personal finance

How to file your taxes online

Filing your taxes online doesn’t have to be scary and intimidating. In this class David is joined by our resident financial guru, Chip Capelli to show you how easy it is to file your taxes online using Turbo Tax.

Video by David A. Cox

for today’s class I’m joined by our
resident financial guru chip Capelli who
you might remember from our various
QuickBooks classes to show you how easy
it is to file your taxes online a
process that many Americans find scary
and intimidating
so the question is will we be able today
to make filing your taxes online fun and
exciting no absolutely not and if you
thought that you’re crazy
but hopefully we will make it a little
less scary and maybe you learn a thing
or two how to file your taxes online
that’s coming up next on PC classes
hello everyone and welcome to the class
this is david a cox with le chip if you
remember has done all of our QuickBooks
classes and today we’re talking about
how to file your taxes online this
videos can be valid for people in the
United States and also they do make a
version of the software we’re going to
be demoing for you in Canada or as I
like to affectionately call it Canada so
chip before we begin here when we just
mentioned we did teach this class live
and we had some sort of a weird audio
glitch we have recently switched to a
whole new microphone system so we’re
still kind of working the bugs out of it
so hopefully everything should be good
here so one of the things that I asked
you to mention at the beginning of
yesterday’s class is this whole just to
explain this controversy that came out
at the beginning of the tax season can
you go over that sure right and I’m not
an expert on anything technical but
there was some issues with turbo tax
returns being accepted by various states
the state returns there was no IRS
problem and what they had figured out
was that there was a glitch on the state
sides and that resulted in some negative
publicity for Intuit who publishes
TurboTax and they were vindicated for
lack of a better word of any wrongdoing
there was no breach and there’s no
cover-up if there were any problems we
would be seeing it on the front page or
on the internet every single day so I’ve
been using into it since the beginning
and I can also say I’ve never had a
security issue and part of the reason
why I asked rip to bring that up is
because when you look at the reviews
you’ll see they are not exactly stellar
just please understand it is not into
its fault in this case so chip there’s a
whole bunch of different versions of the
software which by the way will have
links to everything you see here in the
description of the video both for Mac
and PC one things I love here is the
fact that you can download it you don’t
need an actual disc so you don’t have to
wait for that to ship can you talk to us
about the the difference between these
and what you kind of generally recommend
for like the average Joe well for the
average taxpayer what I would recommend
the TurboTax deluxe it’s that I think
it’s the top one here on the screen and
it’s well that TurboTax deluxe federal
and state I’m sorry I see her I thought
I was looking at the wrong one okay and
um yeah that’s pretty good
that’s an excellent product for someone
who has one or two w-2s married has a
house has a couple kids just the
standard routine of return a routine
return now if you have a small business
or you have rental properties and you
need to add different schedules so I
think third one down is home and
business and that will support a
Schedule C which is the schedule for
self-employed and then there’s various
add-ons you can get for rental returns
and things like that but the basic
everyday guy can get or woman could get
the TurboTax deluxe federal and state
and use that pretty successfully and if
you buy something and I don’t work for
TurboTax if you buy something and you
need to add on trust me they’re going to
let you yeah gotcha so this is basically
what it looks like when you first go
into it so I bought the home in business
addition to demo we are only going over
the personal side of it today we’re not
going over the business side so well in
the just to follow up on that what we’re
showing it’s basically the mechanics of
it and the it’s Intuit the name of the
companies into it so it’s pretty
intuitive so that the keystrokes and the
screens that you see for personal or
pretty much mirrored in business so they
don’t reinvent the wheel for each thing
that they do I use a professional
version called Pro Series in my
accounting practice and this is a little
more user-friendly as far as walking you
through the forms you need but even the
professional version I use i call it
TurboTax on steroids and it’s pretty
friendly walk through and it supports
all the forms you need cool so I mean
you can see here it’s really just asking
you a lot of the very basic questions
where did you live in this case right
now it’s 2015 so this is for 2014 you
know where did you live have
lives in another state I’m putting a
that’s not my actual age Oh David’s
younger and I’m older yeah actually I
think it’s probably right in the middle
of our two agents asking if you have a
dependents the good news about named
user dependence right the good news
about this is once you use TurboTax one
year and if you’ve already use it again
the next year it’ll import all of your
personal information then you would just
