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Taxes Filed

April 12, 2021

It is time for my yearly rant against the tax software industry!

I just paid TurboTax $110 to file my taxes ($60 federal, $50 state). I know that I don’t have to do that. I know there are cheaper (and free) options. I know that even if I wanted to do TurboTax, there are better deals to be had. I probably should have sought those deals out, but I went into it thinking I was going to use TurboTax for the first pass, then file for free on my own like last year. Last year, I ultimately filed directly with the free fillable forms via the IRA. It wasn’t terrible. This year, once I had everything in TurboTax, and I just wanted to be done with it. I gave them my money. Aside from the fact that the industry is a scam and actively lobbies to keep taxes complicated, there were two major annoyances this year.

Annoying thing #1: They suggest me providing my tax documents by having them log into my financial institutions and fetching them for me. Why would I want to do this? If I’m going to enter my password information somewhere, I may as well just download the forms myself. It just seems unnecessary to have another company in the password loop. Via a smallish box in the bottom of the screen, they did allow me to upload a PDF instead. They also auto-ingested the information from the PDF, which is more convenient than manually typing it… so that somewhat redeemed them.

Annoying thing #2: I refinanced my mortgage in 2020, then it was sold almost immediately after I refinanced. I received three documents from 3 different lenders telling me how much interest I paid to each. TurboTax asked me a series of questions about this. This was slightly annoying in the first place. I know what the 1040 form looks like for this, and it just needs a single number! Quit asking me questions! TurboTax wanted to make sure I was not deducting more interest than I was supposed to, due to the TCJA updates. My mortgage is less than the cap, and we’d be grandfathered in anyway. I did not take a cash-out refinance. It is all deductible. The series of questions TurboTax asked somehow led them to incorrectly computed a partial mortgage interest deductions, and thus conclude I should take the standard deduction. I figured out a workaround, but it was significantly more effort to get to the right info into the 1040 than it would have been if I filled it out by hand. This is apparently a known bug that existed last year and was not fixed. What if I had trusted TurboTax, and didn’t already have my own excel calculation of my taxes that made this error obvious? It could have cost me a lot of money!

Last year, the straw that broke the camels back last year was the need for us to fill out Schedule C to account for some money T received to be on an interview panel. We ultimately owed an additional $13 dollars in taxes for this, but TurboTax wanted to charge us another ~$50 to upgrade to a version capable of filing that form. Um, no! We didn’t have that issue this year.

Anyway, it is done. We will receive a modest refund (about $2k), which is about where I like to be.

3 Comments leave one →
  1. April 13, 2021 6:40 pm

    I had a plan to use free IRS forms this year but… we may be too close to the deadline by now. I’ve never been able to use Schedule C on my tiny yoga income because the cost of the TurboTax upgrade is more than the tax savings from deducting business expenses. It has made me irrationally angry every year, yet I suspect I will still shell out over $100 to file taxes.

    We ARE taking the standard deduction this year. It feels really weird. I will probably start lumping deductions (January mortgage payments + charitable donations). I’m also holding out for a selfish hope that the SALT cap is raised (but… it probably shouldn’t be).

    • April 14, 2021 11:54 am

      Congrats on paying less in mortgage interest!!! That is a great accomplishment.

      I’m still annoyed at the way TCJA rolled personal exemptions into the standard deduction to make the standard deduction so high, then advertised it as “doubling the standard deduction!!!” I get that the SALT cap is mostly a hit to high income people. The mortgage interest deduction in general is also a bit suspect. Still it was complete political BS, and also incredibly annoying that the SALT cap doesn’t double for married vs. single. I’m theoretically fine with paying a bit more taxes for the social good, but not when I feel like it largely went to giving tax breaks to those even wealthier than me. (And where are my taxes on a postcard I was promised? A $110 postcard?)

      Deadline was extended until May, so you could use the fillable forms, probably.

      • April 15, 2021 9:01 am

        That’s the key for me too. I’m happy to pay my share of taxes, but I know it’s this way to scrape an extra few percent for billionaires.

        I have TurboTax all filled out, TBD if I’ll use it as a check on my own numbers or just submit by the deadline.

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