Money Progress

I’ve already started working on my 2009 tax return.  I’m pretty sure I will get a sizable refund this year so I am anxious to get it done.  Unfortunately I can’t make too much progress yet since I am still waiting on most of my tax forms.

As the forms do come in, I have been adding them to my return.  Since I used TaxAct for 2008, it was natural for me to check them out again to use this year.  When I went to their site I thought I would go ahead and review my 2008 return to refresh my memory about all the data I had to enter last year.  I was a little disappointed to find that I could no longer access my 2008 tax return on the website.  Instead I found out that I would have to pay a $12.95 fee to do so.

Looking back at some old emails, it turns out that they did warn me this would happen.  They even offered me a discounted rate of $7.95 for the data archive service.   They also told me I should print the return for my records.  Luckily I did save a PDF copy of my return, so I do have it, but it just isn’t as easy to review as their online system.

In the end, though of course I would like to be able to view my data for free, it seems fair what TaxAct is doing, especially given ample warning and a previous discounted offer.  I guess when I first saw this however I had forgotten all about this issue and I would have been out some money I didn’t plan on if I hadn’t saved the return myself.  When companies like Google will save 7 gigabytes of data for free, I kind-of expected my tax return to be saved for free since it is probably only a few kilobytes of data.  You might say that Google pays for it via advertising and data mining, but it appears that TaxAct will also share “aggregated statistical data” with other parties, and I’m sure that provides some value for them.  So while they are performing a free service for me, they have my data to share with others and word of mouth advertising from me too!

After looking at the other major options for filing a tax return online such as TurboTax, H&R Block At Home, and TaxSlayer, it still seems like TaxAct is the best option for me.  It is the only one who offers a free federal return that includes all the tax forms in a very well done package.  Once again since I am in Texas I have no state return to file, but they offer a good rate for that too in comparison with others.

And now back to the original point of this post.  Make sure to save your tax return in some form that you know you can always access after it is done!  Print it out or save it on your computer and back it up.  I am normally firmly in the camp of e-statements and paperless, online everything.  However this example of my data no longer being freely available means I need to be sure to rely on my own records rather than online sources.  This includes financial account records as well!  This post about the vanishing of a $60k Roth IRA at Vanguard scares me just a bit!  It looks like the situation will be resolved and the account will be recovered but it is taking quite a while.  It is certainly in my near future plans to make sure I have some recent statements and account numbers for all of my larger accounts.

Last year I used TurboTax Online to do my taxes.  They have a free edition that works well if you have a simple tax return.  I used them out of habit from helping my mother who uses the boxed TurboTax edition every year.  I was surprised that it was just as easy to use and as graphically friendly as what I was used to with the boxed copy.

This year my return is a bit more complex.  As I mentioned in my last post, I’ve had some losses in the stock market this year, some of which were in non-retirement accounts.  This means I get to claim short term capital gains losses!  Such a claim requires filling out a Schedule D form, which the TurboTax free edition doesn’t support.

As I was looking around for a fully functional free alternative I found TaxACT.  They have a free version that you can use online just like TurboTax, but that supports all the tax forms rather than a limited subset.  You have to put up with quite a few prompts to update to one of their paid versions but they are easy enough to skip by.  Overall the quality seems very similar to TurboTax.

I actually started my return with them a month or two ago but I couldn’t complete it as I had to wait for some straggling tax documents to come in the mail.  I logged back in last night to finish and ended up filing my return.  The whole process probably took me about two hours (including the time I spent a few months ago.)  Most of that time was just me tracking down my tax documents from various banks and investments.

As a result of filing I’ve now got an email in my inbox that says to expect my tax refund to be deposited into my account within 2-3 weeks!  The funny thing is that the money the government will be sending me isn’t really a tax refund, it’s my 2008 economic stimulus payment.  They mailed the checks based on 2007 returns, but I did not qualify then.  Since I do qualify based on my 2008 return, I now get the money.  Without it, I would have actually owed taxes since I try to keep my paycheck withholdings to a minimum so that I’m not overpaying taxes during the year.

There are probably other good alternatives out there besides TaxACT, but I felt like posting because it was a very painless and free process!  If you know of other free options that have full functionality and are easy to use, let me know!

You may have noticed that I didn’t mention anything about state income taxes.  This is because I live in the great state of Texas!  If you live in an inferior state (just kidding… you know us proud Texans) then you might have to do some more research on whether or not TaxACT’s state offerings are a good deal.  It looks like the cheapest you can get away with on their site is $14.

And now for one last snippet.  Did you know that only seven states don’t have an income tax?  I was very surprised when I looked it up.  I would have thought it was split more evenly.  I probably wouldn’t be so surprised if I grew up in a state with income tax, however.