Friend of the blog, Andy Zach, author of Zombie Turkeys, reviews the best online tax software.
The following is an unbiased and unsolicited review of the best DIY tax preparation programs.
Tax Preparation Software Showdown
3 Tax Programs Compared by Zombie Turkeys
Well, no. It's me, indie author Andy Zach comparing tax preparation software.
After I filed my Federal taxes using TaxAct. For the tenth year, I thought: “I've used three tax programs over the years; why don't I write a blog post on “3 Tax Programs Compared”?
TaxAct vs. TurboTax vs. Credit Karma
I took my Federal tax form and entered the same data in Credit Karma's new tax program. I have used Credit Karma's credit reporting service for several years and wanted to try their free tax program this year, comparing it to TaxAct.
Finally, I used TurboTax for over ten years as well! I'll give you why I switched from it to Tax Act and how both of them stack up to Credit Karma.
Let's start with the most recent program first: Credit Karma.
The user interface is simpler compared with TaxAct. There are fewer options visible, but you can find them by clicking on various options. I'm more used to TaxAct, but I'm sure I could get used to Credit Karma, no problem.
Then there's the advantage of Credit Karma being free. TaxAct costs $14-to $17 per year. As an author, I begrudge every dollar. I wanted to replace TaxAct with Credit Karma.
But the most important thing of all (to me, at least) is getting all the advantages of our existing tax law and producing the maximum return possible.
I was quite chagrined when I had entered the identical data on my three W-2 forms, and my state taxes paid, and I got two different deduction amounts from TaxAct and Credit Karma! TaxAct gave me about $30 more in deductions.
I didn't exhaustively compare the results from the two programs. Once I saw this discrepancy, I lost all faith in Credit Karma. Sometimes free isn't worth the price.
This is the program I've used for over ten years, so I'm happy with it. I have great faith that they are up to date with the latest tax law and tax forms, and they lead you through all possible options on income, deductions, and tax credits.
Further, they archive your tax forms and use them from year to year, so you don't have to re-enter the same data each year. But they do check to see if the data has changed.
They provide you a state income tax form with your federal, and here is my first beef: you must pay for your state filing as well as the Federal filing. This is an additional cost ($14-15) I do not take. I'd first copy the data into the Illinois form myself and file for free.
This leads to my second beef with TaxAct: you can no longer print your tax forms for free. If you haven't filed your taxes, you must pay to print the forms. I used to be able to print the forms for free, without filing.
Those are my two big complaints. There are other little things I'll leave off. It's still the best, in my opinion.
Finally, we have TurboTax. I have nothing against it. I used it for ten years. It was my first tax program. So why did I stop using it?
I kind of resented having to install it each year and pay for it each year, but I saw it as an inevitable cost of doing taxes. Then TaxAct came along.
TaxAct lets me file for free and kept all my data online, allowing me to transfer data from year to year and to compare year to year. I didn't have to install software anymore!
Since then, the free filing is only under certain circumstances (basically, you must be poor), and I have to pay TaxAct every year. I also found out that TurboTax is also available online.
I'll keep using TaxAct until they annoy me too much. I'm considering investigating TurboTax. There's always a cost of transferring from one program to another.
Check them each out for yourself and see what you like better!
Thank You, Andy, for this great post!
3 Tax Tips From Zombie Turkeys
More precisely, 3 Tax Tips from the author of Zombie Turkeys, the comic paranormal animal adventure. Turkeys, even zombie turkeys, are good at gobbling, not at taxes. So I, author Andy Zach, must step in for my paranormal animal friends.
I don't know about you, but I start my taxes in December, finish in January, and file in February. Yes, I know that's early, but since I usually plan to get a refund, I want to get my money as soon as possible. Since this is my third year as an author, but my fortieth year filing my taxes (you do the math!), I thought I'd share what works for me as an author: 3 Tax Tips From Zombie Turkeys.
What??? You don't care? Are you not an author? Well, do you pay taxes?
If you do, you still might find this post useful. Otherwise, read Zombie Turkeys!
Do you wonder why you should listen to the foremost paranormal animal author of urban comic fantasy, instead of say, your tax advisor? Good question!
If you have a tax advisor, great! Listen to him or her. But, if you're running on a shoestring budget, like me, and you're cheap, like me, and want to do it yourself, then read on! Or maybe you're the artistic type, and you hate taxes and numbers.
No worry! What I will cover doesn't involve numbers at all!