have to update if you moved got married
divorced etc now one of the things
that’s changed in the past few years is
this screen here chip if you want to
talk about this Shore um in the last
decade or so many states I guess I think
about two-thirds of the states now
recognize same-sex marriage and in those
states since day one you’ve been able to
file a joint state return a couple of
years ago there was a case called the US
vs. Windsor where a couple sued to be
able to file a joint IRS return and the
IRS is now is now accepting joint IRS
returns from same-sex couples who are
married and you can be married in one
state that recognizes same-sex marriages
live in another state that does not
recognize same-sex marriages and be able
to file a joint IRS return however if
you live in the state that does not
recognize that marriage you have to file
a single return and that’s why it asks
this because it will do a split now if
you’re if you’re in a same-sex marriage
and live say in Massachusetts it’s one
returnee over the joint returns to state
yeah it’s very simple okay so for
simplicity sake today I’m putting as if
I was single moving on and this they
asked about making money on any other
states if you make money more than one
state you need to you sometimes need to
file a return in both states sometimes
you do not depends on the state a lot of
times there’s a reciprocal agreements
between states in the story I like to
tell is I’m originally from southern New
Jersey right across the river from
Philadelphia Pennsylvania and
Pennsylvania New Jersey have reciprocal
and green
so if you’re paying income tax via
payroll deduction in Pennsylvania New
Jersey lets you take what they call
credit for credit for taxes paid in
another jurisdiction and a lot of states
do that but now with the way the world
works I live in Massachusetts I
sometimes make money from a client in
you know Nevada
you know there’s it becomes a little
more complex but for most folks who are
not self-employed that doesn’t become an
issue but you do need to answer the
question honestly because all the
information is on your w-2 all right
asking that child children or
financially supporting another person
well if you click yes David’s going to
click no here just for the example but
if you click yes in fact why don’t you
click guests so we can show you the
screen you never know I might have
forgotten so you would need to put in
the child’s of name date of birth social
security number and the IRS does a
cross-check to make sure that more than
one person is not claiming the same
unfortunately there’s people who like to
take advantage of systems so they try
the safeguard against as much as
possible so here’s where you would just
put all that all that information in
it’s just easier to go back and just say
yeah right we don’t mean now like I said
we don’t need to go through every screen
we just need to explain the process all
what does a stand for Alexander okay
not my real addresses
now David’s going to put in a fake
social security number at the end of the
process if he were if we were to
actually file it it would do a
cross-check in the IRS system against
his name date of birth and social
security number and it would reject it
because that’s none of these are correct
right all right let’s go through the
deductions parts oh did I just skip to
the business I’m personal my bed
personal here we go walk through
everything okay so first of all if you
have a job you’ve got a w-2 if you did
not get W to contact your employer
immediately and then what they’re going
to do is they make this pretty user
friendly you’re going to see standard
form for w2 not all w-2s look exactly
like this but what we’ll see on the next
screen is of the boxes and you’ll fill
in all your stuff here but box one is
always the same box two is always the
same about the etc etc so as long as you
follow along with the boxes what we’ll
see lower in the screen you’ll be fine
so don’t worry if your form does not
look exactly like that clear that can
type really well well you’re sitting it
up yes
now see here is what the scroll up again
now it asks for David social security
number again and clearly he didn’t put
the same social security numbers you put
in on the first screen it’ll check that
and and give us an error so this is
really a good way of catching any key
stroke error especially if you have a
job where you’re not the depth at the
keyboard mm-hmm all right help me with
number here that should all be the same
one three and five should basically be
the same one three and five yeah unless
you have payroll deferments and things
like that so you’ll just follow along
and do all this and it’ll give you on
the next if you look at the upper
left-hand part of the screen it kind of
tracks your refund and taxes due and/or
taxes do as you go along
sometimes that’s distracting to folks
and sometimes it it’s actually kind of
people use it like as a games like a
game show the more you put in the more
yeah whatever
so you’ll put in all your your your
information scroll down and your state
information box is eighteen and twenty
if you live in a place where you get a
local yeah I worked in Philadelphia for
many years and we paid 4.25%
city wage tax to get our trash picked up
and you know it’s going to here this is
a good example it says we noticed that
you did not enter any state or local tax
amounts and you have so it catches
things for you so sometimes you don’t
