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TurboTax 2012 Online Review

This article was written by in Reviews, Software, Taxes. 62 comments.

This is a relatively long review of TurboTax 2012 Online, software for completing tax forms and submitting them to both the federal and state authorities. I’ve updated the review to reflect the changes to the software in 2012 (for filing 2011 tax returns).

Recently, the IRS began accepting federal tax returned filed electronically. Even before the IRS began accepting returns, you could still have completed your tax forms online through software. Programs like TurboTax, H&R Block, and Jackson Hewitt have been accepting customers and holding off on filing until now. This delay affected those who had itemized deductions, claimed the tuition and fees deduction, or claimed the sales tax deduction.

Many taxpayers are just getting started with their 2011 federal returns now. I’ve been using the services of an accountant for the past few years, and he was able to cut through the more confusing tax consequences of owning a business, saving me $15,000. Before my tax situation was complicated, however, I completed my taxes online using various software. Following a series of questions, completing and filing my 1040 form was easy.

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. There is an option that is completely free for filing federal returns, but it is limited. This free version is for taxpayers whose returns can be completed using the 1040-EZ form, a simplified version of the 1040 form. If you have deductions, investments, a mortgage, or self-employment income, or if you want a step-by-step hand-holding guide to completing the forms, you will not be able to take advantage of the TurboTax Free Edition.

TurboTax offers several flavors in addition to the Free Edition, including Deluxe, Premier, Home & Business, and Business, each to handling more complicated tax situations above and beyond the lighter editions. The Deluxe Edition focuses on capturing all of your deductions. The Premier Edition does deductions, as well, but also includes the forms you need for investments like stocks, mutual funds, and rental properties. Home & Business covers all of the above as well as self-employment income, and the Business Edition is for anyone who is a partner in or owner of a corporation.

The editions are flexible; start with the Deluxe Edition, and as you come across features you need, TurboTax will ask if you’d like to upgrade — without charging you yet — to the edition that takes all of your needs into account. I started the Deluxe Edition to see how far I could go. I saw that for the most part none of the upgrades are needed if you are confident about your tax accounting abilities and are willing to enter your information directly into forms rather than have the software hold your hand through every decision.

Get your refund in as little as 8 days. E-file with TurboTax today. It’s Easy

Here is an overview of my entire process of completing my federal and state tax returns with TurboTax.

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2012 Federal Income Tax Brackets and Marginal Rates

This article was written by in Taxes. 15 comments.

The IRS has finalized the 2012 federal income tax brackets, but most people aren’t concerned with these numbers until next year. In April 2012, you’ll need to be concerned with the 2011 tax brackets to file your 2011 income tax returns. Most taxpayers won’t need to deal with the 2012 rates until early 2013.

While tax laws are always in flux, and things could change before 2012 tax returns are due in April 2012, the new tax brackets are official. They increase each year due to inflation. I’ll update these tax tables if the IRS announces any changes. For those who like to get a head start on their tax planning, these tables will at least provide a starting point.

Here are the tax tables for 2012, applicable for taxpayers filing by April 2013, still in the distant future. Keep in mind that the “taxable income” used in these tables is not your gross income. Taxable income already has certain deductions removed, like 401(k) contributions.

To lower your tax burden this year by up to $5,000, consider opening an IRA (Individual Retirement Account). Mint.com has an IRA wizard that can show you what kind of IRA to open and where to open it.

Married individuals filing joint returns and surviving spouses

If Taxable Income Is: The Tax Is:
Not over $17,400 10% of the taxable income
Over $17,400 but not over $70,700 $1,740 plus 15% of the excess over $17,400
Over $70,700 but not over $142,700 $9,735 plus 25% of the excess over $70,700
Over $142,700 but not over $217,450 $27,735 plus 28% of the excess over $142,700
Over $217,450 but not over $388,350 $48,665 plus 33% of the excess over $217,450
Over $388,350 $105,062 plus 35% of the excess over $388,350
Standard deduction $11,900

Heads of households

If Taxable Income Is: The Tax Is:
Not over $12,400 10% of the taxable income
Over $12,400 but not over $47,350 $1,400 plus 15% of the excess over $12,400
Over $47,350 but not over $122,300 $6,642.50 plus 25% of the excess over $47,350
Over $122,300 but not over $198,050 $25,380 plus 28% of the excess over $122,300
Over $198,050 but not over $388,350 $46,590 plus 33% of the excess over $198,050
Over $388,350 $109,389 plus 35% of the excess over $388,350
Standard deduction $8,700

Get your refund in as little as 8 days. E-file with TurboTax today. It’s Easy

Unmarried individuals (other than surviving spouses and heads of households)

If Taxable Income Is: The Tax Is:
Not over $8,700 10% of the taxable income
Over $8,700 but not over $35,350 $870 plus 15% of the excess over $8,700
Over $35,350 but not over $85,650 $4,867.50 plus 25% of the excess over $35,350
Over $85,650 but not over $178,650 $17,442.50 plus 28% of the excess over $85,650
Over $178,650 but not over $388,350 $43,482.50 plus 33% of the excess over $178,650
Over $388,350 $112,683.50 plus 35% of the excess over $388,350
Standard deduction $5,950

Married individuals filing separate returns

If Taxable Income Is: The Tax Is:
Not over $8,700 10% of the taxable income
Over $8,700 but not over $35,350 $870 plus 15% of the excess over $8,700
Over $35,350 but not over $71,350 $4,867.50 plus 25% of the excess over $35,350
Over $71,350 but not over $108,725 $13,867.50 plus 28% of the excess over $71,350
Over $108,725 but not over $194,175 $24,332.50 plus 33% of the excess over $108,725
Over $194,175 $52,531 plus 35% of the excess over $194,175
Standard deduction $5,950

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Government Blocks Merger of H&R Block and TaxACT

This article was written by in Economy, Taxes. 11 comments.

