April 01, 2009

Income Down, Refund Up - Refreshing All the Way to the Bank

I don't like anything to take too much longer than it has to. I tend to write blog posts from beginning to end in one sitting. I don't like to stop TV shows and watch the second half later. And I really don't want to have to make doing my taxes an ordeal. That's why for the last several years, I've jumped onto TurboTax Online and powered my way through the year's data. Last night, the entire process took me less than two hours, including my wife and my W-2s, deductions for our various donations to charities and the church, by way of tithing, and synchronizing the results of my gains and losses (mostly losses) in investments through eTrade over the last year.

I've mentioned my using TurboTax a few times previously on this blog, including writeups after 2005 and 2006 taxes. But given the readership of the blog is ever-changing, and given the significant changes we're all seeing in terms of the economy, I thought I would share our experience again.

As an existing TurboTax user, all the year's previous data is saved for me. Rather than have to tell them every year where I work and where my wife works, it simply asks me if that data has not changed, and can automatically import the correct information. The automatic import of data from my brokerage account is also a dramatic timesaver compared to printing all my records out and hoping I get the data right.

As you know, 2008 changed a lot of things in our family. For one, we added two new dependents, with Matthew and Sarah joining us in the year. Also, as my wife stopped working in the middle of the year, her income decreased quite a bit. Lastly, and most importantly, as far as Uncle Sam was concerned, the gains I had seen in previous years on the stock market turned into losses, as they did for everybody else.

TurboTax Helpfully Shows Results vs. The Previous Year

The result? As expected, our household income went down by a good margin, but not so much that we're in dire straights. Yes, we're lower on cash than we'd like, but we have avoided debt, and I still have my job. And after last night's two-hour effort, this year's refund should help things quite a bit, especially as I have to strongly consider replacing my car, on its last legs, thanks to trouble with the transmission. (See FriendFeed thread here)

As it turns out, thanks to the drop in income, our new family status, and our being good citizens and tax payers, our refund grew by about 50 percent compared to last year. Even though it won't make up for the losses in the market, and our reduced income, it's something, and it's been great to just be able to log on to TurboTax and take care of the whole process in one evening. Now, I just have to check in with my bank every morning and see if the government has given us our share back. After all, three years ago, it only took ten days.