Sunday, February 10, 2008

Tax prep: Giving Tango a try

Longtime Birds & Bills readers will recall that I have absolutely no loyalty when it comes to tax prep -- I'll use whatever program is cheapest and at least minimally user friendly. I used TaxCut through college, switched to TaxAct for a few years, and gave TurboTax a spin last year.

This year, just as I was starting to idly troll through discounts and figure out what to use, David mentioned a Second Life promotion offering free codes to use H&R Block's tax software. I assumed he meant TaxCut, and said sure, if he can head over to H&R Block's island and snag me a code, I'd be thrilled to use it. (David plays Second Life. I just snark at it.)

The Second Life freebie promotion code (well, "freebie" in the sense that it cost 100 Linden dollars, which is about 12 cents in U.S. dollars) seems to have dried up, but David got one before it did. But it turned out it wasn't TaxCut H&R Block was pushing, it's Tango, an entirely new option. It's kind of the in-between product. For basic, no-nonsense tax prep software, there's TaxCut. Tango has a jazzier interface, a more informal presentation, and access to tax professionals 24/7 if you need it. And, of course, for the full-service option, H&R Block has its walk-in offices.

Tango's slicker approach comes with a steeper price tag: it's $70, vs. about $35 for TaxCut. What does the extra cash buy you? Aside from on-call tax advice if you need it, it's paying for attitude. The Tango website gives you a pretty good idea what you're in for: it has a blog, and sells its multiplatform approach with the line "windows, apples, penguins - we love u."

I can see the Tango approach being useful for young and intimidated tax filers, which seems to be the demographic it's aiming at. It definitely has the Web 2.0-vibe. I couldn't decide whether I felt amused or condescended to by the quippy little messages it pops up throughout the prep process. Filling out my personal information at the start generated a bubble on the side saying, "This is kind of like when your aunt asks you when you're going to have children at Thanksgiving, isn't it?"

Like all version-one products, Tango is breakable. Because my company partially funded my HSA, they ticked a little box in 12c on the W2 saying they had. Tango popped up a note saying that meant I needed to file Form 8889, which it does not support. End message. Er? So does that mean I can't use Tango at all? Does it mean I need to file the form separately myself, if I completed the process with Tango?

I suppose this would have been the time to test out Tango's on-call tax-prep help, but I opted to forge on and deal with the problem later. Which ended up being a sound decision, because when I finished and was ready to file and put in my little Second Life code ... it was invalid. I tried a few times. Still invalid. Arugh.

So, Plan B. TaxAct apparently missed me last year. It sent an email Jan. 30 offering 30 percent off if I came back. Back I went, to reenter all the information I had already plowed into Tango. Luckily, my taxes are fairly straightforward, despite the vast pile of forms I seem to have every year (this time, it was 11, not counting charity receipts - three W-2s, an overpayment form from NY state, an interest statement from my bank, tuition and student loan interest statements, and several 1099s). About an hour later, my taxes were done - and, shock of shocks, the discount thingie worked, as last year's TurboTax discount totally failed to. My state and federal return e-filing and prep cost a grand total of $11.90. And, I'll note, TaxAct had no problem with Form 8889.

Yay TaxAct! All done, rebate en route. (Yes, I loan the government money interest free every year. This is a deliberate calculation, because David and I are crap at saving. It is much better for us financially for us to not stress about it and instead get a giant wad back at the end of the year. Plus, when I freelance heavily as I did this year, I don't have to worry about owing money at the end; it just comes out of the refund cash we've already amassed.)

Last year's tax-time surprise was discovering that I itemize, something I assumed I'd never do until we had mortgage expenses to deduct. But our state and local taxes now exceed the standard deduction, so we itemize and deduct them. Living in NYC cost us around $11,000 in taxes this year. Ow. When I briefly whinged about it, David told me to shut up and calculate what the subway saves me on car expenses. Hrm. Point.

Anyway, this year's surprise was finding that I file a Schedule C. Possibly I have had to do this before, but I don't recall seeing it come up, and I'm pretty sure I've had other years where I filed my freelance 1099 income. But this time around, when I plugged 'em in, up came the "hi you run a business, tell us about it" forms. Now I too get bitten by that self-employment tax all my freelancer friends gripe about! Ok, my bite was all of $106, but. I sympathize, my comrades.