Annual Tax Software Review

Transcription

1 Sun City Summerlin Computer Club Seminar Annual Tax Software Review Tax Year 2018 Tom Burt January 30, 2019

2 Where to Find the Handout Sun City Summer Computer Club Website:

3 Seminar Agenda Seminar Introduction Review of Turbo Tax Versions Review of H&R Block Versions Review of H&R Block Features Sample Couple - Financials Step by Step Completing a Return 2018 Tax Law Recap and Rates 2019 Tax Rates Q and A

4 Seminar Introduction (1) This is a seminar about Tax Software Programs. This is NOT a seminar about income taxes. Please don t rely on me for tax advice. Please don t rely on me to correctly interpret the tax laws for your tax situation. We ll look at Turbo tax and H&R Block Features Then we ll dig into H&R Block in more depth Our approach will be to use a model senior couple and fill in their tax forms with H&R Block.

5 Seminar Introduction (2) Benefits of Tax Software Programs: Easy step-by-step interview. Can automatically get much financial data. Imports prior year s tax return data. Can import from Quicken. Instantly recalculates when you make a change. Programs know and follow the latest tax rules. Powerful error checking and audit review. Facilitates electronic filing via an encrypted connection between your PC and the IRS. Also does State income taxes (if needed). Your tax filing is completely private.

6 Turbo Tax Versions Turbo Tax Free (1040 A / 1040 EZ) - online Turbo Tax Basic (Simple returns) Turbo Tax Deluxe (For homeowners) Turbo Tax Premier (Sched stocks, rentals ) Turbo Tax Home & Business (Business, ) All versions are now available on the web in free trial mode. All versions available online or as downloads

7 Turbo Tax Key Features Step by step interview Personal Information Income Expenses (deductions) Credits & other considerations. Forms mode (direct entry) Tax summary window Program and Tax Help Deduction Finder (Deluxe) Print return (for records, for filing) Electronic filing State tax return (now extra)

8 H&R Block Versions H&R Block Free (Simple returns) Online H&R Block Basic (Basic returns) H&R Block Deluxe (Stocks, rentals, business ) H&R Block Premium (More help on business) H&R Block Premium & Business (Corporate) All versions are now available on the web in free trial mode. Most versions available online and as downloads.

9 H&R Block Basic Features Step by step interview Personal Information Income Expenses (deductions) Credits & other considerations. Forms mode (direct entry) Tax summary report window Program and Tax Help Print return (for records, for filing) Electronic filing State tax return (may have extra cost)

10 John and Mary Smith Income Item John (73) Mary (71) Joint Wages 5,465 2,975 Social Security 19,648 18,088 Interest (B of A CD) 241 Dividends (TDA) 6,728 Stock Sale (TDA) 500 sh (bot 52.45) IRA Withdrawals (RMD) 6,947 5,177

11 John and Mary Smith Expenses Item John (73) Mary (71) Joint Health Ins. (Med Part B) 1,608 1,608 Health Ins. (Humana) Health Care 4,235 2,565 Property Tax 3,275 Long Term Care Ins 2,425 2,425 Car License Fees (2) Charitable Contributions 250 Qualified Charitable Donations

12 BIO BREAK

13 H&R Block Step by Step for the Smiths Import prior year s return Personal Interview Income Entry Interview Expense Entry Interview (even if using std. deduction) Estimated Tax Payments (1040 ES) Revisit Income and Expense Topics Lists To ensure nothing missed esp. medical expense items. Final Review correct any issues Audit checks Print Return for records (paper & PDF) E-File E-Pay (IRS)

14 IRS Free-File Program For taxpayers whose income is < $66,000 Find at: Fill in some questions and then get directed to a tax software vendor s free tax filing product. Alternative for those whose income > $66,000: Free fillable online tax forms that you can fill in, print and submit. (Does basic math). Also consider free AARP Tax Assistance. Check the LINK Magazine for details.

15 IRS Electronic Payments EFTPS: Pay tax bills on-line Get password - call: Once account set up, you can pay all taxes owed online. IRS will mail you a PIN. Each payment gets an receipt. May have to call and reactivate if not used for 6 months or more.

16 The 2018 Income Tax Law Detailed article on the new tax bill (Motley Fool): Major Provisions for Individual Filers: Seven tax brackets with slightly lower rates (see next slide) Standard deduction increased to $12,000 / $13,300 SF, $24,000 / $26,600 MFJ $4050 Personal exemptions - GONE replaced with $300 credit per adult, $2000 credit per child Most itemized deductions - GONE except Mortgage interest on first $750,000 (new mortgage), first $1 million (existing mortgage) First $10,000 of state & local sales, income or property taxes Medical deductions exceeding 7.5% of AGI Charitable contributions Obamacare penalty for no health insurance - GONE Alternative minimum tax for individuals - limits doubled Estate tax exemption doubled (to about $22 million when inherited by surviving spouse) Dividends and Cap Gains still receive favorable treatment, but complex rate structure Corporate Tax rate drops from 35% to 21% Pass-through businesses can deduct 20% from first $315,000 of income Because of reconciliation rules, sunsets in 2025 (but will likely be renewed or made permanent before then)

17 The 2018 Income Tax Rates New law features 7 tax brackets for taxable income: Note the marriage penalty beginning at 35% and worse at 37% (Rate tables copied from an Agora Financial newsletter)

18 Tax Changes for Tax Year 2019 For 2019, there were few material changes in rates / deductions: If over 65, medical expense exclusion increases to 10.0% of AGI. Tax brackets and standard deduction adjusted for inflation: Marginal Tax Rate Single Married Filing Jointly Head of Household Married Filing Separately 10% $0-$9,700 $0-$19,400 $0-$13,850 $0-$9,700 12% $9,701-$39,475 $19,401-$78,950 $13,851-$52,850 $9,701-$39,475 22% $39,476-$84,200 $78,951-$168,400 $52,851-$84,200 $39,476-$84,200 24% $84,201-$160,725 $168,401-$321,450 $84,201-$160,700 $84,201-$160,725 32% $160,726-$204,100 $321,451-$408,200 $160,701-$204,100 $160,726-$204,100 35% $204,101-$510,300 $408,201-$612,350 $204,101-$510,300 $204,101-$306,175 37% Over $510,300 Over $612,350 Over $510,300 Over $306,175

19 Questions and Discussion