Last month I blogged about choosing a tax preparation service. I ended up deciding to use TaxAct to help me file my own taxes for the first time in my life. And, for most, it turned out to be surprisingly easy!
First, I understand all W-2 and other tax documents that I received in the mail in the last month. I click on the link in the NextAdvisor.com review, which takes me to the site TaxAct. I register with TaxAct, creating a user name and password. I must not leave my credit card because I will not need to pay until I'm done and ready to drop, which is nice.
Once I am registered and logged in, TaxAct asks me if I want a ride, which will provide information on entering my tax information, review my income tax return, filing my return, get help with questions and technical support. Since I was very unsure about what I do, I love it of course would be to have some kind of video introduction. Unfortunately, I do not find this helpful to visit all. All it does it indicate where different buttons are on the screen, and where they lead, which is quite intuitive and clear for people who are used to navigate around the base of software and websites.
Then he asks me if I want to move to TaxAct Deluxe. I refuse.
Now I click through several screens, where I fill basic personal information. I take my name, date of birth and social security number, and answer questions about whether or not I am married, a full-time student, blind or disabled. I fulfill my profession, telephone number and state of residence. TaxAct informs me that I can find additional information TaxAct.com if I am unsure about these issues. He asks me if I can be claimed as a dependent or if I have dependents. Then I fill my filing status, which to me, is single. I refuse to contribute $ 3 to the election fund of presidential elections. I check to make sure that my name and Social Security number are correct. TaxAct summarizes some recent tax changes for the reimbursement of credit recovery and tax relief for the disaster area. Then he asks me if I've made any federal tax payment or estimated state for 2008, I did not.
Now TaxAct takes me through a life changing segment where he asks me what changes life, as I did last year, such as moving, getting married, buying a house or change jobs. I can click one of the "changing life events" and offered more information on how it might impact my tax return. I click on "change jobs" and wonder TaxAct information about jobs that I had last year and told me that I am not entitled to a tax credit. It offers me show more information about the fact that I have changed jobs during the past year, but none of this is particularly relevant for me. Because I'm using the cheaper version and the most fundamental of TaxAct, I can get help and information on a change of extra life. If I want to access information on other life changes, I'll have to go TaxAct Deluxe.
I finished entering my information, it is time to embark on my federal tax return. TaxAct application if I received a wage or salary in 2008, and told me to get into each of my W-2 forms separately and then. If I want to automatically import information from an electronic W-2, I'm going to spend TaxAct Deluxe. I only have paper W-2s, I decline the upgrade again.
I enter employer information, wages and amounts withheld from my first W-2. This part is easier than I imagined. I do not have to fill out complicated forms, I just fill in the answers to simple questions. Then he asks me all appropriate codes on my W-2. Hmm. This is a bit confusing. I do not see codes. After reviewing all of my W-2s, I find the box where the codes should be, but they are empty, so I skip this page and go on. I meet the condition of my W-2 information. I between the state, the state of my employer identification number, and my state tax on the retained income. Then he asks me my local tax information, but my W-2 has those empty slots, so I skip this page and move on. Then it requests information from box 14 on my W-2. I really do not understand what this game is about, but I type in the letters and random numbers from in box 14. According to the additional explanation provided by TaxAct, this part can be simply for information, and did not really matter to my tax return. But I between the codes anyway, just to be sure.
I just finished my first information for W-2, but I have two more to go, so I click "new" and starting the next. Ah, the confusing Box 14 codes are clearer on this second W-2. They indicate that the money was withheld from my salary for the disability insurance contributions for compulsory State. Finally, I fill the information in my third and final W-2, which is NextAdvisor.com. and now I'm done with my W-2s! It was much easier than expected. Sweet.
Again, I wonder if I want to move to Deluxe. I say no again.
Now, he asks if I have interest, dividends or other investment income to report for 2008. I do. He asked if I had interest income in 2008. I would say yes. He asks if I sold my house or other property, and I will not say. TaxAct then informed me that if I have interest income from 2008, my bank would have sent me Form1099-INT. I have this form, so I click Continue. He asks me the name and ID number Payer interest. I see the number on this form that the bank sent me, but I'm not sure of the name of the payer of interest. I suppose it is Bank of America? Then I get the total interest income. There is a field to enter the tax withheld, but I do not see anything about it on this form. I log on to my online bank account to see if any federal income tax was withheld from my interest, but apparently Bank of America was not retained in case income taxes. Then he asks me to enter more information about capital expenditures and foreign taxes. I do not see anything about it on the forms that Bank of America has sent me, so I leave it blank. TaxAct raises me confused questions about interest received as a candidate, accrued interest if purchased between the dates of payment and the amortized issue premium. I do not know what it all means, and there is nothing about it on the form that I have, so I guess it does not apply to me and I leave the field empty. Then he asked if one of my Bank of America interest has been generated by a state or municipal entity that would be exempt from federal tax. I do not think, and I know nothing of my interest is in the city or state bonds, so I not click. Now it gives me the opportunity to enter another 1099-INT form. I do not have each other, so I click continue.
