Why transfer an old return? What are the advantages / disadvantages? What is Transferred? What is not Transferred?

[UOldGoat]

I just installed TTax Deluxe for 2016 CD onto my PC.  After Updates are done and I start TTax, the first page lists 3 files for 2015 Taxes. One of them has a ~ symbol as the first character of the filename.  Why doe TTax not explain the purpose, advantages, disadvantages of Transferring an old file into this new 2016 filing?  

[Texas Roger · Accepted solution]

The file with a tilde is a temporary file saved by TurboTax in case the permanent file is unusable for some reason. You can just ignore it. You need to determine which of the other two files is the one you actually filed as your tax return. 

When you transfer from a prior year, TurboTax populates a lot of the information that was on you prior year return so you don't have to enter it again. Things like names, addresses, and permanent information on forms like W-2s and 1099-Rs. This is very important for someone who has things like carryover depreciation or capital losses. It is less important for simple returns with not much more than a W-2. There is really no disadvantage to transferring unless one of the taxpayers has changed or you don't want to have to delete forms that transfer that you no longer need.

[bobweissman]

Transferring data from last year's return is handy for reducing the amount of manual entry you have to do. But it can result in a lot of duplicates if you download data from your financial institutions and/or import from Quicken.

For example, TurboTax asks me whether I want to transfer several Forms 1099 (INT, DIV, etc.) from last year. It asks the question "Did these still apply in 2016?" Well, sure they did, but I'm going to download all that data from my bank and brokerage. I therefore tell TT "No," these don't apply, avoiding later duplicates.

Similarly in the Deductions section, TT asks me if last year's charitable donations still apply in 2016. Mostly they do, maybe some don't. But I'm going to import that information from Quicken, so, again, I tell TT they don't apply in 2016.