- 1 Online Tax Prep Battle: TurboTax Deluxe vs. TaxACT Online Plus
- 2 How TurboTax Made an Error on My Tax Return and Refunded My TurboTax Fees
- 3 Free Tax Refund Calculator for 2016 from TurboTax Online
- 4 The Musician’s Guide To Taxes (Plus Free Tax Spreadsheet)
Online Tax Prep Battle: TurboTax Deluxe vs. TaxACT Online Plus
TurboTax Deluxe and TaxACT Online Plus are only separated by a half point in our rankings this year. They're both exceptional online tax preparation services and they share many attributes. Either one of them will get the painful job of filing your 2015 taxes done, so how do you choose? We've put the two services head to head (and side by side) so that you can see the differences and similarities and pick the one that's right for you and your particular financial situation.
Right from the start, let's be clear: These two services have more similarities than differences. For example, they both use the same structure. Rather than requiring you to fill in the fields on the Form 1040 and its related IRS forms and schedules, they present screen after screen to you in a giant wizard-like format. You answer their questions by entering data or selecting the correct option from a list or clicking a button. When you're finished with a screen (or not), you can click another button to move on to the next screen or back to the previous one. Or you can use navigation tools to move to another section completely. Note that the pairs of images below that show the differences in the interfaces of the two services are ordered alphabetically, so that TaxACT is always first, followed by TurboTax.
TaxACT has additional navigation tools that TurboTax Deluxe lacks, however. These can help you find the exact screen you're seeking. You can see a comprehensive list of all forms and schedules included or you can search for a page by entering a topic. The site also displays a list of all of the forms, schedules, and documents used to prepare your return.
In the background, the sites are depositing your answers on the correct lines in those forms and schedules that you won't see until you're done. TaxACT sometimes lets you enter data directly on reproductions of forms (like the 1099-INT), but you can opt for the progressive Q&A.
TurboTax and TaxACT cushion you from the complex language that the IRS uses, the sketchy descriptions of what it expects on every line and the printed instructions in the tiny type that you pick up at the post office.
Instead, TurboTax and TaxACT use simple, understandable language for the most part (some tax terms are just what they are). Both companies have refined this approach over the years, simplifying their complex content and making it more accessible to users who aren't tax professionals.
They offer summaries at the ends of sections. They let you revisit topics you've already completed. They do a final review of your return and point out errors and omissions. Then both transfer applicable data to your state return. If you've been conscientious about your work, you'll be able to print or e-file your return using either site.
So why the half-point difference in scores? The answer has to do with how tightly each focuses on the content being presented, how accessible the process is from mobile devices, and what the overall user experience is like.
If you were sitting in a tax preparer's office, you'd undoubtedly engage in some small talk before you launched into your discussion of income and deductions and credits. TurboTax Deluxe doesn't actually engage in small talk, but it uses the first few screens to set a friendly, casual tone.
TaxACT Online Plus gets right to the point. It immediately asks for your full name, Social Security number, date of birth, and occupation. There's no greeting, no "How are you doing?" and no colorful-but-tasteful graphics.
Both approaches will get you to your goal eventually.
But don't be fooled by TurboTax's folksy charm. After its friendly early screens, it launches into the same types of just-the-facts queries as TaxACT. Both sites start to offer extra help even in these early, fairly-cut-and-dried Q&As. Both, for example, give you the option to get more specific guidance on what individuals in your life could be considered dependents, an issue that's gotten increasingly complex. They continue to offer these breakout sessions in a number of thorny areas throughout the site.
Both sites ask you to select the tax-related situations that apply to you near the beginning; they display boxes with pictures and text describing things like marriage, dependent, dividends, and home ownership. You click on the ones you experienced during the tax year. TurboTax assures you that you'll have a chance to work with these more later and then moves on, but TaxACT starts its educational process early.
TaxACT's Life Events feature probes for more specific information about your situation and produces multiple screens full of clearly written explanations in the form of Q&As and articles that address the tax implications related to the topics you selected. You can breeze past this if you want, but it's a terrific tool, a great way to get a headstart on exploring the issues that affect you.
Both hyperlink words or phrases that may be unfamiliar or drop in links at the end of a question or statement signaling that you can open a window for a more thorough explanation by clicking on them. TaxACT almost always displays (sometimes) context-sensitive questions-and-answers on the edge of the screen; TurboTax does this less frequently, but the additional content is always relevant.
