# Commercial Tax Software?



## FFMralph

Hi, up until now I have been filling my returns using the IRS provided "Free File Fillable Forms". Printing them out and sending them through the mail. Is it beneficial to use commercial tax software such as Turbotax or Taxman? 

My main areas of interests are the correct completion of the Foreign Tax Credit, the Foreign Earned Income Exclusion, the Foreign Housing Exclusion and Standard Deductions. 

I would assume that an expat with no W2 would have problems interpeting the questions asked by the software.

If beneficial, do you recommend online or software download? 
What about e-filling?


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## Bevdeforges

The lack of a W2 shouldn't drive your choice of software. There is actually a sort of "ersatz W2" included on the tax software that you fill out in lieu of a W2, and apparently this is actually transmitted to the IRS in a particular format if you e-file. (It also feeds the form 2555 if you use that.) Can't remember what the IRS calls this, but it exists both on their Free File Fillable Forms and in the tax software that handles form 2555 and foreign addresses.

It's a bit early to start looking for tax software as the forms for 2013 aren't finalized yet. And whether or not you can e-file often depends on how the software is set up. (I also have a problem with having to pay to e-file, but that's just my New England background.)

Once the Free file sites open up (probably mid to late January), you may want to take a look at those software sites. On most of them you have an option to prepare your forms online or to download the software to run on your own computer. Last year, there were only 8 software providers who could deal with 2555's and other expat issues, and most of them have either income or age limits on the free use of their software.

From last year's experience, I can tell you that TaxAct has a free version that is not restricted to those under a certain income level or age. If you want certain types of help with the form, you pay extra, but at least it's on the basis that you pay what you need and not for all the other bells and whistles.

Personally, I think I'm going to download the software this year. I did my taxes online last year, and there are certain limitations as to what you can retrieve and when - plus, if you're like me and like to try several versions of your taxes, it might be best not to store things "in the cloud" where the IRS, NSA or who knows whatever government agencies might have access. Actually tried to e-file (at long last), but although TaxAct will let you indicate "NRA" for an NRA spouse, the IRS system rejected my attempt at e-filing because I didn't (couldn't) enter an ITIN for my NRA spouse. So, you takes your chances.

We'll find out come February what (if any) changes there are for the 2013 filings and what the e-file and Free File options are going to be.
Cheers,
Bev


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## FFMralph

Thanks Bev,
I downloaded TaxAct 2012 and tried it out with my 2012 return. 
I was a little disappointed. Especially, with the FTC. It was still vey confussing.
From the "Q & A" portion I was not able to create a 2nd Form for passive income.

But still, for the low Price is does save a lot of typing and math calculations.


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## FFMralph

To compare I tried TurboTax online version today. Definitely TurboTax takes more work out of the preperation and is easier to understand. 
_(P.S. I'm not yet finished.)_

Funny though, I haven't been approached and asked if I want to take the FEIE or Claim a FTC. 

Also, you cannot purchase the download software online from outside of the US/Canada. As an international user, you appear to be restricted to the free online web Version.


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## Bevdeforges

After the first of the year, check out the Free File options on the IRS website. There are a couple of other tax filing softwares that might be more to your liking. (But to use them to file for free you do have to have AGI under a certain level - something like $58K - and most of them have age restrictions, too.)

Check the website of the IRS office at the French Consulate. They normally put out a document each year that indicates which Free File sites can deal with foreign addresses. U.S. Taxes (IRS) | Embassy of the United States Paris, France
Cheers,
Bev


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## BBCWatcher

Good tax software will make an attempt to determine whether taking or not taking the Foreign Earned Income Exclusion (FEIE) if you qualify is a good idea or not, just as good tax software will try to determine whether married filing separately or married filing jointly is better (assuming you're married). Though even good tax software cannot read your mind. In borderline cases sometimes you will prefer the FEIE, sometimes not (e.g. for making IRA contributions).

Bad tax software -- and bad accountants, for that matter -- will just take the FEIE automatically without determining whether that course makes sense or not.

So check your tax software's (or accountant's) output. Are you living in a comparatively high tax jurisdiction where it may not be wise to take the FEIE? Check.


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## Bevdeforges

Haven't run into any tax software that actually makes the decision for you about FEIE vs relying solely on the FTC, nor about married filing separately vs. joint. It's usually a matter of having to run the alternative scenarios yourself to see how the tax liability (and other factors you may want to consider) work out.

The other issue is that tax software (and tax advisers) are generally focused on one country's tax system or another's. The whole FEIE vs. FTC (or a combination of the two) can depend on the interplay between the US system and the other system (or systems) you are subject to. That's usually the area where you're kind of on your own.
Cheers,
Bev


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## BBCWatcher

I never said any of the available tax software is "good."


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## Bevdeforges

Tax software has one avowed purpose: to help you fill out your tax forms for a particular year in a particular country. To borrow a phrase from long ago and far away back in the US, it's "the nut behind the wheel" who determines whether the results are "good" or "bad" and in what context.

Ultimately, the responsibility for tax declarations comes down to the tax payer, no matter how much you pay for software or professional advisers to advise you. (And I should mention that the advice you get here is worth exactly what you're paying for it - which is nothing in the long term scheme of things.) 
Cheers,
Bev


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