Tax Help

[+ Lucky]

I put off tax law until my last semester in law school because I was so sure that I would hate it. To my surprise, I loved it and wished I had started sooner so I could become a tax lawyer. I have done my own taxes ever since.

Now I use programs like Turbo Tax and Taxslayer. With the addition of a small side business, my taxes are harder. Last year I used Taxslayer and didn't seem to have any problem. This year I cannot figure out what they are doing It seems like I am going around in circles. They currently have me owing more than $2000 in federal taxes than I paid last year despite a similar income. I am just lost.

So I come here, where else? Does anyone recommend one of these programs and why? Anyone want to do my taxes for me? I guess I am too old now. Sigh.

[MikeBiDude]

17 minutes ago, Lucky said:

I put off tax law until my last semester in law school because I was so sure that I would hate it. To my surprise, I loved it and wished I had started sooner so I could become a tax lawyer. I have done my own taxes ever since.

Now I use programs like Turbo Tax and Taxslayer. With the addition of a small side business, my taxes are harder. Last year I used Taxslayer and didn't seem to have any problem. This year I cannot figure out what they are doing It seems like I am going around in circles. They currently have me owing more than $2000 in federal taxes than I paid last year despite a similar income. I am just lost.

So I come here, where else? Does anyone recommend one of these programs and why? Anyone want to do my taxes for me? I guess I am too old now. Sigh.

@Lucky you can add live help subscription to Turbo Tax…I’m not familiar with Tax Slayer. I don’t use either but have family members who use Turbo Tax.

[KeepItReal]

22 minutes ago, Lucky said:

I put off tax law until my last semester in law school because I was so sure that I would hate it. To my surprise, I loved it and wished I had started sooner so I could become a tax lawyer. I have done my own taxes ever since.

Now I use programs like Turbo Tax and Taxslayer. With the addition of a small side business, my taxes are harder. Last year I used Taxslayer and didn't seem to have any problem. This year I cannot figure out what they are doing It seems like I am going around in circles. They currently have me owing more than $2000 in federal taxes than I paid last year despite a similar income. I am just lost.

So I come here, where else? Does anyone recommend one of these programs and why? Anyone want to do my taxes for me? I guess I am too old now. Sigh.

I use Turbo Tax - never had a problem.  There are a few tricky things, like doing a backdoor Roth, which is not intuitive. It is more expensive than it used to be, but I am used to the interface and layout. I've recommended Turbo Tax to friends in the past.  I'd be happy to do your taxes, but I fear you can't afford my rates! 😋

[+ Charlie]

I haven't done my own taxes for many years, because they are so much more complicated than they were when I was young and single and my only income came from my employer. So I took all my documents to our tax CPA's office and handed them over. Yesterday I got an email from the accountant's office, but there were so many attachments and things that I was supposed to do to e-file, that I just called their office this morning and asked them to please print everything up so we could just come in and sign papers with a pen, and write them a check or hand them a credit card. They were very nice about it, and we are going in to sign and seal everything this afternoon. (We started using them several years ago because they quickly developed a local reputation for being very friendly toward same-sex married couples.)

[+ Vegas_Millennial]

I do my own taxes, by hand, on paper with a pencil.  I do it both to the penny, and rounding to the dollar, to see which one saves me more.  I now do a Backdoor Roth IRA.  The trick is: I've been doing my taxes by hand every year for the past 16 years, starting before I was an established gentlemen.  With every year I just add one thing new (a new deduction, a new source of income, a new catastrophic IRA withdrawal, etc.).  It's a lot easier to learn just one new thing per year as my finances get more diverse.  I would probably be lost if I was starting to learn it from scratch after already being established.

As for @Lucky's dilemma: I would just mimick @Charlie's habit of using a professional tax prepare and review their printed forms.  It's a lot easier than trying to navigate a software you only use once because it changes every year.

Edited April 8 by Vegas_Millennial

[Ali Gator]

I know nothing about doing my own taxes so I go to my CPA (who charges $275 for a simple tax return with no itemizations).  Anyhow, I had my appointment two weeks ago with him, and I owed* quite a bit more in fed taxes than I did the year before, even though nothing changed in my income. He explained to me that EVERYONE owed more this year due to a change in taxes in 2023, which not many people were aware of until they filed this year. As he said, "It snuck up on everyone - including him."  So it may not be you doing anything wrong - it's just the tax laws which have changed slightly.

 

*I might have said this before, but I will say it again. Years ago, when I was just starting out with my own business as a 'D/B/A', my CPA said it's always best to owe the feds money each April, rather than get a big refund. As he said, 'Why get a refund of a few thousand dollars ?  Why let the Feds use your extra thousands and then return it to you with no interest accumulated ? '  He said it's always best to owe them money - usually $200 or less is perfect (at least for my income).  So each year I owe - usually under $100.  Last year I owed $19.  This year - with the the tax laws changing as I mentioned - I owed $150. 

[+ Cash4Trash]

Not an expert and may be talking out of my butthole but I believe the 2017 tax package giving 1.8 trillion to the wealthy also included a clause that taxes would go up this year and again in 2027 (?) for middle income earners. It's an offset for the millionaire tax gift. 

[maninsoma]

I'm pretty sure something else is at work here, as my research indicates that, if anything, one might expect to pay fewer taxes for 2023 than 2022 if one's income remained the same because there was an inflationary adjustment to tax brackets.  The individual income tax cuts made when Trump was in office expire at the end of 2025.

So, I'm guessing one or more of the following is true:

Your total (adjusted gross) income wasn't actually the same in 2023 as in 2022.