and sometimes you do but it’s it’ll
remind you to check this next screen
brings us to the uncommon situations
oddly enough yesterday afternoon I had
some drop in in my office who had two
uncommon situations so it was kind of
interesting because we hope it wasn’t
the inmate oh were they in or not now
he’s not an orange um but what happens
is this is uh this doesn’t usually apply
to folks but sometimes it does and let’s
go back so just want to review what they
if your of their special circumstances
for clergy if you worked overseas saying
the right across if you got a corrected
w-2 that sometimes happens so all these
different things and if any of them
apply you check it and it walks you
right through 99 times out of 100 this
is not going to apply to people so this
is just of this note this notice it does
a ratio and it says that okay you had
too much Medicare tax withheld it just
reminds you again to double check and if
you have more than one job there you go
okay so go on to the next and just going
for other income a lot of times and I’m
going to give my standard speech about
unemployment if you find yourself in a
situation where you do need to collect
unemployment I understand it’s a very
difficult time but if you can get taxes
withheld from it even a small amount
because more so many times I’ve had
people sit in my office who are just
getting themselves back on a cone there
from there from there for fee after a
long period and because they didn’t have
taxes withheld they have to pay tax at
the end of the year and it can be a
little painful so if you ever find
yourself in that situation as much as
you can have have at least federal tax
withheld all right
this is uncommon if you have to repay it
sometimes people get busted or they
collect too much we don’t know anything
about that
interest or dividend income this is a
something I want to walk through because
you’ll get a 1099 div or 1099 int if you
just have a everyday checking account
you didn’t get more than $10 an interest
in a year they don’t need to give you a
1099 and you don’t need to report it so
the 1099 90s are you know things if you
have you know big savings accounts a
nest egg you’re saving for our house it
does need to be reported on your return
because it is reported to the IRS and it
is taxable income dividend income same
thing if you get
evidence reinvested into stocks or your
beneficiary of a trust or your any other
situation you’ll get this from the
broker and this all is reported to the
IRS so you need to include on your
return great so for this would you like
me to hit yes or no hey yes because I
because I just want to show the form so
if you’re if you got received interest
income sometimes they’ll let you import
it you know sometimes not we have a lot
of small community banks here on Cape
Cod they don’t participate in this so we
need to put them in manually so I just
wanted everybody to say so here to put
in some you know seaman’s bank or her
local bank and get interest of like
eleven dollars and you know just
continue okay um you know this is also
and yes that is the actual name of
bedroom here it was founded in the 19th
century by fishermen uh just in none of
the above they’ve heard all the jokes
yeah dividend income this you’ll get a
form from your broker that’ll show
dividends that you run through the year
there’s ordinary dividends and we can
skip that it’s the same kind of form
it’s going to esta Nate with a brokerage
and those sorts of things okay
okay this is another form of brokerage
form if you sell securities in the
course of a year so let’s say you ask
that I can want to show this form
because this so let’s say is I’ll type
it in myself so same thing you know just
it’s a Charles Schwab for so what you’re
putting in all these boxes ask for all
these forms all these boxes are box with
corresponding boxes on the 1099 div and
you’ll just check the correct box the
appropriate box I’ll ask you just check
one and then to continue and I’ll ask
you for the form right there and it’s
going to show you you just put in the
name of the the thing the date you
bought it you know 1 111 I don’t think
Oh the date you sold it would obviously
be sometime in 2014
then the say out of the sale price and
then the cost of it and this is
important because you’re taxed on just
put 0 there you’re taxed on the the
proceeds or loss so the cost or basis
the cost basis does need to be reported
because that’s how they calculate your
your tax due and the IRS gets all this
information so don’t try to be sly
investment losses this is unusual
so if you have this and you’re not
comfortable dealing with it you should
probably talk to someone this is we’re
just doing a simple mechanics on just
all this stuff if you got the if you got
these forms you know it and you’ll just
say yes and go through it and all the
forms kind of look like the forms we’ve
looked at so you can just say no we can
get through this section
the one thing quick TurboTax is good at
is they kind of they make all the
screens look relatively similar so that
you’re not trying to retrain your brain
every time you get a new write a new
situation it’s talking about retirement
retirement income and then this is also
happens if you have to pull money out of
a retirement account if you’re not quite
to retirement age so let’s say yes here
just for the heck of it and just say yes
again so this is and I’ll type it in
