Tax Time

[InvestingMoron]

Some of us are hating life.

Do any of you do your own taxes? Is it worth saving the money?

[spanky]

My wife and I have used the Turbo tax software for about the last 5+ years. We don't have a problem with it, but it's hard to tell whether we are better off or not unless we hired both HR Block (another pay firm) and the Trubo tax for a comparison.

The s/w sometimes has troubles with the state tax forms... particularly when transferring her data to the state form from the fed form. It depends on your circumstances.

It still takes a lot of time to run through all of the steps, even with the software. If you have lots of stock sales to log, you will have to have that info in hand.

Good luck

[computeraces]

I've used software (turbo tax and others) before and HR Block and such and I found a guy that's a CPA that does my taxes. I did mine on turbo tax one year, but didn't submit it and then got him to do it. It was well worth the extra money I paid him to do it for. He got me back a lot more.

On another note, does Scottrade mail/email you something for your taxes or do you have to figure them out yourself?

[Malakas007]

I use Tax Cut Deluxe for federal and state.

[InvestingMoron]

The tax rate applies to net income (sales - buys) or gross (the total of all sells)?

[optimus25]

I've done my taxes on Turbo Tax the past two years and have never been happier. Its very convenient.

I use to get my taxes done by a CPA.

[madcowdisease]

On another note, does Scottrade mail/email you something for your taxes or do you have to figure them out yourself?


On their website their is a link for forms. You should be able to download and print a 1099.

The tax rate applies to net income (sales - buys) or gross (the total of all sells)?

Your net. If you came out positive with dividends and capital appreciation you need to claim it as income. I've never had a losing year, but I understand that if you are in the red on Dec 31st you can evidently write this off somehow.

[TonyM]

I've used software to do my own taxes for quite awhile now. This will be the first year doing so with heavy trading activity.

I'm giving the H&R Block Tax Cut program a try this year as it allows importation of all realized activity from a txf file, which can be downloaded from the gainskeeper within Scottrade. Once the data is imported you have to go through each transaction seperately and delare it as a normal sale or a wash sale. This is where the program becomes quite handy; instead of having to look at the dates of all transactions of the same stock, the software will preselect the appropriate box for you, although you can still change it if you like.

Unless you have previously (prior to 4.15.06) made the mark to market election, then you cannot simply deduct losses from gains and report the difference, unless you have zero wash sales. If you had a net loss for the year, the maximum deductible amount is $3000 (unless you mark to market) but any excess can be carried forward in future tax years.

I had previously used Tax Act software and found it to be quite good, however it only allows importation of trading activity directly from Gainskeeper which is not possible if you are not subscribing to them directly.

[Svenwulf]

I've used software to do my own taxes for quite awhile now. This will be the first year doing so with heavy trading activity.

I'm giving the H&R Block Tax Cut program a try this year as it allows importation of all realized activity from a txf file, which can be downloaded from the gainskeeper within Scottrade. Once the data is imported you have to go through each transaction seperately and delare it as a normal sale or a wash sale. This is where the program becomes quite handy; instead of having to look at the dates of all transactions of the same stock, the software will preselect the appropriate box for you, although you can still change it if you like.

Unless you have previously (prior to 4.15.06) made the mark to market election, then you cannot simply deduct losses from gains and report the difference, unless you have zero wash sales. If you had a net loss for the year, the maximum deductible amount is $3000 (unless you mark to market) but any excess can be carried forward in future tax years.

I had previously used Tax Act software and found it to be quite good, however it only allows importation of trading activity directly from Gainskeeper which is not possible if you are not subscribing to them directly.

^5 tony!

