US taxes are pretty much the same basic idea as Canadian taxes - follow the instructions, copy line 666, etc. -, except the Canadian forms are more colourful. Shockingly, for a single man like myself, the federal tax rate is similar to what I'd pay in Canada - for example, for a straight-up 100k, a tax bracket of 26% in Canada vs a bracket of 28% in the US (Washington lacks state income tax, unlike B.C., but that's another story). So much for Canada's excessive taxation!
The American taxes are arguably a bit more complicated - they have the same type of rules, just more of them.
In any rate, this year, I downloaded Intuit TurboTax Premier, using a nice 25% discount provided by Fidelity. A few people asked why I would download a product as opposed to doing it online, potentially even for free. Well, in summary:
- I can do as many returns as I want this year. It's at very least two-for-one: Amber will get the freebie. Since it included a free state too, I can even add her California taxes (since Washington has no state income tax).
- Reliable stop-restart-save. No worrying about my session timing out, or using the back button on accident, etc. Any time I'm worried, I can save the file, copy it to 100 backup locations, etc.
- Control. I don't have to trust as many people with my data.
- Import data next year for whatever application I choose to use (any application worth buying can import from TurboTax).
While the software definitely has some quirks and even outright bugs (sometimes I had to delete entire sections to get it to 'forget' old numbers I had made mistakes on), it feels like a solid application. It's designed in a linear "interview" format, while seamlessly allowing you to move back and forth if you need to change something. Also, at any time, you can look at the raw tax forms that result from the answers you give, and edit them to your satisfaction. If you have a truly unbelievable tax scenario, you can look up tax forms by number and edit them manually (they won't interview you, but you have the interactive form with all the calculations done for you).
It was looking pretty grim at first - capital gains, some disallowed capital losses (the dreaded wash sale), and not even enough mortgage interest to break past the standard deduction. Thankfully TurboTax revealed that the hefty premium ("points") I paid to Golf Savings Bank to secure my loan was fully deductible. Thus, I now have a small but pleasant refund coming back.
While my taxes will be largely the same next year as they are this year, I still think I'll buy next year's version. Unless I get audited this year; in which case there will be lots of ranting... and yelling.
[[While tax software may seem irrelevant in a world where accountants are cheap, I am dubious of any accountant I can personally afford. Our expensive KPMG accountants last year did a passable job , but I had to fill half of everything in ahead of time on their website anyways (which was far less informative than TurboTax was to me this year). And after all that, I still got slaughtered on my taxes based on a technicality (arriving on Jan 2 instead of Jan 1 means you don't get the standard deduction). And let me tell you, I know how much KPMG costs, and I can't afford anything like that. The last accountant I had before that, a BB&A Inc in Vancouver, simply farmed my taxes out to an intern who actually told the Canadian government that I worked sixteen months in the past year, while simultaneously going to school. Such a feat would be impressive if it were possible - needless to say, the Canadian government was not amused with the assertion.
So unless twelve of my closest friends can vouch that their accountant rescued their Mothers from a raging fire, I remain dubious of the cost-to-benefit ratio of the professionals in this field. Hence, software wins.]]