He asked if I received dividend income in 2008. I have, so I click Yes. TaxAct then request the name and payer identification number. Fortunately, my Form 1099-DIV is a little clearer than the last form, and I see easily the name of the payer and the identification number easily. Then I get my ordinary dividends and eligible dividends, which, in my Form 1099-DIV, are the same number. Then he asks me questions on capital gains and non-dividend distributions. I copy the data from my Form 1099-DIV. Apparently my total distributions of total capital gains of $ 0.53. I wonder, what is the tax on it? There are more questions about my dividend income, and I answer for 0 each. He asks me if my dividend income is a mutual fund that invests at least partly, in the US government, state or municipal securities, which would be exempt from federal tax and / or of State. I have no idea! I'm pretty sure it is a mutual fund, but my parents set up for me and I do not really know anything about it. But TaxAct said the fund should give me a statement showing the amount of my dividends that qualify for this status. So I carefully examine this form. I feel very uncertain, but I do not see anything about it, so I guess the answer is no. TaxAct shows me the summary of my dividend income.
I click through several screens that do not concern me. I do not investments or house in 2008. Have I had capital losses from previous years that I was not selling able to deduct in full? I do not know, so I guess not. I do not have the income and expenses of a company I own, I do not own the real estate rental and receive royalty revenues, I have not received money from a regime retirement or moved funds from one plan to another.
I received a tax refund last year. He told me that there is no tax on it, so that's nice.
Will I receive Social Security benefits? No Do I have income from other sources? No. TaxAct shows me a summary of my income. It looks good to me, so I continued. Do I want to contribute to an IRA, or have I already done for 2008? Do I pay the tuition, the student loan interest or receive scholarships? I pay moving expenses for a qualified job change eligible educator expenses as a teacher, alimony, or other adjustments? Do I want to enter itemized deductions? Did I pay property taxes? No no no. He shows me a summary of the deduction. I continue. Did I pay all expenses related to the adoption of a child, or I receive the benefits of adoption of the intended employer. No.
He asks if I want to review the qualifications for the earned income credit. Sure why not? I click yes. He asks if the IRS refused my credit income earned in the past, or if I'm allowed to claim the EIC on my tax return for 2008? TaxAct gives me the option to select "Yes", "No" or "N / A." I do not know if I should select "No" or "N / A" I select "No" and move on.
TaxAct ask if I can be claimed as a qualifying child earned income credit on 2008 statement of another person No income Do I have a social security card that says. "Not valid employment, "or do I have a social security number that was only the questions so that the taxpayer may request or receive benefits funded by the federal government. Was my home outside the US for more than half of 2008? No no. Will my children live with me outside the US for more than half of 2008. Since I have no children and I did not live outside the United States last year, I click "N / A" thereof. Am I a nonresident alien for part of the year? Would I make entries for a qualifying dependent or dependents? No.
Do I want to enter the energy efficiency of residential mortgage information? Since I do not have a home, I think not. Would I enter vehicle information to credit reciprocating engine? I do not own a car, so no. How much was my stimulus payment last year. $ 300. Do I want to go to the interview for the first time buyer credit? Since I have not bought homes, no.
I just finished the subjects credit and payment of federal Q & A. I get another. I would like to review the requirements to make estimated tax payments for 2009? No, thank you, I do not want to deal with that now. Would I enter additional information in my 2007 return, to avoid the possibility of an insufficient sanction? No, because my parents have my back in 2007. Now I'm really done with my federal A & A, and I get another.
I would like to state my Q & A now. TaxAct asks about my residency in California for 2008. I am torn on how to respond to that, since I moved to California, December 31, 2007, but earlier in my federal Q & A I replied that I was living in New Jersey on December 31, 2007. And I have a W-2 for a very minimal amount of income in New Jersey, but it is such a small amount that I am not required to complete a declaration of the state of New Jersey. But "part of the year / non-resident" is not really good, so I say I'm a resident throughout the year.
Then I fill in some information about my living situation to help determine what forms TaxAct I need. He asked if my filing status information is still as last year. Since I did not live in California last year, I leave this box unchecked. He asks if I filed my 2007 under another name. I do not think, therefore I leave this field empty. He asked for my phone number. No, I would not include military information.
TaxAct offers me the opportunity to review the California Schedule CA, since the tax California law differs from federal tax legislation in certain areas. I say yes, and click through a series of screens asking about very specific circumstances requiring adjustments in California. None of them apply to me, so I leave everything blank and continue.
Then he asks me to review my adjustments to California federal itemized deductions. Again, no adjustments applies to me, so I leave them blank and move on. Do I "use tax" or tax on the distribution of accumulation trusts? I do not know what these things, so I guess they do not apply to me and leave the field empty . TaxAct said that California offers a variety of tax credits that can reduce my taxes if I qualify, and asks if I would like to review these credits. I say yes. If I am a resident of California and paid rent property in California, which was my primary residence, so I can be eligible to claim the credit of the tenant. to qualify, my adjusted gross income California must be $ 34,936 or less. I complete the credit qualification of the sheet calculation of non-refundable tenant to answer a few questions about my apartment to determine if I am eligible. Apparently I am eligible for a $ 60 credit. Nice!
