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January 2012

TurboTax is one of the most well-known online tax filing softwares, and with good reason. It’s a full-featured option that takes you through your taxes step by step. Though it’s more expensive than other options on the market, it can be a good investment for those who have never DIY filed before, or those with a more complicated tax situation.

 

Every year, the companies that provide tax e-filing services like TurboTax and H&R Block tweak their products, not only for the latest tax laws, but to improve features, making the process of tax filing easier. I took a look at TurboTax to see what changes the newest edition has to offer.

The first thing I noticed with TurboTax is the wide variety of products they have available. This year, TurboTax is offering four options. It starts with the Federal Free Edition, which will let you file a 1040EZ or 1040A for free. The most expensive option, Self-Employed, offers many more forms for filing but costs $89.99. Most tax filers will find their needs fit somewhere in between the two.

One excellent feature of TurboTax is that you can start off your filing as a free filer. The software will guide you through your tax situation. And if you encounter forms you need but that aren’t included in your edition, you can always upgrade. You never pay until the very end of the process, either way.

So what can you expect from each edition of TurboTax? This helpful chart breaks down all the details. But essentially, you can only file the most basic forms with the free edition. With Deluxe, which costs $34.99, you can file many more deductions and credits. In fact, Deluxe gives you access to most of the credits and deductions individuals claim, including deductions for dependent care, educational expenses, and your mortgage.

If you have rental property or significant investments, the Premier version may be what you need. It costs $54.99, and gives you access to additional profit or loss forms. The Self-Employed version will work well for contractors, freelancers, and solopreneurs. It costs $89.99.

Keep in mind that each of the paid versions requires an additional fee of $36.99 per state to file your state taxes. That could add up quickly if you need to file taxes in more than one state! But TurboTax automatically transfers your federal tax information over to your state taxes, making the filing process a breeze.

What the process looks like

So what does the process of filing your taxes with TurboTax actually look like? It depends on what type of experience you prefer. You can have the software walk you through every potential type of income, credit, and deduction. It’ll just ask you all sorts of questions, and then move through the forms based on your answers.

If you’re already comfortable with filing your own taxes, though, you can tell the software what you want to work on. This can save you time. But be careful here: you don’t want to overlook any potential deductions that you didn’t know about! TurboTax is always up-to-date on the latest tax laws, so you may be eligible for credits or deductions you haven’t considered.

TurboTax’s sleek interface and easy-to-use question-and-answer system is what sets it apart from some of the less-expensive tax preparation software options. You can even automatically pull your information from last year’s taxes, and can import W-2 information from certain companies.

Here’s what the TurboTax interface looks like:

TurboTa

When you click into one of the top tabs, the software will give you an option: go through everything step by step, or choose what you work on.

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If you decide to choose what you’ll work on, you can click into individual options on your own. If you have the software guide you through all the sections, you’ll go through more Q and A. Your answers will determine where the software takes you next.

Here’s what the section for business income and expenses looks like:

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In each section, you can choose whether you’ll go through that entire section, or just work on parts. For instance, under the Farm and Income Expenses section, you can work through the whole section, or just do Farm Rental Income and Expenses.

 

The whole process works just like this. If you choose to let the software guide you, you’ll first work through personal information, then business income and expenses. Then, it’ll take you through personal income and expenses, and, finally (the good part!) deductions you can take.

Besides being an easy-to-use software, though, TurboTax comes with a variety of other features, including:

  • Self-Employed ExpenseFinder: This is the same ExpenseFinder used in QuickBooks. It basically walks you through all the types of expenses you might be able to write off, so you don’t miss anything. As a Self-Employed person, every write-off counts!
  • Mobile File: TurboTax lets you file from a desktop, but it also has a slick mobile interface so you can file online from your tablet or phone.
  • CompleteCheck: Like most tax software options, TurboTax guarantees its math. This isn’t the same thing as guaranteeing you’ll come out on top in an audit. But if its calculations aren’t accurate, it’ll deal with the IRS and refund you to compensate.
  • Tax Help: You can get access to live tax professionals, depending on which version of TurboTax you use. You can chat online, or do a mobile screen share with a tax expert who can answer you specific questions while guiding you through the process. You can also find answers to more common questions in the forums.
  • Audit Support: With Audit Support, you can get one-to-one guidance from a tax pro, get answers to audit-related questions, and get assistance preparing for an audit. If you get an audit letter after you file with TurboTax, you can just visit their Audit Support Center for more help.
  • Audit Defense: This isn’t the same thing as Audit Support. When you file your taxes, you can chose to pay extra for Audit Defense. This is a full-service audit representation by a ta professional. If you want to know that you won’t have to deal with the IRS directly should you be audited, Audit Defense might be worth your while.
  • Free File Storage: TurboTax will store your prior years’ tax information for you, so you can always access the PDF copies of your tax return when you need to.

