36 responses

  1. rgv homes
    March 2, 2012

    cool post! Keep up the sweet work!

  2. Free Tax Filing
    December 9, 2011

    It’s always very helpful when you have online softwares that can do the trick. But always check whether the software you will use is reliable and will really help you. I’ve also been using Turbo Tax and it’s very useful. You just have to do your part by keeping all the documents accurate and stored in one location so you don’t lose them.

  3. YFS
    December 2, 2011

    John@MoneyPrinciple,

    Gotcha.. so more tax isn't necessarily paid by a business since there are adjustments and exceptions to the VAT. But, there may be an overhead increase by a business and government to handle the administration of the VAT.

  4. UltimateSmartMoney
    December 1, 2011

    Have you heard of TaxAct? I believe federal tax is free and just have to pay for state. It is more affordable compared to TT and H&RB software.

    • YFS
      December 1, 2011

      I've heard of tax act. I even used it 2 years ago.

  5. Hunter – Financially
    December 1, 2011

    I have used both TT and H&RB, and very happy with both. I generally go with the lowest cost package and that has been H&RB the last few years as they offer a huge discount to military service members. I don't recall any problems with their customer service, but things get a little frantic for tax filers and tax preparers at that time of the year.

  6. krantcents
    December 1, 2011

    I use a CPA, a holdover from my business days. He is worth it and I only pay a small amount for than a turbo tax like program. The best part is I can ask question anytime and there is no cost.

    • YFS
      December 1, 2011

      This is the main benefit of having the professional relationship. You can usually get your question answered

  7. funancials
    November 30, 2011

    Last year my taxes were more complicated than normal so I thought I'd leave it up to H&R Block – big mistake. I had to pay for 2 states upfront, only to find I only needed to file 1. For this, they owed me a refund.

    Every time I called to ask about my refund, they thought I was referring to my tax refund – it was a headache.

    This year I'll be doing my own as I trust myself more than some seasonal-hire "tax professional."

    • YFS
      November 30, 2011

      Ouch! sorry to hear about your situation. But, have you tried a trusted competent CPA or Enrolled Agent?

    • Eric J. Nisall – Dol
      December 1, 2011

      That's exactly why I rail against those types of places who don't always use knowledgeable and experienced preparers.

      Just look at what they did to this poor lady: http://www.dollarversity.com/take-precautions-usi

  8. John@MoneyPrinciple
    November 30, 2011

    We have three main taxes –

    i) income tax that is levied on income and that is fairly progressive,

    ii) value added tax that is an EU speciality but is essentially a sales tax which is not on all sales and is also used to evaluate the contributions to the European Communuty as well and

    iii) council tax which is paid to the municipality or council and that is really to with how big your house is.

    Income tax has been around for generations, VAT replaced Purchase Tax when we joined the EEC (as it was) and Council tax was a complete bodge up because in the late '80s the government tried to introduce a Poll Tax and that's really why we lost Margaret Thatcher…..

    One of the reasons why I like the idea of the Three Taxes as on TheMoneyPrinciple blog is that particularly the Excess Interest Tax could raise a lot of money for the exchequer and save the tax burden on everyone. Because undoubtedly high taxation stops activity but it does pay for health care and other things that make society a little more tolerable…

    Accoutants are always happy of course in a professional sense at least!

    • YFS
      November 30, 2011

      What is your opinion on the VAT tax. Do you feel that it makes the cost of goods higher since at each stage of the manufacturing process is taxed?

      • John@MoneyPrinciple
        December 1, 2011

        Before we had VAT there was Purchase Tax which was levied down to the individual item and made it very messy because it meant that the ordinary guy or girl couldn't buy trade goods. There wasn't a tax AFAIK on services. VAT has a number of advantages:

        i) It is fairly easy to administer by the government at least – essentially you just have Input tax that you pay and Output tax that you charge. For the trader there are complications – various goods and services are free of tax – food, children's clothes and printed newspapers for example but snacks, restaurant and take-out, adult clothes, magazines, garage servicing and petrol are taxed. And different countries have slightly different rules and rates. Electronically delivered goods across EU borders have different rules but by and large it is as simple as possible. It is a very broad tax as you see.

        ii) The ordinary person can buy at trade prices – and pay the VAT but of course they can't reclaim it. This makes it better for people and there is much more competition than there used to be because purchase tax was levied effectively only at the trader-public interface.

        iii) This makes it quite neat and self-correcting – you just pay or reclaim the tax every quarter or whenever.

        iv) The total VAT receipts for a country are a measure of its business activity. This is why it is used by the EU to calculate the individual contributions – I think it is 1% of VAT receipts.

        Does it make things more expensive? The real answer must be just to measure the government income comparing to purchase tax but then there has been a gradual move away from direct taxation over the years so that is difficult to say. The rate in the EU has to be at least 15% – in the UK it is 20% at the moment because the government raised it. Most EU countries are around this level. That is probably rather more than your sales tax so yes, if you had it in the US, it would increase prices but there are always swings and roundabouts and other things would be cheaper.

        This probably doesn't answer your question…!

      • YFS
        December 1, 2011

        What do you mean their would be swings and roundabouts? My interpretation of the VAT is that there is a tax levied at every step of the manufacturing process. Do you have examples of what goods are positively affected by the VAT?

      • John@MoneyPrinciple
        December 1, 2011

        The swings and roundabouts comment was to do with the changes between direct and indirect taxation. So while indirect taxation may have increased, direct taxation (income tax) has decreased. That's why I couldn't really say whether it caused an increase in prices overall. Sometimes governments kick themselves in the bahookie because changes in VAT are reflected in the cost of living indices. So they put VAT up (as happened recently here) and then inflation as measured goes up – because it does! People are paying more for their flat screen TVs.

