Tax Guide for Investors

An Easier Way to Report Capital Gains

February 27, 2015

Taxation of InvestorsIf you have more than a few sales of stocks, mutual funds or other investments to report on your tax return, you may want to be aware of a recent change in IRS requirements for reporting these transactions.

details: Easier Capital Gains Reporting

Backdoor Roth Contributions

February 14, 2015

Roth retirement accountsBackdoor Roth contributions provide a way for some people with income above the Roth IRA contribution limits to add dollars to a Roth IRA. We’ve added two new articles to our online guide to Roth Retirement Accounts, both based on material in our book Go Roth!:

Backdoor Roth IRA Contributions
Some people can use this technique to add to a Roth IRA even when their income is above the limit for Roth IRA contributions.

Possible Challenge to Backdoor Roth Contributions?
Some tax professionals have identified a risk in using this technique, but we believe there is no cause for concern.

New Roth Book Available

February 11, 2015

The 2015 edition of our book on Roth retirement accounts, Go Roth!, is now available. This update reflects changes in tax rates, legislation and IRS guidance through January 15, 2015.

more info  |  order from amazon.com

TurboTax Apology 2.0

January 29, 2015

Form 1040After getting an earful (and then some) from their customers, the folks at Intuit have come up with a new, improved apology for the mess they created in disabling features in some versions of their products, forcing many of their customers to buy a more expensive version. While they’ll need a few days to roll out the new approach, they say it will include three features:

  • For this year, a free upgrade “within the product” for people who buy the desktop version of TurboTax Deluxe but need TurboTax Premier because they removed capabilities from the lower-priced product.
  • People who already paid for the upgrade can claim the rebate described earlier up until April 20.
  • For next year and presumably thereafter, the capabilities removed from the Deluxe version will be restored.

Details haven’t been provided, so it’s unclear if any of the numerous limitations listed in our previous article will be lifted. In particular, we wonder whether these forms are being restored only to the desktop version of TurboTax Deluxe. Some 80% of TurboTax customers use the online version, but for some reason there was little outcry when similar changes were made to that version a year earlier.

 

TurboTax Apology

January 24, 2015
By Kaye A. Thomas

Form 1040Beginning last year, Intuit began disabling key features in some of its TurboTax offerings so users would have to upgrade to more expensive versions. The change rolled out a year ago to people who prepared returns online, and this year it also affects those who buy the software for installation on their computers (CD or download). For some reason, last year’s change in the online version didn’t cause much of a stir, but the angry response to this year’s follow-on change in the installed version has been widely reported, including in the New York Times and Wall Street Journal.

Intuit has responded with an apology for not doing enough to communicate this change. The company offers no apology, however, for the underlying strategy of forcing users to migrate to more expensive products. The TurboTax apology comes with a rebate offer, but one that won’t fully compensate for the difference in cost, and won’t be available to all affected customers.

Read the rest of this entry »

Guide to Free Tax Filing

January 22, 2015

Penny

You can pay less than this

Psst! You don’t have to pay for tax software or filing services! Even if you don’t meet the requirements of the IRS Free File program (which we review with all its warts), you may be able to prepare and file your tax return free of charge through other offerings.

details: Free Tax Filing

Can’t Find Pub 590?

January 19, 2015

IRS Publication 590One of the most important publications issued each year by the IRS is Publication 590, Individual Retirement Arrangements (IRAs). Individuals rely on Pub 590 for explanations of the rules, and professionals look to this publication for insight into how the IRS interprets the law in some of the gray areas. You may have trouble finding the 2014 edition, however.

That’s because the IRS decided to split Pub 590 into two publications, 590-A for contributions to IRAs, and 590-B for distributions from IRAs. Many websites, including irs.gov (and, dare we say, this one) have not fully caught up with the change. Links to IRS publications automatically go to the latest version when they appear on the IRS website, so we aren’t used to updating those links. The IRS isn’t redirecting that web traffic, though, so links to Pub 590 will bring up the 2013 edition, even though the 2014 replacements are available:

Internal Revenue But No Service

January 15, 2015

By Kaye A. Thomas
Current as of January 15, 2015

The Taxpayer Advocate has released a depressing report.

Internal Revenue ServiceTaxpayer service levels at the IRS have been declining for the last ten years. In 2004, the IRS answered 87% of calls from taxpayers seeking assistance, with an average hold time of 2½ minutes. On its toll-free lines and in roughly 400 walk-in sites, taxpayers received help on a wide range of tax questions. Tax return preparation assistance was provided to hundreds of thousands of taxpayers, many of them low-income, elderly or disabled. Here is what we can expect for 2015:

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Good Time to Think About Roth Conversion

January 14, 2015

Roth retirement accountsWe often think in terms of year-end tax planning, but there are some moves that can be especially advantageous early in the year. A Roth conversion is one of them.

details: Roth Conversion Early in the Year

Nonqualified Options? Don’t Ask the IRS

January 12, 2015

Compensation in stock and optionsWe recently added some material on how to report sales of stock you acquire by exercising a nonqualified option. In the course of doing that we took a look at what the IRS has to say on the subject. Not much, it turns out — and some of what they say isn’t accurate.

details: The Sorry State of IRS Guidance on Nonqualified Options