Taxes

I have been doing our taxes by hand for several years. Our federal income taxes are fairly straightforward. Aside from itemizing deductions, we are pretty textbook: normal jobs, own one house, typical investments. However, I am surprised that we always seem to owe money especially when we give away 10% of our income to a non-profit. In a way I guess it is a blessing to make enough to be in a position to owe money. Also, we own a lot less house than we could technically afford, so I'm sure the smaller property taxes and mortgage interest are a big part of why others who make similar money seem to always get a refund. That and the fact that when it comes to taxes children are little cash cows!

This year I took the plunge and purchased TurboTax Deluxe software to see if perhaps I was missing something. It turned out to be worth the $30 investment. Using TurboTax I reduced the amount we owed by $733. I had missed a reduction in income from stock losses (one company we had invested in went belly up so the stock was worthless) and a deduction from the sales tax we paid when we bought a car with cash last year.

For previous years, I doubt the software would have been worthwhile. This year it paid off. Overall, I would say that it is worth the money to buy tax software if you feel like you might be overpaying. Worst case, you are only out $30 (less if you choose TaxAct or H&R Block software).

Even without the financial benefit, it was nice to not have to read through the 1040 instructions and fill out the bizarre forms to calculate things like what amount of tuition I could deduct. Those forms are maddening (multiply by a percentage, subtract row 3 from 5, take the lesser of row 6 and 7, if row 4b is more than $80,000 use form X, and so on)!