        VAT works this way. Suppose you have a company that makes plumbing bits. This company has employees, equipment, requires raw materials, electricity and services etc etc. On certain things that your company uses VAT is charged by your supplier – you may need a new machine or oil for the machine for example. This is your Input Tax.

        When your product goes to the wholesaler, you charge VAT on that. This is your Output Tax. Every period (it can be month for bigger businesses but generally it is quarter), you send the difference between total Output Tax on your products and the Input Tax that you have paid to the government.

        Now a shop buys your widgets from the wholesaler and puts them out for sale charging VAT on their sale price which is their Output Tax. They do the same so their Input Tax reclaims some of your Output tax. Maybe the wholesaler sells some directly to special customers who are not registered for VAT – then they can't reclaim the Input Tax.

        The rules can be quite complex to cope with the many varied types of business – services are treated a little differently and in the UK you don't have to register until you turnover a certain amount per year (turnover, not profit) so small self-employed traders for example can make a reasonable living without getting involved in VAT (this is not true of most EU countries by the way – most insist on all businesses being registered for VAT).

        It is a chain and there is tax charged at every stage but most of this is reclaimed so it is not an additional tax. The idea is just to ensure that tax is paid somewhere! It is quite a neat idea and fairly efficiently implemented.

  9. John@MoneyPrinciple
    November 30, 2011

    We used to have a very efficient Inland Revenue i n the UK who were helpful and understanding.

    Then they replaced their in-house software which worked with something contracted out that was so awful that even the Inspectors couldn't understand it. For example the software couldn't link you with your employer so you had to enter your annual salary and tax paid etc yourself.

    Mistakes occurred all over the place. Then the government made the system even more complex so you had to have an accountant, which cost the earth because you had to make a return yourself.

    It is getting a bit better and no doubt we do have similar software in the UK but tax is always a pain in the derriere…. Apart from the pain of paying it of course but then employees pay via the employer every month using Pay As You Earn which works quite well and is self-correcting if an error occurs.

    • YFS
      November 30, 2011

      The USA has a pay as you earn system as well. But, we have so many freaking taxes it's unreal. Federal tax, state tax, Medicare, Social security… blah blah blah. The federal tax is progressive and the other taxes are regressive (Flat).

      Wow accountants in the U.K must be happy!

  10. Roshawn @ Watson Inc
    November 30, 2011

    Most recently, I have used TaxAct.

    • YFS
      November 30, 2011

      I've used Tax Act before as well. I think it is great for checking a CPA's work or simple tax situations

  11. Jami
    November 30, 2011

    TurboTax all the way!! I love it. Makes things easy for me. peace

    • YFS
      November 30, 2011

      How long have you used Turbo Tax? Also, what key features would make you switch tax software providers?

      • Jami
        December 1, 2011

        **I think** about 2 or 3 tax returns, and I did use TaxSlayer once or twice. I base on how much it's going to cost me to file online. For example, this coming tax season, if the online companies I would consider using are charging too much for both federal and state, I will paper file state. I always did my own paper returns except for one year. And once online filing started, I've used it, since **I think** 2005. peace

  12. femmefrugality
    November 30, 2011

    I always file my own. But this year…..there's so many changes I might pay to have them done. Then in subsequent years I'll just use that one as a model keeping an eye out for any changes in tax law.

    • YFS
      November 30, 2011

      I plan on using my CPA and running a tax software to double check her work. When will you make your decision to go with a pro?

  13. Miss T @ Prairie Eco
    November 30, 2011

    We used Quick Tax last year and we loved it. It interfaced well with our Quicken program. I think Quick Tax is similar to Turbo Tax in the States. We file our own taxes too now that we both have a full understanding of personal finance. Gone are the days of paying for an accountant.

    • YFS
      November 30, 2011

      This is an interesting way of thinking. I only hire CPA's who can teach me something. If they simply file taxes they are of no value to me. How much does a tax pro cost compared to tax software in Canada?

      • Miss T @ Prairie Eco
        December 1, 2011

        Their hourly rate is equal the cost of the software.

  14. Aaron Hung @aaronhun
    November 30, 2011

    I do mine online at TaxAct. It's pretty easy and cheap but I'm not sure if it's the same anymore since I'm married :D

    • YFS
      November 30, 2011

      I used Tax Act before I began to acquire rental properties and several business. I still will run Tax Act in conjunction with profession help. Are you running Tax Act for 2011 taxes?

  15. Eric J. Nisall – Dol
    November 30, 2011

    I do my own taxes on Intuit's mid-level professional program ProSeries since that's what I use for my clients.

    I hate those packages "easy" programs because they assume people know the rules and allow things to slip through the cracks. A couple of examples:

    –Charitable deductions that aren't really deductions because something of value was received in exchange (dinners, raffles, event tickets, etc.

    –Medical insurance carried to schedule A that has already passed through a tax-advantaged plan like a cafeteria plan on a W-2

    –reporting of prior-year capital loss, foreign tax credit, and charitable deduction carry-forwards that regular people may not know should be brought forward.

    Plus, they aren't available year-round to answer tax questions or make sure that people are making the right year-end tax moves the way that an experienced tax preparer does for his/her clients

    • YFS
      November 30, 2011

      Great advice. I guess this is the reason why someone should seek help! Either you forget something or tax deductions you shouldn't.

      • Eric J. Nisall – Dol
        December 1, 2011

        What's sad is that people think that it is a foolproof program, and that it makes them an expert. I can only imagine what I would find if I did a review of their prior years returns!

      • YFS
        December 1, 2011

        I'm sure you will find a lot. The software does not replace a competent tax professional

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