It's just the best practices I have found over thirty years of tax filing, plus four years as a Management Science major, plus three years of training for my MBA. Finally, plus two years as a published author. Also, later on, I give you a free spreadsheet to track your book numbers, the same one I use for Zombie Turkeys.
My Attitude Toward Taxes
Perhaps you view taxes and filing for taxes as slightly worse than death. Here's a different approach: treat it as a game, like Monopoly! You go from step to step on your tax form, make sure you fulfill all the requirements and try to keep as much of your money as possible. If you have money coming back at the end, you win!
First of all, I'm assuming that you're using IRS Form 1040 throughout since you're an author and you're running a small business. These steps also apply if you're not an author or businessman. If you use the 1040 short form or the EZ form, the tips work, but you'll need less of this information. Just follow the IRS instructions for these shorter, simpler forms, then review the steps below and pick up what you need.
Tip 1: Get all your income documentation.
- All your W-2 forms. These forms document your income. Everyone you work for must give you one of these by January 31st of the following year.
- All your interest statements (IRS Form 1099-INT) from all the banks or credit unions where you had any money at any time during the year.
- All your business income receipts for the year. You're an author. You've sold books. Track every sale, the price, and the discount off retail.
- All your dividend statements from all your stocks you received during the year. (IRS Form 1099-DIV) This may also include insurance companies and credit unions who sometimes give dividends to their depositors.
- Any retirement payments from your IRA. (IRS Form 1099G) Yep, they're counted as income, unless you've already paid taxes on them (Roth IRA). Also, include any Social Security income you receive. That may be taxable. If you don't know for sure, talk to a tax advisor.
- Any unemployment payments you received during the year. This is illogical; why would one part of the government give you money and another take it away? But taxes have nothing to do with logic.
- Your state income tax refund from the previous year. I know this sucks. But the Federal government taxes the tax refund as income.
Tip 2: Get All Your Expenses and Gifts
- All your charitable contributions: cash, credit/debit card receipts
- Any physical gifts receipts
- Include all your business expenses. Get all your credit card statements, all your checking account withdrawals, all your Paypal statements. This is a good place to note that your business should have its bank account, checking account, credit cards, and Paypal account. You might also want to go through your business emails, looking for any reference to cash. Why devote so much effort? Every dollar of expense you find reduces your income and your taxes.
- Don't forget all your tax receipts. This includes all state and local income taxes, all sales taxes, or all property taxes. The Federal Government allows you to pick one or the other as a deduction. Pick the larger amount.
- Finally, collect all your medical expenses. If you're a Corporation Sole, like I am, then your medical expenses count. Perhaps you're an LLC or a corporation. In this case, you should have recorded your business medical expenses. If this is confusing, skip it and talk to a tax advisor.
Tip 3: Get a Good Tax Program
Now that you have all your documentation use an online tax program like Turbo Tax or TaxAct, and follow their instructions step-by-step until the end. I've used both Turbo Tax and Tax Act, so I know they're good. I'm sure there are other good tax programs online. Do a search and check recommendations.
I had you get all the documentation first because you produce that all year. You need to start at the beginning of the year and collect it all year. We have a simple file folder called “2018 Taxes” and put in documentation all year. Do it.
For my author's business, I have email folders for expenses and revenue. I also have paper folders for each. I record all my costs and book revenues in my Excel spreadsheet. If you'd like a copy, send me a request. I'll send you a copy free.
You're All Done! Except for . . .
Double and triple-checking your numbers. I ensure that I've captured every expense and every piece of income. If you miss an expense, your taxes go up. If you miss an item of income, you can go to prison or be penalized for your missing income taxes, plus ten percent.
I go through each paper receipt, income, or expense, twice. The second time I ensure the number is correctly entered in the tax program, and if it is, I check the paper.
Electronically, I go through my business income and expenses and ensure the net income or loss on my spreadsheet matches that of the tax program. If not, I review the income and expense entries until I find the error.
Finally, I also count all my book copies so that my physical inventory matches my reported inventory. If it doesn't, I review my sales and purchases until I find my error.
I just did this for Zombie Turkeys, and I was tickled when the income/loss and book totals matched.
That's all for 3 Tax Tips from Zombie Turkeys! This is author Andy Zach, signing off.
Andy Zach, the foremost comic paranormal animal author in the comic urban fantasy genre.
Thank You, Andy, for this great post!
Andy has been a good friend to the blog and regularly shares blog posts. My family listened to the audio version of Zombie Turkeys, and it is a great book. I hope that you pick up a copy, as well as follow Andy on social media.
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