Taxes, So Methodical A Computer Can Do It!

Computer helping with taxes 

When I strolled into an H&R Block last January, I was expecting a rapid fire list of questions. And not just questions, but revelations that would rain a tax refund down on me in ways I never would have figured out alone. I’d been doing my own taxes for years, but now it was time to hire a tax professional and get a full refund. I imagined my tax preparer as a fully accredited accountant, religiously pouring over IRS updates to absorb every possible tax break. To get you inside my head before I walked in the door, here’s the scene I was picturing from Shawshank Redemption:

“Do you trust your wife? What I mean is, do you think she'd go behind your back? Try to hamstring you? Because if you do trust her, there's no reason in the world you can't keep every cent of that money. If you want to keep that money, all of it, just give it to your wife. See, the IRS allows you a one-time-only gift to your spouse. It's good up to sixty thousand dollars. Tax free. IRS can't touch one cent. But you will need somebody to set up the tax-free gift, and that'll cost you.” 

Needless to say, I did not meet a tax assassin that day. No refund revelations were revealed. In fact, I sat through half an hour of my “accountant” complaining about new software updates before we even started. What, the IRS changed something this year?  

I wasted the next two hours answering a series of questions. Yes, I admit that I expected questions, but not like this. Everything asked was computer generated. A never ending series of if-then questions. I couldn’t see the screen, so my tax preparer was essentially just a tax software avatar. It felt like paying someone to do my laundry, and then sitting there watching them do my laundry. I can use a computer, so why not just do this myself!  

Actually, I’d already prepared my taxes online. I hadn’t filed anything yet, because I wanted to see how much more refund the tax professionals would get me. In the end, our refund numbers were nearly identical. That is, unless you count the “professional” tax preparation fee. I recommend counting it, because for me the quote was $320.  

Despite my disappointment at no hidden tax secrets, I did learn a money saving lesson that day. You can use what I’m about to tell you for good or evil. When all my tax paperwork was printed out by H&R Block, I was asked if I was ready to file with them or if I wanted to wait and think about it. I could either pay $320, or return home and do it myself for free. I didn’t feel that my tax preparer deserved $160 per hour for methodically entering answers I provided in a tax survey, so I paid nothing and filed my taxes myself.    

Free tax software is all most people really need. Companies promoting themselves as tax experts know this, but they continue to charge enormous fees. The most valuable part of the tax preparation process is the time involved. Somehow, this part is still given away for free. There’s a silent pressure for reciprocation that’s attached to freebies. Just keep this in mind if your taxes are prepared and you are quoted an amount you’re not comfortable paying. You have the choice to walk away. The preparation may be free, while the tax filing process (that you can easily do yourself) will cost you.

For those of you wondering about that $60,000 tax free gift from Shawshank Redemption, to my knowledge it doesn’t exist, at least not anymore. As of 2012, on IRS Form 709, the annual tax free gift exclusion is $13,000. If your spouse is not an U.S. citizen, the gift exclusion increases to $139,000. 

 

IRS resources for free tax preparation: http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers 

   

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