Your tax is the same but you had less withheld or made less quarterly estimated tax payments, and what you really mean is that you owe $2,000 more with your return for last year, not that your overall taxes are $2,000 higher.

Data entry error.  I have to say that while the various tax programs I've tried are great for relatively straight-forward returns, if you have one thing that doesn't apply to the vast majority of taxpayers then the program might not do a good job of guiding you through the data entry for that.  The program I use doesn't properly call attention to one tax credit I'm eligible for, and every year after the "interview" portion is done I have to use the search function in the program to guide me to the screen where I enter the data to get that tax credit. 

[Ali Gator]

3 hours ago, Cash4Trash said:

Not an expert and may be talking out of my butthole but I believe the 2017 tax package giving 1.8 trillion to the wealthy also included a clause that taxes would go up this year and again in 2027 (?) for middle income earners. It's an offset for the millionaire tax gift. 

That sounds similar to what my CPA explained a few weeks ago, which is why I ended up owing a bit more. 

[+ Charlie]

We are a middle income couple, but strangely enough, our experience this year is different. We usually owe the feds and the state of CA, but this year we are getting refunds from both, even though our fixed income is similar to last year. I can only assume that our tax preparer found a new loophole related to our itemized deductibles, or else made an error somewhere.

Addendum: I just remembered that last year we forgot to make some of the estimated tax payments, and this year we made them, so it could be as simple as that.

Edited April 9 by Charlie
Additional information

[+ Vegas_Millennial]

5 hours ago, Cash4Trash said:

Not an expert and may be talking out of my butthole but I believe the 2017 tax package giving 1.8 trillion to the wealthy also included a clause that taxes would go up this year and again in 2027 (?) for middle income earners. It's an offset for the millionaire tax gift. 

That is a common misperception.

According to the IRS data from 2018 compared to before the 2017 tax changes, broken down by income:

Fillers with with an adjusted gross income (AGI) of $15,000 to $50,000 enjoyed a tax cut of 16% to 26%, on average, in 2018.

 

Similarly, filers earning between $50,000 and $100,000, one of the largest groups of taxpayers, experienced a 15% to 17% tax cut, on average, from 2017 to 2018.

Higher-income households also experienced sizable tax cuts, but not nearly as large as the tax reductions provided by the law to working and middle-class families. Those with AGIs of $500,000 to $1 million, for example, had their taxes cut by less than 9%, and filers earning $5 million to $10 million received a 3.4% cut, the lowest of any bracket provided by the IRS.

The data also show that wealthier filers ended up providing a slightly higher proportion of total personal income tax revenue in 2018 than they did in 2017. In 2017, filers earning $500,000 or more provided 38.9% of all personal income tax revenues. In 2018, the same group provided 41.5% of revenues.

Most of these tax rates expire in the 2025 tax year, and revert to their 2016 levels unless Congress changes something.  That would be more burdensome to low and middle class income than it would be to higher income filers.

[+ Vegas_Millennial]

16 hours ago, Ali Gator said:

He said it's always best to owe them money - usually $200 or less is perfect (at least for my income).  So each year I owe - usually under $100.  Last year I owed $19.  This year - with the the tax laws changing as I mentioned - I owed $150

I do the same thing.  I always adjust my withholdings early in the year so I owe something the following in April.  Make sure the amount you owe is less than $1K, or be sure you paid at least 90% of total taxes via withholdings, or be sure you paid at least 100% of the total taxes of the previous year.  Otherwise, you will have to pay a penalty.

I'm especially going to remember this next year, when the 2017 tax cuts expire and tax rates for everyone will increase back to 2016 levels, but more so for the low and middle income filers.

[+ Lucky]

Last year seniors got a break with Schedule R, but this year is is people who borrowed money for college getting the break. I paid my debts, but had I known the government would wipe them out I wouldn't have.

[+ The Big Guy]

There could be many different reasons.   I handle taxes for two elderly people who make less that 85,000 per year but their taxes were both up slightly due to higher income from CD’s and MMF’s due to higher interest rates. 

[+ augustus]

On 4/9/2024 at 7:21 AM, Cash4Trash said:

Not an expert and may be talking out of my butthole but I believe the 2017 tax package giving 1.8 trillion to the wealthy also included a clause that taxes would go up this year and again in 2027 (?) for middle income earners. It's an offset for the millionaire tax gift. 

No.  Everything just reverts back before the tax cut.

[Bokomaru]

I’m in awe that @Vegas_Millennial does his own taxes. I think mine was about 80 pages long this year. F that. Having someone else do it is sort of like hiring a world class provider: worth it, at ANY price. 

[+ DERRIK]

Too many vested interests want to make sure you get confused.

Politico's want you confused

professionals that do taxes want you confused

Attorneys want you confused

[+ Vegas_Millennial]

3 hours ago, Bokomaru said:

I’m in awe that @Vegas_Millennial does his own taxes. I think mine was about 80 pages long this year. F that. Having someone else do it is sort of like hiring a world class provider: worth it, at ANY price. 

@Bokomaru I'm glad you have the financial resources to have 80 pages worth of taxes!  Since the 2017 Tax Act, I now just take the standard deduction.  All my retirement investments are now in Roth accounts so I don't have to keep track of capital gains, dividends, or interest.  And I don't own a business or rental real estate, so there's no depreciation to keep track of.

My taxes are 4 pages long.  They could be 3 pages, but I choose to pay by check so I need to submit Form 1040-V.

[TonyDown]

Face to face communication works best for me but my tax preparer transitioned to remote.

At some point I may find someone else. She's pricey.

But after 20+ years it's so easy to let her keep doing it.