Am I doing my taxes right?

irvinehomeowner

irvinehomeowner

Well-known member
So I've been using HR Block's tax software (was called TaxCut) for several years now and this time I really looked closely at what it calculated for deductions.

Is a 25% of income deduction normal for those of you who itemize? I'm not complaining since it does make our AGI lower... but I don't want AuditMan to show up at my door.
 
irvinehomeowner said:
So I've been using HR Block's tax software (was called TaxCut) for several years now and this time I really looked closely at what it calculated for deductions.

Is a 25% of income deduction normal for those of you who itemize? I'm not complaining since it does make our AGI lower... but I don't want AuditMan to show up at my door.
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are you asking whether deductions totaling 25% of AGI are normal?  our deductions were about 13% of AGI, but we didnt have the mortage interest deduction for 2012 (well only for like 10 days), but if that was in there for the whole year, our deductions would have been 20% of our AGI, so i would say your are in the normal range and would not stick out for audit purposes
 
irvinehomeowner said:
So I've been using HR Block's tax software (was called TaxCut) for several years now and this time I really looked closely at what it calculated for deductions.

Is a 25% of income deduction normal for those of you who itemize? I'm not complaining since it does make our AGI lower... but I don't want AuditMan to show up at my door.
Click to expand...

I've been using TaxAct for 3 years and really like it.  It's only $20 total for Federal & State.

Our deductions are close to 25% and I've never had a problem.  It probably depends on which deductions you are claiming though.  My feeling is that if I'm doing everything legally and it's well documented, it shouldn't matter if an audit occurs.

The IRS budget has been constrained for years now, even with all the new tax laws being passed.  The number of audits is on the decline from what I've read.  Something like 1.3% of returns are audited, so I think people's fear of being audited outweighs the actual risk.
 
qwerty said:
are you asking whether deductions totaling 25% of AGI are normal?  our deductions were about 13% of AGI, but we didnt have the mortage interest deduction for 2012 (well only for like 10 days), but if that was in there for the whole year, our deductions would have been 20% of our AGI, so i would say your are in the normal range and would not stick out for audit purposes
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Yeah... that's what I was wondering... the MID makes up almost half of that deduction and our loan below conforming.

We had to adjust our tax payments though when we went from the bigger home back to the smaller home a few years back... I guess I was used to the large deduction a jumbo loan gave you (and interest rates were higher).
Liar Loan said:
Our deductions are close to 25% and I've never had a problem.  It probably depends on which deductions you are claiming though.  My feeling is that if I'm doing everything legally and it's well documented, it shouldn't matter if an audit occurs.
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Yeah... I am really strict one what we report... and am sure we will pass any audit... just don't want to have to deal with the headache. I thought 25% was high but I just looked back at my past returns and it seems that's par (was actually higher back with the bigger home).

I sometimes wonder if I'm doing the rental income/loss stuff properly... but $40 for tax software is much cheaper than the $500 I used to pay someone else to prepare it.
 
you guys need to switch to turbotax.com and do your taxes online. 

my effective tax rate was 24% this year. creeps up every year  :'(
 
qwerty said:
you guys need to switch to turbotax.com and do your taxes online. 
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I use HRBlock because it's cheaper than TurboTax (by half I think)... esp when you go to the Premium editions (that help you calculate rental income and Schedule C items).
 
irvinehomeowner said:
qwerty said:
you guys need to switch to turbotax.com and do your taxes online. 
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I use HRBlock because it's cheaper than TurboTax (by half I think)... esp when you go to the Premium editions (that help you calculate rental income and Schedule C items).
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you are starting to sound like a 99%'er IHO - step your game up.    :)

i just filed mine last night, it was $100 (for state and federal) and that was after some discount i received through TD ameritrade.
 
I think your point of concern is the non-MID deductions.  If you've got good docs, don't worry about it.  But 12/13% outside of MID seems a bit high (although it might not be).  I guess it depends on your AGI too. 

Not prying but medical doesn't kick in until you've got 7.5% so no medical deduction, you get your Cali taxes, which I'm guessing comes in around an effective 6-7% and.

Charitable donations for 5-6%?  Lower income, plausible, higher income, you're talking serious donation, better have good docs.

Employment/investment/tax expenses, has to first exceed 2% of AGI.
 
qwerty said:
i just filed mine last night, it was $100 (for state and federal) and that was after some discount i received through TD ameritrade.
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Heh... mine was only $59 (including Fed & State eFiling fees). The good thing about HRBlock is that BestBuy always heavily discounts the Digital Download version).
 
nosuchreality said:
I think your point of concern is the non-MID deductions.  If you've got good docs, don't worry about it.  But 12/13% outside of MID seems a bit high (although it might not be).  I guess it depends on your AGI too. 