If you need more detailed explanations or help where little is provided on the main screen, you can enter a word or phrase in a search box to access the more comprehensive guidance that both offer. Both sites usually provide multiple answers in the form of FAQs or links to related data entry screens or brief (or sometimes, lengthy) articles. TurboTax's content is a bit more targeted and clearly-written.
And if you've exhausted the resources of either site and still have a question, you can talk to a tax professional associated with either company via phone call.
Intuit offers several, including one app that supports the same content as the browser-based version. So you can create an account and start your return on your desktop or laptop or tablet or smartphone and continue working on it using any of your other devices. When you sign in, you can pick up where you left off.
Three other apps are available from Intuit. TaxCaster helps you estimate your refund. MyTaxRefund will locate your refund in its journey and tell you when you should be seeing it (even if you didn't use TurboTax for your preparation). And ItsDeductible helps you record charitable donations year-round and move that data into TurboTax once prep time rolls around.
Both Intuit and TaxACT employ rigorous security measures, on a par with those used by financial institutions, to keep your data safe. TurboTax Deluxe and TaxACT Online Plus will automatically log you off if you've been idle for a period of time, and you'll have to enter at least your password to get back on.
TaxACT requires even more manual verification from you. When you try to log on again, you'll have to click on a button labeled I'm Not a Robot. I've also been asked to look at a series of pictures and click on those that contain recreational vehicles or trees or storefronts.
TaxACT Online Plus and TurboTax Deluxe are the best personal tax preparation websites available to you this year, in my opinion. Either could serve you well as long as your needs fall within the purview of the tax scenarios supported. TurboTax Deluxe is our Editor's Choice this year, however, because of its streamlined, its accessible help resources, its mobile capabilities, and the unparalleled user experience it provides.
How TurboTax Made an Error on My Tax Return and Refunded My TurboTax Fees
TurboTax made an error on my state tax return and then refunded 100% of my TurboTax filing fees for both my federal and state returns.
I finally used an Online Tax Filing Service this year to simplify the process of filing my business and personal income tax return.
Which TurboTax Product Did I Use?
I decided on the TurboTax Home & Business product, as it offered exactly what I needed to file my taxes this year.
The process went smoothly for filing both my federal and state taxes, and I thought everything was fine until a few weeks later when I received a notice from the IRS.
What Was the TurboTax Error?
TurboTax made an error in my Wisconsin state tax return.
While TurboTax correctly calculate Underpayment Interest charges for my federal return, the TurboTax software apparently failed to recognize the necessary Underpayment Interest charges on my state return.
So even though TurboTax indicated that all of my data was 100% correct (I had all green check marks during the verification process), I failed to pay my state tax Underpayment Interest and received a “Notice of Amount Due” letter from the IRS.
It really wasn’t a big deal, as I still had plenty of time to pay before the tax deadline, so I simply paid the amount due to avoid any further issues.
However, TurboTax had made an error, and I felt like I was due a refund per their guaranteed 100% accurate refund policy.
How Did TurboTax Customer Service Handle the Error?
I contacted TurboTax on 2 occasions and received 2 different responses, which turned out to be fortunate for me, as the second occasion resulted in a quick and easy refund.
I contacted TurboTax via their online chat option both times.
The first time I contact TurboTax, I was told that their policy would refund 100% of both my federal and state filing fees if there was a programming error in the TurboTax system, which was a nice bonus, as I originally thought that I would only receive a refund for my state return where the error occurred.
However, I was also told that I would need to provide the customer service representative with all of my business and personal financial data, so that they could recreate the error within the TurboTax system to verify that it was a TurboTax programming error and not a human error on my part.
Once they had verified the error, I would then receive my refund.
Although I understand the necessity to verify issues before handing out refunds, this wasn’t exactly an attractive option for me, as it would have taken lots of time to go over the information with them again.
I responded that I would contact them again during the following week when I had more time to go over my information and resolve the situation.
I followed up with TurboTax customer service again the following week.
I was already logged in to my TurboTax account and ready to verify my information along with the TurboTax mistake.
I once again explained the error that had occurred to the new customer service representative, asked for a refund, and indicated that I was ready to review my information if necessary.
They asked for my TurboTax order number and then responded that they would provide me with a full refund.
They followed up with a refund verification code, and my problem was resolved.
What Made TurboTax Refund My Money?
I’m not quite sure what the difference might have been between the first and second customer service experience.
By the second time around, they may have already recognized that a system error was occurring in my state and were just automatically issuing refunds to complaining customers who qualified.
