General Question

windex's avatar

What is the best way to get the most $ back when filing taxes?

Asked by windex (2926points) February 17th, 2010

Last year I did my taxes w/a new guy because I moved.
He somehow managed to end up with 0 dollars.

I want to see what you guys recommend. (I want it to be 100% legal off course)

Turbo Tax? H&R Block? Friend of a friend? ...

Thanks

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17 Answers

erichw1504's avatar

I recommend Turbo Tax.

CMaz's avatar

If you make under a certain amount. I think it is 45k.
The IRS will do your taxes for free.

drClaw's avatar

I second the Turbo Tax recommendation!

Skippy's avatar

Turbo Tax if you want to do it yourself, but H&R is worth the $$‘s if you have any deductions that you are eligible for. I did Turbo myself a few years ago then went to Block. They got me 2,000. more that I did myself. No cheating – legit deductions I didn’t realize I could take.
PLUS if there’s a problem, they will fix it or go with your if you’re called in.

robmandu's avatar

I have 1099-DIV, -INT, -MISC forms. I own my primary residence as well as some rental property. I’m married with children. I contribute money to charitable organizations.

Point is, my taxes are definitely not 1040-EZ.

And I’ve happily used TurboTax.com for several years now. I had a guy do my taxes once. He basically took all the paperwork I’d gathered and organized and simply punched numbers into whatever his tax preparation software was. And then charged me over $250 for giving it all back neatly stapled together.

Don’t pay someone… just do it yourself. The software is easy and inexpensive. Takes me less than 2 hours to do all of mine. And I’m super-cautious carefully reviewing each step multiple times.

And to @Skippy‘s point, if you take your forms into H&R Block, they’ll often evaluate you for additional deductions for free.

drClaw's avatar

@robmandu couldn’t have said it better myself.

Skippy's avatar

@robmandu You sound like my house! Does the software prompt you for vacancies and utility expenses as deductions on the rentals? That’s what I missed – I had one unit empty for 6 mos and didn’t realize I could take it off….

maybe I should look at it again!

robmandu's avatar

@Skippy, in short, yes.

Here’s descriptive info about rental property expenditures direct from TurboTax online:


RENTAL EXPENSES

You can deduct any ordinary and necessary expenses required to manage, conserve, or maintain property that you rent to others.

The most common rental expenses are already listed for you on Schedule E, including advertising, auto and travel, cleaning, management fees, mortgage interest, taxes, insurance, repairs, and so on.

A few entry notes:

- Do not duplicate any expenses you have already entered on other forms, such as for another property, a business on Schedule C, or as a home office deduction on Form 8829.

And some guidelines on expenses:

- If your property is vacant but available for rent, expenses are still deductible, provided you are making an effort to rent it.

- If property is converted to rental use from personal use, expenses that are annual (such as interest and taxes) must be prorated between personal use (deductible on Schedule A) and rental use (deductible on Schedule E).

- If part of the property is used for personal use and part for rental use, the expense must be divided as though there are two separate pieces of property.

For example, suppose you own a duplex and live in one half of it while renting out the other half. Your expenses for the year include:

Mortgage interest – $10,000
Property taxes – $1,000
Insurance – $400
Yard maintenance – $600
Repair tenant’s stove – $100
Paint interior of tenant’s apartment – $400

You can deduct half the mortgage interest, property taxes, insurance, and yard maintenance. You can fully deduct the repairs and painting.

Expenses you pay to prepare a property for rent for the first time are not deductible because there has been no rental activity. These expenses may be added to the cost/basis of the property and recovered through depreciation.

Similarly, any expenses you pay for improvements to your property, such as assessments for street and sewer projects, roads, or sidewalks are not deductible but may also be added to the basis.

However, any tax assessments for operating costs are deductible expenses.

njnyjobs's avatar

I have used Turbo Tax for the past 10 years. I have also helped prepare other people’s tax forms using the software. There were a few times that I used the software to review other people’s returns done by paid preparers and found additional items that could have lowered their tax liabilities. It’s also great if you have income earned from multiple states.

windex's avatar

Tnx everyone, so it’s between TT and H&R

I wonder if I can claim my evil land lord’s Dog as a dependent.