With all these features and its incredibly simple-to-use interface, TurboTax could be a great option if you’re looking for DIY tax software. Yes, there are other good options available. But many of the cheaper options don’t offer as much hand-holding as TurboTax does. So if you’re less comfortable with your tax situation — or if you have a slightly more complicated situation — TurboTax may be the right software for your needs.

On the other hand, if you know what forms you need to file and what deductions are right for you, TurboTax may be more expensive than you’d prefer. In this case, other tax preparation options, including H&R Block or TaxACT might be a better option for you.

Consumerism Commentary is an authorized affiliate of Intuit. Intuit did not compensate Consumerism Commentary for this review.

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It may be illegal for states to print money for commerce, but local communities have no such restriction from the federal government. And in some communities, local currencies have been successful, at least in gaining the support of some retailers and consumers.

There’s no law of nature that says that an economy functions best when the broadest number of people use one currency exclusively. Currency is just a placeholder that creates efficiency. Without it, we’d have to barter for products and services. Without currency, a tailor would need to trade his services whenever he wanted to buy food for his family. In a free market, theoretically, anything could be used as a currency. The government or quasi-government organizations help by establishing a currency as a standard, so there is faith in its consistency.

Dollar currencyNot everyone is satisfied with this solution, however.

A community may start its own currency for a few reasons:

  • Local currencies can help keep more funds invested in the community instead of helping national or global companies profit. When you buy a light bulb at Home Depot, part of that profit goes to the headquarters, and eventually shareholders, including global investors. When you buy a light bulb at a local hardware store whose owners live within the community, more of that profit stays in town — but not all unless the light bulb supplier and manufacturer is also in town.
  • When companies pay a part of their employees’ salaries in local currency, or when a consumer participates in a community marketplace by selling their items or services while taking payment in the local currency, the profit stays in the community.
  • A town or city bonded together by a unique currency builds the sense of community and encourages businesses to work together, not just for the greater economic benefit of the town, but to ensure that all consumers and retailers engaging in economic activity using the currency remain good citizens and fair businesses.
  • Local currencies present an alternative choice for people who believe the federal government cannot be trusted with the responsibility of ensuring economic stability through monetary policy. A community-based financial system can help people in the community feel better about threats of inflation or devaluation.
  • With local currency in hand, a customer will peruse the directory of merchants accepting the currency and make purchasing decisions based on this list, effectively ignoring companies whose profits benefit those outside the community.

In Philadelphia, the “equal dollar” is a local currency that has flourished for over a decade. Philadelphians can earn equal dollars by volunteering in the community or by selling items. There is a $10 (USD) membership fee and a =$50 (equal dollars) sign-up bonus for individuals; merchants can join for a $25 (USD) fee and receive a =$125 (equal dollars) bonus. It’s unclear how many merchants accept equal dollars, but those who do often require the bulk of the transaction to be in U.S. dollars.

This system isn’t too far removed from certain gift cards. Replace the idea of the community with a mall, and you’ll recognize the paradigm. One of my local indoor malls is owned by a national mall company. They offer gift cards that can be used in any store within any of this company’s branded malls. This is a currency as reliable as the U.S. dollar (as the value is denominated in dollars, not a separate currency of its own), but just like a local currency that ties its spending to the community, the gift cards tie spending to stores that pay rent for space in the mall properties.

Philadelphia is not the only community that has created its own currency to increase local solidarity. You can find local currencies in the Berkshire region of Massachusetts, Seattle, Portland, and Traverse City, Michigan.

I’d be concerned about counterfeit currency. Official government currency like the U.S. dollar is though to counterfeit effectively due to a large number of security measures, but it seems to me that this technology is not readily available to whatever printing services are used by communities that offer their own currency. Of course, since the U.S. dollar is incredibly popular, more counterfeiters aim at overcoming the security measures. Thus, popular currencies may be subject to fraud more than a community currency, but the concern still exists.

Would you use a local currency to replace some or all of your U.S. dollar use in your community?

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Cash Back Rewards Stolen

This article was written by in Credit. 34 comments.

Using cash back credit cards is rewarding in two specific ways. First, you’re earning money when you spend. That’s the obvious part. But when you know that you’re getting a rebate when you use your credit card, you also feel better about spending than you would otherwise. Feeling good can be dangerous, as you might make mistakes like spending more than you should while chasing that good feeling.

That’s why I’ve identified ten traps for using cash back credit cards. The issuers know that many people will fail to handle their credit cards properly, and the resulting profit from customers’ mistakes helps pay for those cash back rebates.

Credit card users are generally aware of these traps and can avoiding them, but sometimes other problem occur, beyond the spenders’ control. Consumerism Commentary reader SteveDH recent encountered a problem with his cash back credit card.