Their customer service systems were extremely busy the second time as well, so maybe to avoid further delays, they were told to refund all complaints that appeared legitimate in nature based on certain issues.
I don’t really know the answer as to why no verification was necessary the second time I contacted customer service, but I basically received a refund just for saying that I had an issue.
Would I Use TurboTax Again?
I would definitely use TurboTax again.
The process of filing my taxes online was extremely simple, and I saved a ton of time compared to filing my returns by hand in the past.
Being able to go back and make a small adjustment for some previously undiscovered income like a gift card reward without having to recalculate all of my other data by hand is an incredible benefit.
I would hope that my particular Underpayment Interest issue in the TurboTax program will be resolved by next year, but I’m making quarterly tax payments this year anyway, so that shouldn’t be an issue either way.
Plus, I ended up using TurboTax for free in the end, as they refunded 100% of my money due to their programming error, although I’ll be more than happy to pay for their service again next year.
Did You Have TurboTax Errors or Other Online Tax Filing Service Mistakes?
If you’ve ever had an error when filing your taxes with TurboTax or another online tax service provider, please feel free to share your experiences in our comments section below this article.
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Problem with Turbo Tax inputting my tax refund from Wisconsin. I put it on line 10 of Federal and Turbo Tax puts it on line 6 and 42. of the Wisconsin tax form. Wisconsin Dept. of Revenue says it should not go on line 42. Who is right?
Free Tax Refund Calculator for 2016 from TurboTax Online
Tax season is about to be in full swing in just a few weeks. Therefore, there is no surprise that taxpayers are eager, to find out how much they can expect this year via their tax refund. With TurboTax, this can be easy.
All you have to do is use the tax refund calculator and you will be able to find out how large or small your tax refund will approximately be this year.
Table of Contents
The tax refund calculator is free to use. All you have to do is click here and enter some personal information (i.e. age, marital status, dependents, income, etc.) so the calculator can get to work and provide you with an estimated refund.
However, keep in mind when using the calculator that it is only providing you with an estimation. Your actually refund could be smaller or larger depending on how accurate the information you entered into the calculator was.
The refund amount that you will receive is determined by analyzing the income tax and the federal income tax that was withheld throughout the year. In the event that you had too much federal income taxes withheld from your paycheck, you will receive a tax refund during tax season.
TurboTax is a reputable brand that has been around for years and they have a reputation for helping taxpayers receive their largest tax refunds possible. When you utilize their services, you can do so for a low cost or free.
Therefore, it is recommended that you use the free calculator because as long as you input accurate information into the calculator you will receive accurate results.
Additionally, this calculator is ideal for business owners too. It not only allows taxpayers to see how much they can expect to receive back in the form of a refund but it also allows taxpayers to see how much they will have to pay the IRS in the event that they are not going to be receiving a tax refund.
The calculator is easy to use and it does not ask you for specific personal information, such as your name, social security number/EIN, or any other confidential information, in order for you to receive your estimate. Therefore, you can be 100% confident that by using this calculator you will not have to worry about anything happening to your confidential information.
Overall, TurboTax’s online tax refund calculator benefits taxpayers in numerous ways. You can have an idea of how much of a tax refund you will receive so you can plan your finances accordingly. Additionally, other products and services are available that can help you out during this stressful time of year.
TurboTax will ask you easy questions and fill in all the right tax forms for you. You can get live answers by chat where they have credentialed TurboTax experts CPAs and EA’s. Plus TurboTax online completes thousands of error checks to ensure that your tax return is correct so you won’t trigger an audit.
The Musician’s Guide To Taxes (Plus Free Tax Spreadsheet)
A Quick Note: All of the information below pertains to taxes in the United States. Every country works differently so do research on self employment taxes specific to your country. I am by no means a tax professional, but hope to help you better understand the process of paying self employment taxes.
When I was 16 years old I started my first job: working at a pizza place. It paid minimum wage, but I was happy to be making any money at all. I started in the middle of a billing cycle so I didn’t get my first check until 3 weeks after I had started working. I had done several intense training days and a few 20 hour weeks, so I figured the check should be pretty decent. “I’m no mathemagician,” I thought to myself, “but minimum wage x 75 hours or so = prolly bout like a thousand dollars.” When I opened the envelope, I was shocked. Surely there was a misprint on the check.