[TonyM]

Some may find this information from the IRS useful:


Topic 429 - Traders in Securities (Information for Form 1040 Filers)
This tax topic explains whether an individual who buys and sells securities qualifies as a "trader in securities," and how traders must report the income and expenses resulting from the trading business. In order to better understand the special rules that apply to traders in securities, it is helpful to first review the meaning of the term "investor," and the manner in which investors report the income and expenses relating to their investment activities.
Investors typically buy and sell securities and expect income from dividends, interest, or capital appreciation. Sales of these securities result in capital gains and losses that must be reported on Form 1040, Schedule D (http://www.irs.gov/pub/irs-pdf/f1040sd.pdf) (PDF), Capital Gains and Losses. Investors are subject to the capital loss limitations described in section 1211(b), in addition to the section 1091 wash sales rules. Investors can generally deduct the expenses of producing taxable investment income. These include expenses for investment counseling and advice, legal and accounting fees, and investment newsletters. These expenses are deductible on Form 1040, Schedule A (http://www.irs.gov/pub/irs-pdf/f1040sab.pdf) (PDF), Itemized Deductions, as miscellaneous deductions to the extent that they exceed 2% of adjusted gross income. Interest paid on money to buy or carry investment property that produces taxable income is also deductible on Schedule A, but under section 163(d) the deduction cannot exceed the net investment income. Commissions and other costs of acquiring or disposing of securities are not deductible but must be used to figure gain or loss upon disposition of the securities. An investor is not subject to self-employment tax. For more information on investors, refer to Publication 550 (http://www.irs.gov/publications/p550/index.html), Investment Income and Expenses.
Traders
Special rules apply if you are a trader in securities, in the business of buying and selling securities for your own account. To be engaged in business as a trader in securities, you must meet all of the following conditions:

You must seek to profit from daily market movements in the prices of securities and not from dividends, interest, or capital appreciation.
Your activity must be substantial, and
You must carry on the activity with continuity and regularity. The following facts and circumstances should be considered in determining if your activity is a securities trading business:

Typical holding periods for securities bought and sold.
The frequency and dollar amount of your trades during the year.
The extent to which you pursue the activity to produce income for a livelihood, and
The amount of time you devote to the activity. If the nature of your trading activities does not qualify as a business, you are considered an investor, and not a trader. It does not matter whether you call yourself a trader or a "day trader." Further, a taxpayer may be a trader in some securities and hold other securities for investment. The special rules for traders do not apply to the securities held for investment. A trader must keep detailed records to distinguish the securities held for investment from the securities in the trading business. The securities held for investment must be identified as such in the trader's records on the day he or she acquires them.
Traders report their business expenses on Form 1040, Schedule C (http://www.irs.gov/pub/irs-pdf/f1040sc.pdf) (PDF), Profit or Loss From Business. The limit on investment interest expense, which applies to investors, does not apply to interest paid or incurred in a trading business. Commissions and other costs of acquiring or disposing of securities are not deductible but must be used to figure gain or loss upon disposition of the securities. Gains and losses from selling securities as part of a trading business are not subject to self–employment tax.
The tax treatment of sales of securities held in connection with a trading business depends on whether a trader has previously made an election under section 475(f) to use the mark-to-market method of accounting. If the mark-to-market election was not made, then the gains and losses from sales of securities are treated as capital gains and losses that must be reported on Form 1040, Schedule D (http://www.irs.gov/pub/irs-pdf/f1040sd.pdf) (PDF). Both the limitations on capital losses and the wash sale rules continue to apply. However, if the mark-to-market election was timely made, then the gains and losses from sales of securities are treated as ordinary gains and losses (except for securities held for investment — see above) that must be reported on Part II of Form 4797 (http://www.irs.gov/pub/irs-pdf/f4797.pdf) (PDF), Sales of Business Property. Further, neither the limitations on capital losses nor the wash sale rules apply to traders using the mark-to-market method of accounting.
In general, the mark-to-market election must be made by the due date (not including extensions) of the tax return for the year prior to the year for which the election becomes effective. The election is made by attaching a statement either to your income tax return or to a request for an extension of time to file your return. The statement should include the following information:

That you are making an election under section 475(f) of the Internal Revenue Code;
The first tax year for which the election is effective; and
The trade or business for which you are making the election. Refer to the Form 1040, Schedule D Instructions (http://www.irs.gov/pub/irs-pdf/i1040sd.pdf) for further instructions on how to make the mark to market election.
After making the election to change to the mark-to-market method of accounting, you must change your method of accounting for securities under Revenue Procedure 2002–9, as modified by Revenue Procedure 2002–19. In addition to making the election, you will also be required to file a Form 3115 (http://www.irs.gov/pub/irs-pdf/f3115.pdf) (PDF), Application for Change in Accounting Method. The procedures for making an election are described in Publication 550 (http://www.irs.gov/publications/p550/index.html) under the section called "Special Rules for Traders in Securities". You may also refer to Revenue Procedure 99–17.




http://www.irs.gov/taxtopics/tc429.html

[zyzzyva57]

I have used TaxAct for two years and have been very satisfied, but this year I am switching to TurboTax or TaxCut, because Sottrade's light version of GainsKeepr will export into either--The one I will switch to will depend upon the reviews when they come out

Note Feb 3d: "IRS free filing program now available...
The free filing program from the IRS is available once again. So, who’s eligible? If your income is more than $60,000 a year, you might not qualify. So, it’s a good thing to figure out your adjusted gross income (AGI) before you start the process. Your AGI must be less than $52,000 a year to use the free program. That covers about 70 percent of all income earners. And there is a special rule that applies just for this year. You will get an extra tax break if you wait until after Feb. 3 to file. Waiting specifically benefits people who live in states with no state income tax. The IRS free tax filing has changed every year for the past three, so read the fine print carefully. "
http://clarkhoward.com/shownotes/2007/01/17/

[madcowdisease]

I have used TaxAct for two years and have been very satisfied, but this year I am switching to TurboTax or TaxCut, because Sottrade's light version of GainsKeepr will export into either--The one I will switch to will depend upon the reviews when they come out

Note Feb 3d: "IRS free filing program now available...
The free filing program from the IRS is available once again. So, who’s eligible? If your income is more than $60,000 a year, you might not qualify. So, it’s a good thing to figure out your adjusted gross income (AGI) before you start the process. Your AGI must be less than $52,000 a year to use the free program. That covers about 70 percent of all income earners. And there is a special rule that applies just for this year. You will get an extra tax break if you wait until after Feb. 3 to file. Waiting specifically benefits people who live in states with no state income tax. The IRS free tax filing has changed every year for the past three, so read the fine print carefully. "
http://clarkhoward.com/shownotes/2007/01/17/

Can you elaborate of the exportation of Scottrade info please? Do you know if this holds true for the online version of TurboTax as well? Thanks in advance.

[TonyM]

Can you elaborate of the exportation of Scottrade info please? Do you know if this holds true for the online version of TurboTax as well? Thanks in advance.

Using the Gainskeeper on Scottrade you can export the data to your pc and then import it into the tax program. There are 3 file types you can export, when you get to the portion of the tax software that asks you to import the data it should ask you to do so in one of those formats.

[zyzzyva57]

To elaborate on TonyM:

Once logged into your account with Scottrade:

(1) Click the tab "My Account" along the top
(2) Once there, on the left clicked "GainsKeeper"
(3) Click the tab "Export Data"

Notes:
Scottrade's "GainsKeeper" is a lite version of GainsKeeper, so you cannot just go to the high price version of the full version at GainsKeeper.com

If you are starting from scratch as I am, I would wait till the reviews come out on the various online tax programs to find the one most suited to your needs

The one I have been using is easy; however, I could not use Scottrade's lite version of GainsKeeper

Once done, next year, use the same program, but updated, and your core data (e.g., Soc Sec Card #, address, etc) is already entered

[MoMoney4Me]

Turbo Tax Deluxe for me 5 years running.
I like the fact that previous years returns are archived and readily available for future reference.
I use the online version rather than the boxed. It's simple and walks you through line by line, and offers suggestions along the way that might benefit you in ways you might not been previously aware of.
Of course, your own personal record keeping is vitally important throughout the year so that relevent info is at hand when you are preparing your return.
No software or CPA can submit information on your return that you are not able to provide.

[madcowdisease]

Turbo Tax, thus far, has proved worthless.

[zyzzyva57]

Please explain your dislike of TurboTax, because I am shopping for a program to work with Scottrade