TaxAct asks if I were income that was taxed by California and also by another State. No. I Was subject to the alternative minimum tax? I do not know what that means, so I guess the answer is no. He asks me if I would like to complete the worksheet special credits, to see if I am eligible for other credits involving the adoption of children, father, mother, head of household or joint custody of their heads high Household. It does not look like any of those apply to me, so I refuse. Now he wants to know if I have interest on the deferred tax payment obligations. I do not think, therefore I leave the field empty. It requests that the amount, if any, other taxes and credit recoveries. I guess that does not apply to me and I leave the field empty. Now he wants to know the amount of any payment that I made with the form FTB 3519, automatic extension for people and / or amount of any claim credit law. I do not know what that means, so I leave it blank.
Would I complete the worksheet to estimate my 2009 California state tax or apply my refund from 2008 to 2009 my estimated tax? No, thank you, I do not feel like dealing with now. Then he asked if I would like to make a contribution to one of several different funds California, which will be deducted from my refund or added to the amount I owe. He asked if I would like my refund deposited in one or two different accounts, or none. This is an odd question. He did not ask this for my federal return. I choose to select none, and take my refund in the form of a check, since in the past I have had problems with the routing of digital errors when trying to set up direct deposit.
TaxAct shows me a summary of my return to California 2008. He asks me if I want to add another state to return. I say no. He suggested that I take a moment to review my return. Do I want to spend Deluxe? Again, no.
Now TaxAct said I can choose to examine the red alert, yellow or green, or all alerts. Red alert identity information which is incomplete or inconsistent. A yellow alert identifies potential problems. A green alert identifies opportunities for potential tax savings. I choose to see all alerts. I click through several screens, examining all alerts. Nothing needs to be changed.
I did fill information, and TaxAct asks if I am interested to see all of my payment and repayment options. I say yes. Apparently, I have to fill out a lengthy consent, complicated to use the form before TaxAct can determine if I can pay my preparation fees for my product refunds.
He asked again if I want to switch to Deluxe. No, he asks me if I want to compare this year's tax return from last year to check for errors, but I do not have last year, I say no. Do I want to pay $ 7.95 for TaxAct to store my tax return information for reference, easy access, and the tax return next year? No.
Then he asks if I want to file my federal return electronically. I say yes. He asked who I would send back a file. I select the two federal returns and California. I confirm that I am e-filing these returns. Now he wants me to click on the "check the status" button to confirm that my state accepts electronic filing. I do it. California accepting e-filing. Now he asks my email address and phone number, to confirm the status of my return.
Now I have to choose between direct deposit and a check. If I choose to check, I'm going to pay my preparation costs now. I also have the opportunity to get my refund on a prepaid Mastercard, but I certainly do not want to do that. The last two times I set up direct deposit for my paychecks, something went wrong. I do not want to risk losing or delay my refund, so I play safe and opt to receive in the form of a check.
I have to click a button that says "I agree," confirms that everything I have written is correct and complete to the best of my knowledge. I click "I'm okay "again, to allow TaxAct send my return to the IRS. I write today's date and create a number of 5-digit pin. Oh, apparently I have to be my original adjusted gross income in 2007 or 2007 my pin number to confirm my identity. I do not know either of these since I've never done my own taxes before. I ask my parents to get the pin number of last year.
Now I have to answer some questions of specific electronic filing my state. I confirm my phone number. I confirm that I want a check rather than direct deposit. No I did not file a tax return in California last year. Yes, I agree that TaxAct can send my information to California.
I have to check to make sure all the information in my federal return is complete and correct. He spends all alerts and is ready for submission. I check the state of alerts, to ensure that all information is complete and correct. It is.
Now I just have to pay for the service, submit and print my return. My tax preparation fee is $ 13.95, and I have to pay with a credit card since I decided to get my refund by check rather than direct deposit. I enter my credit card number and my billing address.
Next TaxAct insists that I print my bill, a copy of my federal return, a copy of my return to the state, and some form called Form FTB 8453-OL, all for my own records. He told me to see my printed copies. Now I have my view and print of federal electronic filing instructions and California filing instructions. I thought e-file was supposed to save paper?
I take a verification code to prove that I am a human being. And my return was submitted successfully! I should get an email and a text message within 24 hours confirming that my return has been received and is being, and I should get another e-mail or text message within 72 hours acknowledging receipt of my return by IRS or state of California.
I thought I did, but TaxAct asks if I would fill in the W-4 form to update my restraint. I refuse. He asks me if I would like to submit comments or suggestions for TaxAct next year, or tell a friend about TaxAct, or sign up for the repository of data TaxAct. No.
Hooray! I'm finally done! I am disconnecting.
Just a few hours later, I received 2 emails simultaneously and 2 text messages, notifying me that my statements were received.
This was not so difficult! I'm glad I chose TaxAct to help prepare and e-file my tax returns for the first time. It faster and easier than expected, and it only cost me $ 13.95.
For more information on TaxAct or find the online preparation service fee that suits your needs, consult the reviews of NextAdvisor.com and comparison chart.