Thursday, June 9, 2016

2015 taxes

My taxes got off to a bad start this year when the DVD drive in my computer died while reading the TurboTax disc.  Fortunately external DVD drives (which plug into a USB port) aren't very expensive.  I ordered one from Amazon and it was able to read the disc.  So I guess I can't blame this on TurboTax. 

Last year Intuit annoyed a lot of people by removing longstanding features from the Deluxe version of TurboTax (in order to force people to buy a more expensive version).  The ensuing outcry eventually caused Intuit to reverse course and the deleted features (or at least most of them) were restored for 2015.  One positive difference is Intuit now appears to provide unlimited state returns as part of the base program (previously if you needed to file more than one state return you had to purchase upgrades for each additional state).  This saved me some money as I spent the summer working at my employer's California location.

In addition to again encountering some problems with TurboTax that I have complained about in previous years I found a new issue.  When entering items from Box 14 on your W2 TurboTax says something like don't worry if you can't find the item in their drop down menu of common deductions.  But you should worry because if TurboTax doesn't recognize the abbreviation it won't treat it as a deductible state tax potentially costing you money.  In my case I had a deduction labeled "UI/HC/WD" which it turns out is the same as "UI/WF/SWF" which is deductible.  The program actually knows this but only lists "UI/WF/SWF" in the main menu.  If I recall correctly you have to consult a help page to get a list of alternative names which includes "UI/HC/WD" which I had not done until this year.  I don't think this actually cost me money in previous years because I am subject to the alternative minimum tax which doesn't allow the deduction.  However anyone who just pays the regular tax is potentially overpaying if they overlook this which TurboTax makes it easy to do.

I also found I had been making another error in my New Jersey returns.  States generally do not tax interest on directly held federal bonds.  So you can exclude this interest from income on your state return.  But if you own a mutual fund that in turn owns federal bonds state tax treatment varies.  In New York this interest is taxable unless it is a substantial fraction of the mutual fund dividends (over half by some test if I recall correctly) but in New Jersey it appears you can prorate and exclude the portion of dividends attributable to interest on federal bonds from your income even when it is only a small fraction of the dividends.  Having lived in New York for many years I was used to the New York rule (which my mutual funds never came close to satisfying).  When I moved to New Jersey I assumed the rule was the same.  This oversight cost me a small amount of money in previous years but not enough to make filing amended returns worth the hassle.

I filed my federal return electronically April 10 and mailed the state returns April 12.  My refunds were reasonably timely.  I received (by direct deposit to my bank account) my federal refund on April 20 and my New Jersey refund on June 3.   I was not due a refund from California.

Over the years I have had various issues with TurboTax but there don't appear to be any obviously superior alternatives so I will probably stick with the devil I know.

Added 7/19/2016:  Actually I received my New Jersey refund May 3 not June 3.

1 comment:

  1. Yes, I had a portion of the Required Minimum Distribution that I had already paid taxes on and couldn't figure out how to get Turbotax to take it off. Fortunately some of my retirement income also has after tax contributions but PERA, my retirement ageency, figures it for me.

    I don't understand why there would be two different names for your deductible item.
    That's confusing.