The amount was drastically less than I was expecting. After looking closer, I could see how many hours I had worked (75 or so) and how much money I had earned (prolly bout like a thousand dollars (actually less)). But then there was another category subtracting money: taxes.
The pizza place was automatically deducting taxes out of every paycheck. This is standard for anyone with with a normal day job. At the end of the year, you punch a couple numbers into Turbo Tax and, if it’s at all like the commercials, the computer says, “You get a $1000 rebate” and it pretty much feels like winning the lottery.
But you don’t work at a pizza place. You’re a professional musician. Unfortunately for us, self employment taxes are a little more complicated. Let’s break this down so you know what to do. When April 15th rolls around it’s not going to feel like winning the lottery, but you’re also not going to be thinking, “Where am I going to get money to pay my taxes?”
Taxes are a pain in the ass, but they’re also crucial to our society. I don’t like paying taxes either, but I do like driving on paved roads, having criminals held in jail and other nice things that taxes provide. It sucks, but it doesn’t. So pay your taxes, and don’t whine about it.
Also, if you’re just starting your career as a professional musician you may not make enough money to have to file taxes. Click here to find out if you need to file a tax return.
When I worked at the pizza place, they did all the tax work for me. “Doing my taxes” at the end of the year just meant double checking their math and making up the difference. When I made the jump to being a professional musician, I had to do the math myself. If you take nothing else away from this article, take this with you:
You should be thinking about your taxes all year long.
The confused feeling I had when my paycheck was less than I expected was one thing. But if you aren’t thinking about taxes during the year, you’ll have a similar feeling, but multiplied by about 50. A feeling of, “I owe how much?”
Not only should you be thinking about taxes all year long, you’re required by law. Self Employed Tax Payers are required to make estimated quarterly payments, in addition to an annual tax return (the one due April 15). Don’t think of this as a bad thing though. By paying your taxes 4 times a year, that’s less work leading up to April 15. While you’re technically required to pay quarterly taxes, many self-employed musicians still pay yearly and it works out fine. I can’t however recommend this method (based on the law mentioned above).
Regardless, you should be thinking about this stuff all year long. Don’t put it off. The longer you put it off, the more you’re going to hate yourself at the beginning of April.
As a self-employed professional musician, there’s two main types of tax forms you’ll encounter.
This is the most common tax form that you’ll deal with. As a musician, you are mostly hired as an Independent Contractor. At the end of the year, the person who hired you includes in their taxes how much they paid you. They send that information to the government, and you’ll receive a 1099 from them. You’ll get these from anyone who has paid you more than $600 in a year. The more people you work with, the more of these you’ll get in the mail. Last year, I had about 15 1099 forms.
A 1099 form only reports how much money you were paid. No taxes are deducted by the employer (like at my pizza place job) so you are responsible for doing the math and paying them yourself.
This is the more standard tax form (like what I received from the pizza place). Your taxes are automatically deducted out of every paycheck you receive. You’ll get a W2 form at the end of the year summarizing all the taxes taken out. Then you’ll double-check the math and make sure the taxes taken out are all correct. This form is common for jobs that are ongoing, like teaching at an academy or working part time at a church.
We’re just going to rip this off like a band-aid and get it over with. Here’s the current federal tax rates as of 2014:
- 10% on taxable income from $0 to $9,075
- 15% on taxable income over $9,075 to $36,900, plus
- 25% on taxable income over $36,900 to $89,350, plus
(There are higher tax brackets as well, but I’m going to assume you don’t fall into those)
In addition to income tax, we have to pay self-employment tax.
- 13.3% (10.4% for Social Security and 2.9% for Medicare)
The numbers listed above are for Federal taxes only. You’ll also owe state taxes, but those are typically significantly less. Since those vary from state to state, do some research to find out what your specific rate will be.
Depending on your tax bracket, at the end of the year, you’ll owe somewhere between 23.3% and 38.3% of your annual income. It stings, I know. This means one big thing for you:
You should be saving money throughout the year so that you aren’t blindsided when it’s time to pay your taxes.
The amount you should save varies based on your tax bracket, but it’s better to save now than to have to figure out where you’re going to get money when taxes are due. When you get $100 from a gig, don’t think of it as $100. Think of it as $80, or $70 or whatever you’ve figured out is your number based on your tax bracket. As soon as you deposit the money into your bank account, transfer a portion of it to a savings account specifically dedicated to your taxes.