myself just for the heck of it I wonder
how much those folks have to pay to
Rotax to be part of that item so just
type in like Joe’s brokerage or
so I know and you’ll get a 1099 R and
it’ll tell you exactly how much you took
out how much was taxable how much taxes
were withheld again if you find yourself
in a situation where you need to pull
money out of a 401k or an IRA prior to
retirement age there is taxes and
penalties associated with that so to the
extent that you can have them with hold
it upfront because you know you’re going
to be high so you’re going to be hard
pressed to hold on to it yourself if
you’re like most people it’s just yeah
well here you just make it just 10% of
that just for that point make it 12 and
box for
just put 12 yeah
1200 so you’ll see how the refund amount
went down right there because you have
to pay taxes on that money right and we
can just skip all this but it mirrors
the form that you’re going to get from
the IRS basically that’s that’s what
this is this needs to be a replica of
your forms and you just continue world
it yeah I mean you’ll just if you’ve
done everything correctly 9 are you
little already have calculated it out
for you okay say and this is important
because if you took the money out and
moved it to another retirement account
it’s not taxable click-click that first
one David and then put I rolled it all
over hit continue yeah what it went up
right saying you won’t have to pay tax
on it but if you did if you just took it
to you know go on vacation or binding
run by so just continue there okay and
this if you’ve collected Social Security
you’ll get what’s known as at SSA 1099
from the Social Security Administration
and it will detail how much you got from
Social Security how much you paid for
Medicare premiums and all of that again
is mirrored exactly on here as it looks
on the Social Security Administration
form this is your that is that Canadian
yeah this the state and local tax refund
you’ll get 1099g
from your from your state 1099 Mis see
that’s a contractor income if you aren’t
quite an employee and then you become
considered self-employed and you have to
write you’re able to write your
related expenses off we’re going to skip
the detail of that but I do want to go
back and talk about the 1099 K the 1099
K is a relatively new development and
what that is is if you say you have a
business on eBay or you’ve sold a
significant amount of goods on eBay and
you’re collecting money from your
customers via PayPal or Square or any of
those other things they will they’re
required by federal law to issue of a
1099 K over a certain amount and that
amount changes every year and I’m not
sure what it was for 2014 the IRS gets
that gets that report so just like they
get w-2 and the 1099 M is C and what
happens is yeah it’s time becomes
taxable income I had a client who sold
collectible dolls on eBay and has been
doing it for a decade and one year I
filed his tax return didn’t think
anything of it and a couple weeks later
he called me and told me he got a 1099 K
and a letter from the IRS saying that
you know there was one hundred and
twenty two thousand dollars worth of
income on the 1099 case we’re to file an
amended return and he became
self-employed with discs Schedule C
suddenly some well all’s well that ends
well because he had enough of a loss on
the business but you have to report it
that’s the thing anything you get and
that’s why I caution people usually the
IRS starts accepting returns around
Martin Luther King Day and I get calls
and I let’s wait till February first
because nine times out of ten they’ll
get something else and we’ll have to
file an amended return right Schedule k1
k1 schedule Q I’m not going to talk too
much about if you get one of those you
know about it the k1 is if you’re a
member of a partnership or an S corp and
what happens is you get a schedule k1
which identifies the property share of
income or loss that you have allocated
to you as a result of your membership so
if you’re a 50/50 partner you’re 50% a
lot of folks you know I’m a member of a
couple of partnerships where I have 2%
it’s you know so it’s insignificant but
you still need
to report it right less common income
here we’re social security if you sell
your house there’s some things you have
to report gambling winnings alimony
alimony you we always talk about this if
you receive alimony it’s income if you
pay alimony it’s a deduction jury duty
pay earned income all these things the
one thing I want to spend just a couple
seconds on this cancelled debt what
happens when canceled debt is you get a
1099 see and that is considered taxable
income unless you’re in a foreclosure so
if you’ve done a short sale or in a lot
of cases if you’ve made a negotiation
with a credit card company and they you
know take up a settlement amount or they
just write the whole thing off that’s
still considered income and that’s not
and that they don’t tell you that at the
time and I’ve had several people come
through my office with these 1099 sees
and they’ve had to pay taxes on you know
ten thousand dollars worth of credit
card debt that was written off and it’s
still it’s less than paying the ten
thousand dollars but it’s not something
people are prepared for and I don’t
recommend of declaring bankruptcy just
to get out of it if you’re already in
bankruptcy that’s it that’s another
matter um we’re going to skip this this
is about retirement most people don’t