Not prying but medical doesn't kick in until you've got 7.5% so no medical deduction, you get your Cali taxes, which I'm guessing comes in around an effective 6-7% and.

Charitable donations for 5-6%?  Lower income, plausible, higher income, you're talking serious donation, better have good docs.

Employment/investment/tax expenses, has to first exceed 2% of AGI.
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State and real estate taxes made up the bulk of the other half (about 12%)... any other deductions are really small.
 
irvinehomeowner said:
qwerty said:
i just filed mine last night, it was $100 (for state and federal) and that was after some discount i received through TD ameritrade.
Click to expand...
Heh... mine was only $59 (including Fed & State eFiling fees). The good thing about HRBlock is that BestBuy always heavily discounts the Digital Download version).
Click to expand...

TaxAct.com = $20 for both Federal & State

I used to use turbo tax but when they wanted to start charging me over $100 because I have a rental, I said enough is enough.  As a side benefit, I think the interface on TaxAct is much nicer and the questions much clearer.
 
No brainer you're good, if the bulk of the other 12% is Cali Income and Property Tax. 

I used to use TurboTax loved it and really good about keeping things like ESPPs, ISO straight.  Turned it over to a tax guy at 10X the cost when we got married. When you've got 1099s from 10 banks, you kind of just cringe. 

Kind of want to pull it back in house as the real work is gathering all the docs, receipts, transactions data, once you've got that, it's just data entry.

 
nosuchreality said:
Kind of want to pull it back in house as the real work is gathering all the docs, receipts, transactions data, once you've got that, it's just data entry.
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Yeah... that's when I decided to do it myself. Since I had to do all that data collection anyways, it was easier for me to manage instead of having to make an appointment with my tax guy. He was just asking me for the same information I could enter myself and at least I can do them at midnight on April 14 if I had to.
 
irvinehomeowner said:
nosuchreality said:
Kind of want to pull it back in house as the real work is gathering all the docs, receipts, transactions data, once you've got that, it's just data entry.
Click to expand...
Yeah... that's when I decided to do it myself. Since I had to do all that data collection anyways, it was easier for me to manage instead of having to make an appointment with my tax guy. He was just asking me for the same information I could enter myself and at least I can do them at midnight on April 14 if I had to.
Click to expand...

Next year we add the rental property, so one more layer of complexity. 

I may fork over the $21.95 for the TaxAct ultimate bundle on Amazon and dry run my 2012 data and do a comparison.  It'll tell me if my tax guy missed anything and remind me how much work it'll be with no deadline.
 
nosuchreality said:
irvinehomeowner said:
nosuchreality said:
Kind of want to pull it back in house as the real work is gathering all the docs, receipts, transactions data, once you've got that, it's just data entry.
Click to expand...
Yeah... that's when I decided to do it myself. Since I had to do all that data collection anyways, it was easier for me to manage instead of having to make an appointment with my tax guy. He was just asking me for the same information I could enter myself and at least I can do them at midnight on April 14 if I had to.
Click to expand...

Next year we add the rental property, so one more layer of complexity. 

I may fork over the $21.95 for the TaxAct ultimate bundle on Amazon and dry run my 2012 data and do a comparison.  It'll tell me if my tax guy missed anything and remind me how much work it'll be with no deadline.
Click to expand...

I filled mine out directly on the TaxAct website and it was $20 for me.  Not sure if I had the ultimate bundle or what.

Also, you can fill it out for free to see what the refund/amount owed would be.  It's not until you want to print or file that they charge you.
 
I think having a CPA/JD available year round is invaluable for tax scenarios/questions that might come up, stuff that online programs/B&M stores can't duplicate.  I pay about $300 for my taxes with a rental property, not a complicated return but it gives me access to a tax professional for the whole year (nothing too complicated of course).  And it never hurts to have a trained tax guy look over your return. 
 
irvinehomeowner said:
So I've been using HR Block's tax software (was called TaxCut) for several years now and this time I really looked closely at what it calculated for deductions.

Is a 25% of income deduction normal for those of you who itemize? I'm not complaining since it does make our AGI lower... but I don't want AuditMan to show up at my door.
Click to expand...

The tax software will not determine whether or not your tax return is correct.  If you answer the questions correctly without manipulating the answers, the calculations will be correct no matter which software you use.

There is no "normal" for itemized deductions.  There are averages, and it is a huge mistake to base any part of your return on averages or what someone may determine is normal.  It is an even larger mistake to see what the averages are and manipulate, exagerrate, or change your deductions based on what is average.

Computer generated IRS red flags are not generated from differences from averages.  They are based on standard deviations on specific entries.
 
Just got my taxes done by my CPA, two new forms this year, 8959 and 8960, guess I'm paying an extra $500 to the government so they can spread it around thru Obamacare.  But its for the greater benefit of the society, no?
 
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