First off, I could just go ahead and try this, but I don’t want to pay for Tax Act to do my state taxes and then find out that something is left off. So here is the question:
My health insurance isn’t deductible on my fed taxes because it’s pre-tax dollars. But NJ does not call medical insurance pre-tax, so it’s deductible for state taxes.
If I pay for the state filing, will Tax Act (or any tax software), give me the chance to add in items which were not in the federal filing, or will it just use the same itemized things as the federal (thereby skipping over the possibility of adding the medical deduction to the state form?)
In the past, I just go ahead and fill out the state for free myself, but I’d be tempted to let them do it, if I was certain it was going to count all available deductions.
Not sure this is clear (you can see though, that i’m an overly-cautious person who won’t do something new unless I understand it ahead of time, lol.)
Two things: 1) In my experience, tax software flags items that are treated differently under federal and state law for purposes of state tax returns.
2) The tax software I use doesn’t make me pay until after I’ve filled out the form and before I submit. You might want to see if that is the case with Tax Act, too.
I can’t talk about Tax Act, but just having done my taxes with Turbotax which included NJ, they asked the question seperately for NJ, in large part because NJ and the federal government have different levels of where it becomes deductible (federal it is now 10%, NJ is 2%), and yes, your cost of health insurance is deductible, nj considers it post tax. I suspect because of that any software package for NJ would ask you seperately, if simply because the difference between NJ and federal eligibility is so high.
I just fired up my TurboTax and can confirm that NJ TT has a special field where you can add medical insurance premiums to the federal medical expenses.
Most of the TT packages include one free state return and in NJ you can prepare tax return in software and then file on paper to save $20.
I have used Tax Act for several years, but this year I used Credit Karma for my taxes, because, you know… it’s FREE !
So you could try them and see how their package handles it at no cost to you. I was going to use their free software and use another package (maybe Tax Act) to compare it to, but I got lazy and just submitted my Federal and State with Credit Karma because it seemed like it was doing the right thing.
Be sure to always start from the tax freedom website to sign in, or it will try and change it to TT basic or whatever version you need for your circumstances.
I got my state return free with TaxAct. You have to access it via irs.gov. There were some requirements you have to meet I think.
All those programs differentiate deductions for federal vs. state, as others have said.
I had an unusual situation with health insurance that a different program could not accommodate but TaxAct handled it properly, as well as my D’s returns for 2 different states (both free).
I have used several different online preparers and I’ve always been able to view the results before paying. But some (looking at you H&R Block) make you feel like you’re playing chicken with the Submit button before you get to see it in final format. I need to look at it in the actual 1040 format to review it.