have foreign bank accounts and then
TurboTax even acknowledges that okay so
we’re going to do deductions and credits
now if you’re a seasoned TurboTax person
you can just choose on the right hand
side and said I’ll choose what I want to
work on but your first year first couple
years I recommend this so first one and
the most common of large deductions
folks have is on their home whether
there can we talk about this from your
screen just sure okay so if you have
property taxes mortgage interest
mortgage insurance and that’s PMI not
homeowners insurance certain home energy
credits if you get certain kinds of
windows and things like that you know
some DC had first-time home buyers
credit more get home by
credit repayment that’s when the back in
the day they had first-time home buyers
credit so you need to repay it over
certain period of time so if you have
any of these we’ll just click start and
I’ll walk you through it okay health
insurance this is new for this year
there the IRS is checking home health
insurance coverage for folks so if you
had health insurance all year put it in
be prepared to prove it if you have to
don’t lie and this is old hat for people
in Massachusetts this is a scroll up to
the okay so these are different kinds
different sorts different sorts of
situations the folks have business taxes
and they’re you probably be filing ask
at least a Schedule C if you have to do
an amended return there’s a little walk
you through amended returns cannot be
filed electronically
it’s a 1040x that you’d have to mail in
helps you here at the bottom of the w-4
if you have had too much or too little
taxes withheld based on the information
you put in it will help you generate w-4
to give to your employer so with any of
those you just hit the start button okay
just hit the start and walks right
through it federal we’re ready to review
your return so now it’ll do a little
utility to see if you how things have if
there’s any red flags things like that
so they found some errors and Spacek gee
I wonder what that possibly day
maybe it’s the name my employer right
keyword in that’s what letters came up
yeah okay so that’s going to move to the
state and what it does is it will import
your federal data into your state return
and some states do require a little more
information or different information
than the federal so we’re going to just
go through Massachusetts we’re here in
beautiful Barnstable County
and all that you know it’s the same –
and here Massachusetts does ask for
health insurance information we all get
a 1099 HC and you just aim and all that
information is on here and I’m pretty
sure this is the way the feds are going
to go in the next couple of years for
yes and okay
I just put zero it’s going to ask you a
bunch of questions and in Massachusetts
for example if you’re right if you rent
an apartment you get a credit for that
so there’s certain things that’s that
does don’t appear on the IRS return that
states ask for if you live in the state
that doesn’t require a federal a state
return then this is all you know for an
all capital gain um you know I would say
now you know because this is all how do
you had we actually gone through and
done it from a form
none of these a lot of these questions
wouldn’t be appearing I just said saying
our fathers no dog we get an adoption
credit just put it put none you got to
put them me a lot of these things you
have to make a choice even if the choice
is now because it wants to make sure
you’ve read it okay so now it’s going to
go through all that Massachusetts has is
more complicated than most reason why
they call it taxa chooses well it’s
thorough is what it is put yes yes yeah
okay let’s continue alright so just
click done with Massachusetts and this
pad this version of TurboTax comes with
the IRS return and one state if you do
need to file another state you need to
buy that package I think it’s about 30
bucks so basically this point it just is
going to start to double check all the
information make sure yeah it’s going to
try to run smart check over and over
again awesome looks good and and just
like if someone came into my office what
you’re telling TurboTax is you know this
is TurboTax can’t be held liable because
it is filing your return for you based
on the information you provide if
someone came in my office they you know
signed an engagement letter that says I
will file your tax return based on the
information you provide and I have a
little thing that I stamp on each
document so if somebody brings something
back saying you didn’t include this on
my borders my stamp so chip um this kind
of wraps up the software itself if
people have questions or if they in fact
want someone to do it for them if
they’re come they realized that maybe
their situation is a little bit more
complicated than they thought you do
offer the stuff we always like to put
out there that you know chip like myself
doesn’t work for free you know he does
charge you of your own little saying I
know about that yes I say I’m I am an
accountant but I’m not your accountant
until you engaged me because there’s so
much liability involved right so if they
want to reach you the best way to reach
mr. Gipp Cabella is through his website
ww ship Capelli comm works CA p e ll i
upload a tag on the giant one p tools so
thank you everyone for joining us if you
have any comments you can leave them in
the section below
that’s all for us today everyone class
thank you