Thursday, February 02, 2006

Tax bites

Miscellaneous tidbits ...

-I haven't filed a 1040EZ in years -- out joint income has usually been above the cap. This year, the cap is lifted to $100,000, which will put a lot more people into EZ eligibility. However, there are good reasons in some situations to go the more complex route. This article does a nice job explaining the different 1040 options.

-The tuition deduction I mentioned yesterday is an adjustment to income. You can claim it even if you don't itemize your return (which I don't).

-I'm getting very fond of It has a nifty article laying out other income-adjustment deductions available to those who don't itemize. Traditional IRA contributions, student loan interest, money spent by educators on classroom supplies, and moving expenses are among the items you can use to adjust your income downward -- which, as I found out, can dramatically affect your tax bill. The Bankrate article is two years old, but the IRS's website has an index of explanatory documents on various income adjustments.

-My friend Fahmi points out that anyone with a brokerage or other financial services account should check out what deals are available through their provider for tax-prep services. Fidelity offers TurboTax discounts; I'm sure other firms have similar deals. For those who really, really don't want to pay for prep software, H&R Block's TaxCut will let you do both your state and federal return free if you take your refund on a prepaid Visa card. (If that link doesn't show the offer, go in through the IRS's FreeFile site. It's a semi-hidden/limited offer.)

-Note for freelancers: Companies are required to send 1099 forms to any contractor they've paid more than $600. The deadline for sending those out is Jan. 31, so watch your mailbox.

-I think this is my last year with TaxAct. The interface is pretty clunky and buggy -- with Firefox 1.5, using TaxAct's 'back' button to rewind to the previous screen consistently brought up a screen full of blank data fields. After a few minor heart attacks thinking I'd lost all my entered data, I caught on that it's actually a display bug: If you go back, then forward, you see the data. Weird. More annoyingly, when I tried to research questions about the tuition credit (like 'can I deduct tuition fees I'm paying with loans?'), the built-in question system generally had little to offer. Thankfully, a few minutes with Google and the IRS's website answered all my questions.

So, TurboTax/TaxCut users -- how do you like your interfaces?