Review: H&R Block TaxCut 2007 Premium Federal + State (Win/Mac Edition)

We have reviewed the H & R Block TaxCut 2007 Premium edition for Windows and Apple computers. The software comes in several editions, but most tax payers should be fully covered by the H&R Block Premium Edition that includes the State package as well. We decided against the efile edition as there are several service providers that allow easy online efile services for equal or less money. If you are interested in the efile edition of this software – the only difference to this reviewed version is the included eFile allowance – pretty much a pre-payment of the efile fees (Find more details here). Anyway – on to the review of H&R Block TaxCut 2007 Premium Federal + State.

TaxCut Tax Preparation SoftwareTaxCut Premium Federal+State includes almost everything a tax payer needs to complete the federal and state tax return. The software package includes guidance for almost every personal tax situation from 1040EZ to filing a Schedule C. A step-by-step interview guides users through a customized and personalized process. This interview process includes advice on how to find more deductions and how to get the maximum possible tax refund – guaranteed by H&R Block. TaxCut Premium Federal+State also includes advanced tools for financial investors and small business owners such as guidance for income from rental property and related expenses, assistance on investment income and stock options. One section even covers a “how to maximize business deductions” for sole proprietorships.

Some notable highlights:

H&R Block has issues several Guarantees that are included in the tax preparation software package. Here are some examples that will be of interest for you:

Worry-free Audit Support
You can rest easy knowing H&R Block is there to help in the rare event of an audit. This guarantee is included when you e-file your federal return through H&R Block

Accurate Calculations Guaranteed
If TaxCut makes a calculation mistake, H&R Block pays the resulting IRS penalties plus interest. See the software license agreement for details.

100% Satisfaction Money-Back Guarantee
If you are dissatisfied with the software for any reason, H&R Block will refund the full license fee you paid H&R Block or its authorized reseller for the software, exclusive of shipping and handling charges, taxes, and less any rebate you receive on the software. We highly recommend to use AMAZON.com to buy the software as you can mail it back at no fees using Amazon’s return policy. Please make sure you read Amazon’s and H&R Block’s policies.

Conclusion: We found the software very easy to install on a Windows PC running Windows Vista. The tax preparation software worked fine when we created a sample tax return. Of course we were not able to look further into eFiling as a) we would have to wait for 2008 to arrive and b) you would need a real tax return to do so. When we compared the results with other tax preparation tools H&R Block was a top contender. Two Thumbs up from SmartTaxAdvice.com for H&R Block 2007 Premium Edition Federal and State

December 23, 2007 | Filed Under Tax Filing, Tax Preparation Software

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Common Tax Planning Mistakes

Tax Defense

Tax planning mistakes can cost you a lot of money. With some basic knowledge and planning, you can avoid costly tax errors. Here are some basic tips that help you to avoid tax planning mistakes.

1) Do not Ignore the Alternative Minimum Tax (AMT)
The AMT is a separate income tax system with its own difficult set of rules. Read our Tax Guide on the AMT

2) Charitable contributions
Take charitable contributions into your tax planning consideration. You may think the clothes you give to charity are not worth much, but if used properly giving clothes to charity can lower your tax bill significantly. You may be surprised when the final numbers come in. Please note that the new tax law now says you can’t deduct anything unless the clothes are in good condition or better. Keep track of out-of-pocket expenses you incur while working for a charity. An example might be the cost of stamps you buy for when mailing out letters for a fundraiser.
 
3) Maximize your 401K Contributions
Pre-Tax Income you contribute to your employer’s 401(k) plan not only reduces your taxable income dollar-for-dollar, but this money also grows tax deferred until you have to withdraw them in your golden years of retirement. This is one of best and easiest tax shelter employees can take advantage of. Best of all - if your employer matches contributions, such as the first three percent of the money you put in, you are getting free money.

4) Adjusting the Tax Withholdings When You Change Jobs
Switching to a new job is a perfect time to review your overall withholding settings. This is very important if you will earn more money from the new job. After you have adjusted your federal income tax withholdings, don’t forget about reviewing your state withholding allowances as well. This will avoid any unpleasant surprises at filing time.

December 23, 2007 | Filed Under Tax Advice

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What is The Alternative Minimum Tax?

When first proposed, the Alternative Minimum Tax (AMT) was designed as a tax affecting mainly “the wealthy.” However today, more and more avergae people find themselves affected by the alternative minimum tax due to growing incomes. This article describes the AMT in more detail.

The AMT was first introduced in 1969. It was supposed to be a “rich man’s tax” - a fallback tax for those taxpayers with very big incomes, but numerous deductibles at the same time. Since then the AMT has been adjusted for inflation only twice and therefore affecting more middle class people today.

The AMT truly functions as an “alternative” tax in our current tax system. It has its own set of rules and tax rates for possible deductions. These are much more restrictive than the regular tax rules. The AMT rules operate in parallel with the regular income tax system in that if you’re already paying at least as much under the “regular” income tax as you would under AMT, you don’t have to pay AMT. But if your regular tax liabilities fall below this specific minimum, you have to fill the difference by paying the alternative minimum tax. AMT can be triggered by a number of different events. Although those with higher incomes are usually more susceptible to the AMT, many additional factors such as the amount of your personal exemptions or deductions can also trigger the alternative minimum tax. Even simple items such as a deduction for state income tax or interest on a second mortgage can fire off the AMT. AMT tax rates start at 26%, rising to 28% at higher income levels. This compares with your  regular federal tax rates, which (at the time of this writing) start at 10% and step up all the way to 35%. Although the AMT rates may appear to max out at a lower rate than regular taxes, the AMT rules allow significantly fewer tax deductions. The result is a potentially higher tax amount ($$$) you might have to pay. Unlike our regular taxes, you cannot just claim exemptions for yourself or other dependents of yours, nor may you claim the standard deduction. You cannot deduct state and local tax as well as property tax, and a number of other itemized deductions, including your home-equity loan interest (unless the loan funds are not used for home improvements on your primary home). Accordingly, the more exemptions and deductions you normally claim, the more likely it is that you’ll have an AMT liability.

AMT – Check List
Certain circumstances and tax items are likely to trigger the AMT:

If your gross income is above $100,000.
If you have large numbers of personal exemptions.
If you have significant itemized deductions for state and local taxes, home equity loan interest, deductible medical expenses, or other miscellaneous deductions.
If you exercised incentive stock options (ISOs) during the tax year.
If you had a large capital gain.
If you own a business, rental properties, partnership interests, or S corporation stock.

We recommend that if any of the items above apply to you, you should complete the AMT worksheet in detail when preparing your taxes. Rest assured that the IRS will do this as well and you do not want them to come back and ask for more money out of your pocket. Because if the IRS finds that you owe AMT, they’ll add penalties and interest. Worse yet, not paying your AMT liability may trigger an IRS audit. The AMT can be pretty complex and you should carefully look at each item to avoid problems with the IRS.

December 23, 2007 | Filed Under Tax Advice

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