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At this time of year the retired bookkeeper in me surfaces. I've been preparing my own income tax returns since day one. My purpose today is not to recommend one piece of software over another, or even self-preparation over professional. Today, I just want to give you a couple of simple ideas to make the ultimate process easier.

 

Quicken is probably the best known checkbook software out there. It's not perfect, but used properly, it can make life easier. Whichever checkbook app you use, assign each entry a category. If items are categorized, it's easy to print out a summary report at the end of the year. Categories can be as simple as Utilities, Taxes, Donations, Medical, etc. Even if you use a tax professional, do not just give them your check register. The more work they have to do, the more you will pay. A simple summary will save time and money.

 

If you are one of those who toss receipts in a shoe box or envelope, set up a simple spreadsheet. Set up your categories across the top, and enter the amounts in each appropriate column. When you've entered the last number in each column, highlight the entries in the column, then if you are using Numbers, for example, go to the Insert menu and select Function > Sum. Your total will be displayed below the last selected cell. The formula will look like "=SUM(B16:B24)". If you have Excel, it works pretty much the same way. Spreadsheets are easy to use.

 

For the record, I use TurboTax (and e-file), and have for a lot of years. It's fairly easy to use, and I've only caught it in one bad calculation over the years. It wasn't off by  much, so at the urging of a CPA friend, I left it alone. Overriding automatic calculations on e-filed returns is apparently one of those things that can flag you for audit. I haven't had a chance to really work with the current copy of TurboTax yet, but it looks like it shouldn't have any problems this year. I'll give you my final opinion in a couple of weeks.

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  • Calvin

    Great tips Phyllis. Many do not realize that sorting and organizing data prior to getting you taxes done cost money, unless you do it prior to going to your tax preparer. In other words, all that prop work is called “bookeeping” and bookeeping cost time and money.

  • Here’s a tip for users of H&R Block TaxCut: They’ve changed the name. The product is now known as H&R Block At Home. (I think the new name is dreadful; after years of branding behind the TaxCut name, they’ve dumped it for the bland and generic sounding “At Home.” But I digress.)

    I used Turbotax throughout the nineties, but when I ran into a bug that they were very slow to fix, I decided to switch to Taxcut, and I’ve been very happy with it.

    The only problem I had was for tax year 2005, when B&R Block didn’t make a Mac version because, they claimed, the market was too small! I switched to Turbotax for a year, but Taxcut came back in 2006, and I switched back.