Does TurboTax, TaxCut And Other DIY Tax Software Really Save You Money?

Posted on January 13, 2008

The obvious answer is…….Yes! The not so obvious answer is that it might cost me well over $300 dollars this year.

First, the software can usually be purchased for next to nothing after rebates or through other programs. SlickDeals is a great way to scour the net for a deal on the software you want.

The other factor to take into account is your time and stress in having to deal with taxes yourself. The time and stress will be extremely personal decisions that we each must measure for ourselves. The only thing I will say is that the software tends to be fairly straightforward and not as scary of some people might think.

Finally, the last thing to take into account is the risk and cost of mistakes. I can tell you from first hand experience that making one honest mistake can quickly destroy years of frugality. I am currently fighting to lessen the fines from not realizing that I had to pay state taxes by April 15th, even when you file for extension.

We were waiting on the social security number for our son after his adoption was finalized, so I filed extensions for both sets of taxes. Everything was fine until a few months ago the NJ Division of Taxation sends me a bill for over $300 dollars in interest and late penalties. This is over 30% penalty considering that the bill was about $900 dollars. Silly honest mistake that I really should have known better, but hopefully NJ will remove the late penalties and the bill will be under $100 dollars. A severe mistake could increase your risk of getting audited which would most likely cost you much more in stress and fees for representation.

I am not here to get everyone to their local CPA, but I want everyone to consider all the sides when deciding between tax software and using a professional. I may still do my own taxes again this year, but I will make sure I am a bit more careful if I don’t use a professional. More and more I am learning the effeciencies that come from focusing on your own area of expertise and letting other focus on theirs. That is great in theory until you have to shell out $200 to get your taxes done. I will follow up our decision as it gets closer to tax time.

» Filed Under Finance Software, Frugality, Money Savers

Trackbacks/Pings

Frugal For Life » Blog Archive » Festival of Frugality Week 108: Quotable Edition on January 15th, 2008 9:41 am
Save Money By Always Asking For Fees To Be Removed | The Happy Rock on February 18th, 2008 1:40 am
The Happy Rock Spends The Big Money For Tax Prepation | The Happy Rock on March 15th, 2008 11:16 pm

Comments

8 Responses to “Does TurboTax, TaxCut And Other DIY Tax Software Really Save You Money?”

Shela on January 13th, 2008 1:31 pm

Ah, the simple life!

I file form 1040EZ, and so I can honestly say that I do not need TurboTax at this point in time.

I timed myself last year, it took exactly 17 minutes total to complete my federal, state, and local tax returns.

Granted, I may own property and have a small business in the future, and tax preparation software or professional help might be necessary. But for now, I am enjoying the lack of complications in my life.
Will (8 comments.) on January 15th, 2008 3:15 am

I’ll have to agree with you on this one Rock. The piece of mind involved with having a professional do your taxes is worth every penny!
Paula (1 comments.) on January 17th, 2008 10:22 pm

Hmm… Maybe you can look at it this way: the money you save with a frugal or money-saving step elsewhere in your budget could pay for the difference in cost for this expense!
The Happy Rock (163 comments.) on January 19th, 2008 2:43 am

17 minutes that sounds like a record! Simply is good I agree!
The Happy Rock (163 comments.) on January 19th, 2008 2:51 am

@Will - The trick is finding a CPA you trust, because HR Block or similar service doesn’t give me a piece of mind.