Here’s his story:

Burglar alarmWhen I received my last VISA statement it showed that I had redeemed $275 in Cashback awards — I hadn’t. I got in touch with my bank and also started looking at all of the web pages and we found the someone had added a “Transfer Account” from GE Capital Retail Bank in Draper Utah to the redemption page and apparently requested the redeemtion. The information that they had to enter was the ABA number and account number. That’s how I know which bank it is even though only the last four digits of the account number were there. How they got to the redeemtion page without going through my login (which my bank says wasn’t compromised) is a mystery.

Although my bank killed the credit card and promised to apply the missing money to the new VISA card, I’m stilling waiting for final resolution. I download into Quicken almost everyday but I hadn’t even thought of checking rewards balances. In fact I’m amazed I noticed it on the statement this month. Yet another example of the crooks out there — some are pretty darn creative.

This is insanity. Cash back rewards should be something consumers should be able to forget about; they should be able to trust that each purchase earns the correct cash back amount (it occasionally doesn’t) and that the cash back will be there when you retrieve it. It’s a mystery how this redemption bank account was added to the cash back rewards page without SteveDH’s account being compromised. Perhaps it was an inside job.

I confess that I rarely look at my accrued rewards balances. As I primarily use airline miles rewards cards now, I generally see my rewards only when I visit Continental’s and United’s websites. The miles I earn from spending are deposited monthly, and I’ve not yet noticed any discrepancies. Cards that earn cash back, however, can be less organized.

Since cash back information is not downloaded into Quicken or reported in other software like Mint.com, it takes extra effort to verify your cash back is accruing correctly and is available according to the rules of your agreement. Don’t forget to check once in a while. You won’t be able to prevent every problem, but you’ll be able to report it to your issuer promptly, and hopefully have the problem resolved without difficulty.

Thanks for staring the story, SteveDH. If any other readers have stories to share, please contact me.

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Today on the Consumerism Commentary Podcast, Tom Dziubek talks to Jenny Kerr, founder of The Jenny Pincher.

Jenny talks with Tom about how married women can better prepare themselves financially for a divorce. Some of the items she discusses are keeping individual checking accounts, knowing where the money is and being prepared to start a new job.

Consumerism Commentary Podcast
Protecting Individual Finances in a Marriage: S06E15 / 172

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Table of contents

Consumerism Commentary Podcast[00:00] Introduction from Tom Dziubek
[00:38] Interview with Jenny Kerr
[00:49] Jenny’s inspiration for article
[03:15] Individual bank accounts
[05:34] The need for a joint account
[06:13] Funding the individual account
[07:33] The individual account for emergency access
[08:57] Know where the money is
[10:27] Keeping your resume current
[12:06] Part-time work
[14:21] Understanding the necessities
[15:24] Knowing what benefits are tied to your spouse
[16:40] Identifying policies your spouse could benefit from
[19:13] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

Theme music by Mindcube.

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The Role of Money in Choosing a Relationship

by Luke Landes
Relationships couple

Do people have any kind of control over whom they fall in love with? Perhaps Cupid’s arrow strikes randomly, and there is no choice but to obey the heart — or chemicals in the brain — or sexual urges. But once that initial response has subsided, if you and your partner are headed for a […]

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Improve Your Child’s Cognitive Ability for Income Potential

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Rubik's Cube

There’s a chance you could become a multi-millionaire after repeatedly slamming your head into other people and suffering through the resulting mini-concussions and minor brain damage, but not everyone can be a professional football player in the NFL. There’s a safer and less harmful path toward financial independence. Cognitive ability is an important part of […]

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She Spends Less Than She Earns: Zooey Deschanel

by Luke Landes
Zooey Deschanel

It’s not often that a young, female star of music, movie, and television can avoid financial scrutiny. Tales of financial woe tend to be much juicier, anyway. It’s not difficult to remember the Britney Spears train wreck. She couldn’t handle earning more than $700,000 a month. At least her antics kept her in the news. […]

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Consumer Financial Protection Bureau Wants Payday Loan Feedback

by Luke Landes
Check

While the mainstream financial industry has faced a dizzying array of government and quasi-government regulations through most of the last one hundred years, non-bank financial products have, for the most part, evaded regulations. Catering to lower-income communities, payday loan storefronts and check cashing establishments have managed to justify their business models. The more desperate you […]

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Buy Airfare Six Weeks in Advance

by Luke Landes
Airplane

Airlines Reporting Corporation (ARC), a company that processes airline transactions for travel agents and consumers, has analyzed 144 million transactions for domestic flights in 2011 to better understand airlines’ pricing schemes. The study found the lowest fares were available six weeks in advance of the departure date. I’ve always been under the impression that the […]

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The Lonesome, Pet-Free Life

by Luke Landes
Rupert

For almost as long as I’ve been living without a human roommate, I’ve enjoyed the company of my cat, Rupert. I adopted Rupert from my friend who determined his newborn daughter was allergic to cats. He had already owned Rupert for a long time, and I knew I’d be the cat’s new owner for the […]

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