often, the long names get truncated, and you're stuck scratching your head wondering what the heck it is that supposedly got bought and sold.

This year, I decided to try the TaxResources Inc. professional review. I've always bought tax audit protection, mostly so I could sleep easy knowing that I had someone to back me up with regards with IRS dealings. Having had exceptionally good experience with TaxResources through that service, I decided to try their professional review. Note that this review only reviews the resulting 1040 et al, but since I had 2210 filing this year, I decided to have them take a look as well. Note that this review will not catch any of the following:

  • Transcription errors (it does not solve the garbage-in, garbage-out problem)
  • Errors of omission (if you leave out an entire 1099, for instance, they're not going to tell you you forgot it)
  • State taxes. They only do federal taxes.

I submitted my tax forms for a review on Sunday night, and got the review back on Monday afternoon. The review is simply a PDF document, telling you what they've assessed as to your problems are. One thing they caught was that I had taken a short cut while inputting the cost basis for one of my mutual funds, and had forgotten to go back and correct it --- that saved me about $100 in both state and federal taxes, so from that point of view, the professional review paid for itself. (I probably would have caught it anyway eventually, but the reminder was good) In any case, I learned once again that reinvesting dividends is an extremely bad idea, and the increased complexity in accounting and hunting down every reinvestment outweighs any benefits you might gain from keeping your money invested all the time.

Beyond that, it gave me a list of things to watch out for (like a paid off house has property taxes, but no mortgage interest --- that's apparently a flag for auditors, since apparently Americans never pay off their homes). The review reminded me of several things, such as potentially trying to take advantage of the rollover IRA rule in 2010, and so forth. All stuff I knew, but useful if you don't spend as much time dealing with taxes as I do. For $40, it's certainly not going to break the bank, but then again, I got my copy of Turbo Tax through an Intuit employee, so you might feel different if you've already paid full price for your copy of Turbo Tax. What annoys me is that if you want another review after you've made your corrections, you have to pay $40 again. One would think that since the review looks like a generated form, they'd at least give you one revision's worth of checking.

The big bug I found this year so far in Turbo Tax is in the state portion for California, where 1099-B sales were incorrectly imported from the federal return. For some reason one of my 1099-Bs got duplicated, and I had to fix that by hand. This is unusually bad, but fortunately, I have plenty of time to run more updates before I file. This is actually one of the reasons to wait a bit before filing, especially if you owe. Fortunately, I caught this bug, but I wonder how many others are lurking.

All in all, I'm glad I'm not doing this by hand, but I'm disappointed by the bugs I've found so far this year. As for the professional review, I feel that it didn't add anything I didn't already know, but the fact that they caught something that saved me more than the $40 I paid does indicate that it's a useful service. Recommended, but watch out for the bugs, and update your copy or Turbo Tax frequently!


Eric said...

Looks like the audit protection has increased in price just a bit since your rave it still worth it?

Piaw Na said...

Yes, but I've been getting audited every year since 2005, so of course they could probably raise the price a bit more and it'd still be worth it for me.

Amy said...

My 1099-DIVs and -INTs were not downloaded so smoothly - it lumped several things which should not have been, and I'm still not sure if it recorded the wash sale properly. I'll probably use some service to have somebody review what I'm going to file, since I have a few other things I'm not sure about as well - i.e., rental income and expenses for renting out 2/3 of my house for part of the year... one would think such things wouldn't be so rare - TurboTax coverage of it is sparse and leaves a lot of things for you to figure on your own.

rach3 said...

tx for thorough review. does DELUXE import transactions from brokers (FIDELITY) as PREMIERE does? and will it handle short sales?

kind tx.

- rach3

Unknown said...

I don't have a copy of the Deluxe product so I don't know. Sorry I can't help you there.

steffi said...

I've got Deluxe and it doesn't show any way to denote wash sales. Can it does this and if it can't can Premier do this?

Ray Jackson said...

TaxResources is a complete joke! I purchased the audit protection and they offered no support at all. Their words to me were. "We DO NOT assist in preparing you for the meeting. We only go to the meetings on your behalf." "Also, we offer no advice prior to the meetings either!" Can you believe it? How the heck is that considered an audit defense? Their enrolled agents are so rude and inconsiderate!

Fortunately, I ended up hiring a former IRS agent to represent me. He provided MUCH better service and explained to me exactly what he needed to do his job. He also explained what areas the IRS were interested in and what I needed to do to prepare. I took that information to my CPA and we all three worked it out. This collaboration is the exact opposite of dealing with tax resources.

TaxResources job is simple: since everyone prepays, their goal is to get you out the door with as little effort as possible. Is that what you want when you are being audited by the IRS?

Their defense kit is a farce! You are MUCH, MUCH, better off hiring a CPA to assist with the receipts and pre-audit prep and afterward hiring an enrolled agent to represent you. You see, when you prepay, you get who you get. However, if you shop around, you get to pick the person representing you.

Being audited is stressful. When going through it you need someone on your side who is there to guide and assist you. Save your money. Don't deal with TaxResources.

Pagenotfound said...

I had an EXTREMELY bad experience with Tax Resources. I would have been fine if I'd just wasted the money. But, in fact, they were so underequipped to handle an audit that they led to a huge amount of confusion with the IRS auditor. In the end, I had to hire my own accountant to not only handle the audit, but also clean up the mess Tax Resources had made. My opinion is Tax Resources is fine as long as you don't get audited!