The Department of Justice filed an anti-trust lawsuit against H&R Block. This second-largest income tax preparation service intended to acquire the company that owns third-largest income tax preparation service, TaxACT. Based on the number of customers who used these companies’ services to self-file 2010 tax returns, the combined company would still be a distant second to Intuit’s TurboTax. The new combined tax-filing service would be run by TaxACT’s management team, which is surprising considering H&R Block’s At Home product has more customers and is a more recognized brand.

According to the government agency, the proposed merger would result in too much consolidation in the marketplace, decreasing choices for consumers and increasing prices. Consumers’ interests are better served in a competitive marketplace, and the Department of Justice has the job of stepping in when a merger or acquisition would result in unfair competition. For a while, the DOJ has been quiet, allowing companies to consolidate, deferring to market forces. The DOJ didn’t act when AT&T planned to acquire T-Mobile, a deal that would create a duopoly among mobile phone service providers. The government also didn’t have a problem with Comcast’s purchase of NBC Universal, which put the full stream of television, from production to broadcast to delivery, in the hands of one company.

H&R Block responded to the government’s suit with claims that the merger would increase options for tax-filing customers.

CNN, H&R Block

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How to File Your Taxes for Free

This article was written by in Taxes. 10 comments.

The federal government can only operate with the help of the millions of individuals who earn income in this country and dutifully pay taxes. You would think that, in order to ensure a smooth revenue stream of considerable size, the IRS would make filing taxes as easy and painless as possible. That’s obviously not the case, considering the tax code is one of the most confusing human inventions on the planet today. The IRS does ensure that filing federal tax returns is completely free for millions of Americans with the help of a select number of software companies, provided the taxpayer meets a few eligibility requirements. If you can file your federal taxes for free, do so. There’s no point in spending unnecessary money.

If your taxes are complicated, and you require a professional to review or complete your forms, or you require some features not available in the free editions, then go ahead and pay for software or pay a professional. For the cast majority of Americans, free e-filing is a great option.

Starting with the most popular software companies, here are the best options for filing your taxes for free.

TurboTax Choose EasyTurboTax Online. TurboTax tops the list because they are fast to adjust to tax law changes, it’s part of a large company that has a strong reputation for personal finance, and there is a large user community for peer-to-peer support. The TurboTax Freedom edition is free for e-filing if any of these criteria apply to you:

  • Your adjusted gross income (AGI) is $38,000 or less, or
  • You are active military with an AGI of $58,000 or less, or
  • You qualify for the Earned Income Tax Credit (EITC)

I’ve used TurboTax in the past, and here is a TurboTax Online review as of the latest version of the software. If you live north of the border, you’ll need to access TurboTax Canada.

Save 25% on H&R Block At Home Online ProductsH&R Block At Home. H&R Block’s primary business is in seasonal storefronts where taxpayers can bring their financial documentation into a specialist to work through the forms in person. The company also offers the “At Home” filing service for those who like the do-it-yourself approach. While the company normally charges for federal tax filing, if you use the At Home service and meet the following condition, you can e-file your federal taxes for free.

  • Your adjusted gross income (AGI) is $58,000 or less, and
  • You are age 51 or younger

Here is my review of H&R Block’s At Home software, updated recently to reflect the changes since last year.

Free TaxAct. When TurboTax was no longer free for me, and before moving to an accountant to handle my business, I was still able to e-file for free using TaxAct. TaxAct doesn’t have the brand strength or the large community of the two above software services, but the calculations are correct and the system that guides you through your calculations is just as complete. You can e-file your federal taxes for free using Free TaxAct if the following conditions apply.

  • Your adjusted gross income (AGI) is $58,000 or less, and
  • You are between the ages of 19 and 55 inclusive

eSmart Tax powered by CompleteTax. To e-file for free, your AGI must be less than $58,000 and you must be age 51 or younger.

TaxSlayer. TaxSlayer offers free e-filing for taxpayers with an AGI of $58,000. You must be age 25 or younger or 65 or older, which limits the qualification to a smaller population.

Other free e-filing options are limited by the state in which you live in addition to other limitations similar to those above.

The deadline is approaching fast, and maybe taxpayers wait until the last possible minute to file. I suggest starting as early as possible, once you have all the information you need, to ensure you don’t encounter any delays or glitches. I have never heard of there being any software problems at the last minute, but it’s better to be safe than owe penalties to the government.

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Last Minute Tax Filing Tips

by Flexo
Tax

With one week before the deadline, many people are just starting to think about filing their tax return. The problem I’ve often encountered with waiting to the last minute is it’s easy to miss important items. Many years ago, I filed in the manual style: my only tools were a calculator and pencil. Although my ... Continue reading this article…

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How to File a Free Income Tax Extension

by Flexo

Earlier this week, I finally got around to filing my taxes. In years past, when I filed for myself and my taxes were simpler, I usually waited until the last day. My procrastination has been helped by the availability of online filing. I’m thrilled to no longer need to run to the post office late ... Continue reading this article…

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The Adoption Tax Credit

by Flexo

For the first time ever, the adoption tax credit is refundable. This is a great change for parents who have adopted children in the past few years, because it means they could file their 2010 taxes and receive a bigger-than-expected refund. Keep in mind that refundable is a good thing when it comes to taxes; ... Continue reading this article…

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Itemizers Must Wait Until February 14 to Submit Tax Returns

by Flexo

Thanks to the bevy of new changes to the tax code for 2010, the IRS is still unprepared to handle tax returns filed early. If you itemize your deductions, you must wait until Valentine’s Day to submit your returns to the IRS. That doesn’t stop taxpayers from starting early. If you use software to file ... Continue reading this article…

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