I can tell it’s tax time. Most of the questions posted to my old posts are about taxes. I’m not a CPA; I write about taxes only to the extent they affect me.
The best way to get tax questions answered is of course asking a real CPA. I realize not everybody can afford a real CPA so they ask an amateur on the Internet. The next best way to get tax questions answered would be getting a tax book.
There are two popular tax book series. J.K. Lasser’s Your Income Tax and Ernst and Young Tax Guide. These books are updated every year. They are very inexpensive for their size (think yellow pages). They both go for $13.57 at this moment on Amazon.
My favorite tax book, however, is U.S. Master Tax Guide by CCH. Despite the name "Master" it’s not as huge as the J.K. Lasser’s book or the Ernst & Young book. It’s more expensive ($79.30 on Amazon) because it’s used by professionals. Yes, CPAs also use reference books.
The "Master" in the title is well justified because it answers more questions than the other two "consumer-grade" books. I consider CCH’s U.S. Master Tax Guide the best tax book.
I tested all three tax books with some of the questions I got from the readers recently.
"How can I carry forward unused foreign tax credit?"
"How to calculate cost basis in a stock when the company is taken over by another company in a part-stock-part-cash merger?"
"What to do with dependent care flexible spending account when a spouse doesn’t have earned income?"
Every time I found a better answer in the Master Tax Guide than in the J.K. Lasser’s or Ernst & Young books. When the questions go out of the ordinary, the J.K. Lasser’s or Ernst & Young books either don’t say anything or just send you straight to IRS publications, some of which are not easy to understand. A used copy of the Master Tax Guide sells for about $30 on Amazon, which isn’t that expensive.
The problem with tax books is that new editions keep coming out every year with tax law changes. However, it also creates an opportunity. After a new edition comes out, people sell their old editions. A used last year’s U.S. Master Tax Guide sells for as low as $1.48 plus $3.99 shipping on Amazon. That’s a bargain.
Given that if you buy a tax book it’s going to be out of date next year anyway, you might as well buy last year’s book for 90% off and keep as a reference. Tax laws change, but they don’t change that much. For example the answers to the three questions above didn’t change last year. If you can spare $30, get the current year’s book. For less than $6 shipped, last year’s book is a steal.
You can use software to help you prepare your tax return. It won’t help you understand taxes. For that, you need a tax book. You might as well get the best one.
[This post contains affiliated links to Amazon.com. Amazon will pay a commission of 4% – 6.5% to me if you make a purchase within 24 hours after you click on the link.]
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Thanks for the awesome tip, TFB! Pity I already filed my taxes – completely agree with you on the use of a tax software – It’ll do the job for you, but you won’t know what it did!
David H. says
As someone who just finished becoming a CPA and worked as a tax accountant for 18 months, this is quite accurate. I can tell you that when those accountants I worked with including myself ran into something we were stumped on our first step was looking it up in the master tax guide (CCH, RIA, etc) or a quickfinder. We typically can find the answers in there before having to use online research such as CCH, RIA Checkpoint, or others. I am using a 2008 master tax guide and it does just fine.
The <$6 deals seem scarce on Amazon, but I just grabbed a $1.49 2009 copy off eBay, appreciate the heads up on this, I look forward to the light reading.