Intuit Software: It's Deductible (ItsDeductible)

Some time back in the nineties when the Clintons lived at 1600 Pennsylvania, one of their legion of enemies attempted to make some political hay by going through the then first family's tax return with the proverbial fine-toothed comb. I suppose he either forgot that neither of the Clintons (or Chelsea for that matter) had anything to do with the paperwork other than affixing a signature - or more likely, hoped that his audience wouldn't know any better. The big noise, as I recall it, was over how the Clintons' accountant had written off a pair of old socks donated to charity as a deduction of $2.00 - such a scandal!

That's nothing, though: I can justify writing off $3.00 for my donation, 'cause I own a copy of ItsDeductible!


The Situation

Writing off charitable deductions used to be reserved for the folks who sit around clipping bond coupons and ordering the chauffeur to wax the limo. Now that you can apply a charitable deduction to even a short-form tax return, it's possible to save a chunk of taxes even if you're just one of us folks who sits around clipping grocery coupons and ordering the guy in the paper hat to supersize those fries. The big difference is that most of us have no idea what our charitable donations are worth - enter ItsDeductible.

The software has two functions: first, it acts like a big filing folder for all of your deductible expenses, so that come tax time you don't spend hours agonizing over a handful of slips of paper with cryptic notations like "2 BAGS CLTHS" or "KTCHN EQPT." Instead - assuming you're organized enough to keep on top of things - you can keep detailed records of not only charitable deductions but also your medical expenses and those mysterious "miscellaneous" deductions found in the bowels of Schedule A.

Then when tax time rolls around, you can use ItsDeductible to print out a completed IRS Form 8283 ( required if you have more than $500 in non-cash contributions). You can also import your deduction database directly into TurboTax if you have that software, or print out reports if you're doing the paperwork by hand.

Income Dynamics, makers of ItsDeductible, are so convinced you'll save at least $300 by using ItsDeductible that they have a money-back guarantee. We'll see about that...


The Software

The user interface is pretty simple: from the home page you move to pages where you can enter either charitable donations or deductible expenses. In the deductible expense area, you may categorize expenses as medical/dental, or miscellaneous. The latter category is further subdivided based on whether the expense is subject to the 2% limit or not. Entering an expense is pretty simple: you select a radio button for the category; enter a date, some description, and the amount of the expense; and indicate whether you have a receipt. Should you screw up, you can always go back later and edit or delete your entries. In effect, the software merely converts your paper records to digital form and puts them all in the same place.

The charitable contributions area is quite different - this is what the program was really written for, and the deductions module has all the appearance of something tacked on later. Here is where ItsDeductible can actually save you some money, for it has access to current fair-market valuation for thousands of items that people like you and me give to charity every day. The idea is that we grossly underestimate the value of our donations and thus cheat ourselves out of tax savings. They may be right - let's say you donate a trash bag full of clothes. Your guess is that these used garments are worth, what, seventy-five dollars? What would you say if you realized that each of the six nearly new T-shirts in there is worth eight dollars? The prom dress that your daughter wore once is worth a cool $120? Or how about the dresser that your son left behind when he moved out? It might be worth $150! I don't know 'bout you, but I've certainly underestimated values by these standards. ItsDeductible claims that their valuations are based on published fair market values, so I presume they're right - and if they're not actually real values, they're still defensible in an audit.

Entering your non-cash donations is easy. First you establish a record of the overall donation by designating a date and a recipient. Then you locate the general categories of donated goods (e.g., Mens Clothing, Linens, Tools, Games). Within each, you'll find a list of common items. You then give a count of the items and make a "good-faith" estimate of their condition (good, fair, poor). Based on condition and count, ItsDeductible tells you what they're worth and keeps a running total of the value of this donation. If you have still more stuff after your next garage sale that goes to the local Salvation Army dropoff, then you can establish another donation and make all your entries. The advertisements tell you you'll be amazed at the actual value of the goods you've donated. I may not have been amazed, but I sure was impressed by some of the values - so much so that I've listed a few representative ones at the end of the review (where it's easiest to skip 'em).

You can also enter appraised value for donations (such as, perhaps, a car or jewelry) and cash donations, so you can keep the deduction records in a single place. Other points I found useful were automatically entering mileage for making charitable donations and also tracking our-of-pocket expenses and mileage for charitable activities. Oddly, though, the software doesn't allow you to track travel costs incurred for medical reasons, which are also deductible if I remember correctly.


Logistics

The Windows requirements are pretty low-key: the software requires 32 MB of RAM and a processor running at 100 Mhz or higher, under Windows 95 or newer. The website (www.itsdeductible.com) does not indicate availability of a Mac version, though they do have an online version that anyone can use for $29.95.

Installation from the CD-Rom is fast and simple, using InstallShield technology. You're then required to register. Here comes the kicker: although the packaging says nothing about it, your copy of ItsDeductible is good for only one tax year. That's right, folks, after you get it home and begin to install, you must choose whether your installation is for the 2003 or 2004 tax year. This information is available on the website, but is not apparent at the point of sale. Shame!

Help is available from the installed software or online, although the URL for online help is incorrect (a real confidence-builder, I tell ya). Help is very shallow - most of the time it's merely a near copy of the printed instructions for IRS forms, and we all know how helpful they are most of the time.


Recommendations

ItsDeductible guarantees that you'll save $300 on your taxes by using their software. I beg to differ: if you use the software you might save $300 over not having entered any deductions, but if you're even a moderately astute taxpayer you're already tracking all those deductions in software like Quicken. In other words, you're not likely to save an additional $300, just a total of $300, of which you're probably have already saved $200-plus without the software.

I recommend the software for two groups of people: those who do not already track their charitable contributions and deductible expenses elsewhere, and those who donate lots of household goods and to make certain that they're writing off the full value of their gifts. You're warned to go into this software with your eyes open, though - according to their online support, you will be required to buy a new version every year. I just wish they'd made that apparent when I bought it and when they forced me to decide on a tax year at installation. Me? I'm asking for my money back...



A Few Fair Market Values for Comparison

Scroll to the bottom unless you're interested in minutia. The key is: category - item - condition - value:

baby supplies - Sony baby monitor - good - $13
garden tools - gas-powered leaf blower - fair - $50
sporting goods - aluminum baseball bat - good - $23
entertainment - DVD - good - $16
mens clothing - cowboy hat - good - $38
games - video game cassette - fair - $5
furniture - wooden office desk - fair - $99
womens designer clothing - wedding gown - good - $300

Values are as of the date the software was made (2002) and are not necessarily current.

Recommended: No