While you’re recovering from the blow of how much money you owe the government, let me cheer you up. When you file your taxes, you not only report your income, but also your business expenses. This includes anything that you’ve spent money on throughout the year (or quarter) that has directly contributed to you being a professional musician. This includes, but is not limited to:
Instruments can be deducted as a one time expense, or set as a “straight line depreciation” which means that the cost is evenly deducted over a period of several years. Keep your receipts.
This includes any musical gear that you buy that isn’t an instrument. Cables, straps, pedals, strings, picks, and anything else that you can get at Guitar Center is going to be deductible. Keep your receipts.
If you bought a computer or an iPad this last year, and you use it for your business, that’s deductible. Keep your receipts.
If you recorded an album, any musician fees, studio fees, duplication costs, or marketing costs are all tax deductible. Keep your receipts.
Remember how you made an awesome website for yourself? You get to write off the cost of your web hosting. Keep your receipts.
The awesome business cards that you made are also deductible. Keep your receipts.
If you bought any books on music business or business in general, you get to write them off. Scroll through your past Amazon orders (receipts) and total them up!
This includes any physical office supplies such as paper, a printer, pens, or any other items you use to do your work. Receipts necessary.
If you hire an accountant to help with your taxes (more on that in a moment), you can write that off. This also includes fees associated with other professional services like a Lawyer. Just make sure you keep your receipts.
If you spend part of your time working from home as a professional musician, you can write off a certain percentage of your rent and utilities. Just estimate what percent of your home is dedicated to your business. You probably don’t get receipts for your rent, but keep good track of this.
If you use your phone for business, you also get to write off a certain percentage of your bill. Estimate the percentage of business vs. personal use and deduct it! Receipts still necessary.
As a musician, you drive all over the place. Keep record of how many miles you drive and add them all up at the end of the year. You’ll get to write off 56 cents per mile driven. This also includes parking costs. Keep your parking receipts.
You can deduct a percentage of your additional car costs (payments and repairs) since you use your car for your business. Calculate what percentage you think you drive it for business verses personal use. Guess what? Receipts.
If you’ve taken lessons with someone this past year, that falls under “continuing education” which is completely deductible. Receipt if you can.
If you’re making monthly student loan payments, you can write those off on your taxes. Login to your loan site (such as Sallie Mae) and they’ll give your more specific information on how much you should be writing off. It’s basically like a big receipt.
While we’re talking about continuing education, this also includes iTunes music purchases and concert tickets. File your iTunes receipts as soon as you get them.
If you bought clothes specifically for your job as a musician, write ’em off. This also includes dry cleaning costs. Did you keep your receipts?
You can write off food expenses as long as it was a “business meeting.” This includes dinner at a gig, or lunch with your band as you discuss where you want to record your next album. You know what you need though? Your receipts.
As you can see, there’s lot of things that you can write off on your taxes. And so many receipts. The deductions don’t translate to dollar for dollar (each category is a little different) but including all of these help lower your amount owed considerably. For all of these expenses, you’ll need to save receipts to prove that you actually did spend money on this stuff. Don’t use an old shoebox. It’s 2014, use a receipt app instead.
Now that you have a better understanding of how your taxes work, what to expect, and what to deduct, you are much better equipped for the upcoming tax season. Even though you have a good grasp on this stuff, taxes are still unbelievably confusing. I know how it works and the deductions that are allowed, but I’m not going to pretend to know how to calculate the exact numbers and file it. That’s so incredibly complicated that there are people who make a living from figuring it out. Speaking of which:
After you’ve compiled all of your income and deduction totals, take that information to a Certified Public Accountant. Google “CPA” and your city and call up several different accountants. Ask them if they have experience filing taxes for self-employed people, or even musicians. You’ll get a good idea of their experience and whether or not they’ll be a good fit for you from these phone calls.
I know you’re probably thinking, “After all this, I still have to pay an accountant to do my taxes?”
Unfortunately, yes, but let me say this. Paying a CPA to handle your taxes is the best $100-$150 you’ll spend all year. Plus, you’ll be able to deduct the cost from next year’s taxes. Keep your receipt!
To make tax season easier for you, download the free Tax Deductions Spreadsheet below. You can download it as a Excel or Numbers file, fill in the blanks (for all the categories mentioned above), and the spreadsheet will do all the math for you. Then you can send it off to your CPA and they’ll take care of the rest.
Fill this form out and I’ll send you the spreadsheet right away. I’ll also let you know of future posts here on the blog, guests on the podcasts, or other helpful stuff. Unsubscribe at any time.