Tax Time Again

You know you’re a financial geek when you’re working on taxes a full 4 months before they’re due, and before the tax year in question has even ended. The People’s Republic of Maryland hasn’t even released its 2007 tax forms yet, so for now, I’m working on fed.

This year, for the first time, I’m taking the true hard-core accounting geek route of using a spreadsheet to do our taxes. It really hasn’t been that hard, and it allows me to play out some “what-if” scenarios that would be hard to do with canned tax software. When it comes time to file, I’ll use TaxACT for federal and Maryland’s iFile for state, both of which are free. When all is said and done, I’ll have a set of spreadsheets I can use every year with only (hopefully) small modifications. The spreadsheets will also help me do more accurate tax planning throughout the year.

Last year’s tax planning appears to have had the desired effect: It looks like we are going to owe money rather than getting a refund. I’ve set aside money to cover the taxes owed, and it’s been spending the year earning interest for us rather than Uncle Sam. We are actually going to owe a little bit more than what I had planned, because of Cathy’s extra income from child care. I think we’re still below the penalty threshold, but for 2008 I may want to increase my withholding just a tad.

Last week, H&R Block sent me a TaxCut 2007 CD in the mail. They want $40 for the “premium” product that includes state, but no free e-file. Unfortunately, TaxCut is not nearly the deal it was up till a couple years ago, when I last used it. Back in the day, it cost $20-$25 and included free federal e-file. When the price jumped last year, I switched to TaxACT and was pretty happy with it. I did notice that Block is now giving away their DeductionPro software, so I grabbed a copy to help tally up all of our non-cash donations.  The software still works OK, but the UI is not as nice as it was in past years (in particular, I couldn’t find a feature to search for an item).  I guess you get what you pay for.  In any case, I do applaud them for making this available for free, as it does save me some work.

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