@njnyjobs: so what ur telling me is that I need start hooking in Oregon a couple of times a year?

I pretty much F’ed up cause of 1 unlucky decision (it’s something out of a Tarantino movie, you won’t believe it, but I pretty much have a sh*t load of debt. so I need all the help I can get, before I’m killed lol)

njnyjobs's avatar

@windex I’m not telling you what you should do or not do…. especially in Oregon. But if you’re saying that you can do a hookshot while playing against the TrailBlazers, then income earned in Oregon needs to be declared in your Return and an OR State Return filed for that income.

CyanoticWasp's avatar

The best way to get a huge refund is to have the most stupidly conservative withholdings taken out by your employer, and to elect “yes” on any payment you get from others that requests whether tax should be withheld.

That’s also the absolute worst way to pay your taxes, but it’s the best answer I could come up with for your question.

If you’re asking for a recommendation for the best tax preparation method (software, process or agency) then that’s a different question entirely.

Val123's avatar

I’d go with H&R Block the first year, then use Turbo Tax the 2nd year and use the previous year’s return as a guide.

YARNLADY's avatar

After trying TaxAct, H & R and TurboTax, we choose Turbo Tax. It is the most complete, and easiest to understand style of the three. We have a relatively complicated tax, with investments, rentals, and multiple other deductions.

The way to get the most money back is to have the most money withheld throughout the year, but that doesn’t make any sense financially, when you could be earning interest on the money instead of letting the government use it.

jerv's avatar

I think that it’s highly dependent on your situation.

Personally, my taxes are so simple that there isn’t much wiggle room except in filling out a W-4. I earn too much for the EIC but not enough to run into other issues. I have no credits (except for this year’s “Make Work Pay” credit) or deductions that I can claim, (no kids, no investments, no business expenses, no nothing) so the standard deduction is always a better deal for me. I simply went to the H&R website (I was eligible for free e-file), plugged in my W-2, my wife’s W-2, my 1099-G—(from my unemployment), and that was all there was to it.

Now, @YARNLADY has a complicated enough return that she wouldn’t be able to get off as lightly as my wife and I do, so what works for me definitely wouldn’t work for her and might not work for you.

Also, it is quite easy to outsmart yourself and make yourself look like a fool when you start adjusting your withholdings. Sure, it would’ve been nice to have that extra $150/month last year, but without knowing how much income we’d have, what the tax rate on that would be, and how many dollars each exemption claimed on the W-4 would calculate out to, it’s not worth playing with your withholdings unless you can afford (or are) an accountant or tax laywer. The one time I tried, the tax rates changed enough that we wound up paying in nearly a months rent as opposed to getting nearly twice that much back. Considering how minor a tweak we made, we figured it best to never screw with our W-4 again.
While increasing your withholdings doesn’t make financial sense since you could take that money and sock it away to earn interest, realistically the only people who can invest that money are people quite unlike me; people who don’t have to worry profoundly about making rent each month or have to decide between medical co-pays or food.

So to recap, playing with your withholdings is usually a crap-shoot, and the rest of your tax return depends on too many unknowns to really give an answer. Do you have rental properties? Medical expenses? Business expenses? Anything like that? If not, if your taxes are as simple as mine, then there really isn’t a way to increase your return without cutting your throat throughout the previous year.

Skippy's avatar

@robmandu Thanx loads. I’m going to try it and see what I come up with. We have 6 rentals, and it gets complicated with each house. I have kept each cost for each property on a seperate spreadsheet so I know what’s happened on each.

I appreciate your pulling this info for my review, as well as others that can use it!

crazyivan's avatar

The trick to getting the most out of your tax return is owing the government at the end of the year. I know, it sounds crazy, but think about this:

When you pay taxes through the year, you are essentially loaning the government money interest free for the remainder of the year. At the end of the (accounting) year, you file for your return and all they do is give you back what you’ve given them less what you owe. If you took the same $$$ and put it in a low yield savings account, you would be earning interest on it all year.

Then at the end of the year, you simply file your taxes, pay what you owe from this savings account and keep the rest. This is the only way to get the most out of your tax returns.

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