Nothing excites me more than curling up on a rainy Saturday with a warm, cozy Schedule C. That’s exactly how I spent my Saturday – glued to the tax return. I know – I was going to hire an accountant this year. I didn’t. Why? Because time got away from me, per usual. I have made it a goal to make an appointment with an accountant before June. No more will I trust electronic programs to make my life easier. On the contrary, life, for me, became a bit of living hell thanks to that software.
It’s no secret I’m not a math person. So it came as more than a shock to find out the “simple” software program designed to do all the work for me “guaranteed” screwed up. And if they’re thinking I’m going to figure it out and self-correct, well, that’s where they’ve failed big time. I used Turbo Tax. It’s billed as easy. It is easy. Accurate? That’s another thing.
I owed a whopping amount this year. Think the price of your first car – doubled. How can that be? I knew I’d make more last year – and I did – but I’d estimated higher, too. A $7K difference between the estimate and the actual earnings turned into about the same amount of tax. How? Because somewhere in the Turbo Tax brain, my estimated tax payments, which should have amounted to $2K a quarter, were calculated to $700 a quarter. And hey, don’t expect me to catch that mistake. Remember, I’m the type of person they make these things for. In fact, I’m a bit disappointed in Turbo Tax. If they cannot program to my level of ineptitude, what exactly is the point?
I will say that this year’s return was easier for me to fill out than in previous years, and that the online fillable forms at the IRS website are great – and you can file all of it right there for free. Since I’d done my math on paper with a pencil already, it was much easier to fill them out since these are just forms with no extra instruction. And this year’s estimated taxes have been figured out with the IRS’ help, not that of Turbo Tax. Bet it’s more accurate, too.
But taxes are paid and life goes on. Are you estimating the same, less, or more work for you?
I’ve looked at Turbo Tax a couple of time, but they don’t get my life. They are for people with regular jobs, not freelancers, in my opinion.
Took me an hour to do my taxes on Saturday afternoon. I still have to ink in the figures, but then, off it goes, later today.
I’m STILL trying to sort out with the various tax agencies all the mistakes the accountant who supposedly knew everything there was to know about theatrical taxes messed up — nearly 10 years ago.
Lori, what a bite! I set aside 40 cents of every net dollar (after expenses) of every check I get. 15% federal tax, 7% state and local tax, 15% self-employment tax, and a little margin for error. I do this no matter what the accountant projects. Most times I come out about right. When it’s time to pay the estimated tax, I have the money set aside and don’t have to find it somewhere.
Having a clear picture of what taxes I pay is a big help in setting an appropriate fee. $1000 may seem like a lot of money until you realize you only get to keep $600 of it.
Devon, that is exactly what I think about Turbo Tax: NOT FOR FREELANCERS. Michael asked me Saturday morning while we were walking the dogs, “And why is it that we don’t use Turbo Tax?” And that’s pretty much the response he got.
I suppose I’m old fashioned but I fill the forms out by hand, do the math with a calculator, have hubby proofread the forms, and mail them in. I’m a do-it-yourselfer in most things, so I like to know what’s on my tax form and how it computes, rather than punching the numbers into a program and getting a mystery answer back — or paying someone else to do it, for that matter.
Michael and I just did ours last night, by the way, Lori. So you and I had the same idea of how to spend our weekend — and the same weather too, apparently!
I tried TurboTax this year to try to save some dough, but because I had complicated taxes (the sale of and losses on an invesmtent property), I wasn’t confident of the results. So I sent my taxes off to my accountant.
Turns out, he got similar results to TurboTax. TurboTax had me getting a federal refund of about $2,000 and a state refund of about $800. My accountant had my federal refund at $1,800 and my state at $1,200. Roughly the same, but I feel better with the expert–though it cost me $450.
Because this is the first time I’ve had a refund, my estimated quarterlies went down. I figure that’s good, too, since I’m behind last year’s pace on earnings. Gawd, will this recession end, please?
Damn taxman.
Eileen, that’s a smart method. I’d decided Saturday that I was going to set aside the same percentage per check as I owed total. It’s just easier to take it from on top instead of looking back over everything and making sure I’ve not made too much (did we ever think that was possible?) or too little.
Devon and Katharine, I feel exactly the same way about all these accounting programs. I use Quicken, but it took a bit of getting used to, and even so, it doesn’t account for my business needs. I don’t link my bank accounts to it, so it won’t let me invoice through the system. I need one full week of training on how to use these things to be more efficient. Instead, I do work-arounds.
That’s how I felt this year, Gabriella. No way I was trusting the online version of Turbo Tax when that much money’s involved. Instead, I did paper and pencil and managed to find deductions I’d forgotten to take (and noticed we were estimating too low on the square footage of the house).