If I can do my taxes, any Millennial can
For the first time this year, I did my own taxes. Actually, I did them twice.
I've only been filing a tax return for the past two years, but I have been around long enough to pick up on the dread and anxiety that surrounds tax season. TAXES. It's like a four-letter word. It might as well be spelled T@%$!.
Damian Dovarganes AP
This Thursday, Jan. 9, 2013 photo, shows a 2013 1040-ES IRS Estimated Tax form at H & R Block tax preparation office in the Echo Park district of Los Angeles.
This Thursday, Jan. 9, 2013 photo, shows a 2013 1040-ES IRS Estimated Tax form at H & R Block tax preparation office in the Echo Park district of Los Angeles. less
As a young person though, the prospect of April 15 looming has meant a pretty hefty deposit into my bank account the past two years, the welcome tax refund. Time to go shopping and buy myself an iPad! OK, maybe a little shopping, but I've never actually splurged on an iPad and the first year I used half my refund toward my student loans.
My first year out of college, I passed along my W-2 to my parents' "tax man." I got my refund about a month later and remained none the wiser about what had happened behind the scenes. Last year, after seeing how much "tax man" had charged for his services, I decided to spare my parents the expense and turned to my boyfriend's dad for help — because what better person to help you file your taxes than an IRS auditor?
He assured me at the time that filing your taxes really wasn't that hard and that I could probably do it myself. This year, in the name of journalism and my own education, I took his advice. I decided I'd take on my taxes with a plan to write about my experience and, I hope, convince my fellow Millennials that it wasn't that horrible. So, here I am, after a week of doing my taxes a couple of times, telling you that it actually wasn't that horrible. In fact, it was easy and even a little gratifying.
Just for good measure, I went through the process of filling out my information twice (I filed only once), with both TaxSlayer and H&R Block's online programs. Then I met with an H&R Block tax adviser to double-check my work. The online programs make the whole process so easy I thought I had done something wrong. You'll basically be asked a series of questions about your life (did you move? change jobs? have a baby?) and be prompted to enter certain information based on how you answer.
Tax season may be the one time a year Millennials catch a break for falling so far behind on the adulthood spectrum; those milestones we're not achieving — marriage, buying a house, having a kid — make filing your taxes more complicated and prone to errors. Some of those situations also often mean tax benefits, but hey, we can't have it both ways.
The H&R Block adviser I met with in Vienna, Va. Jeffrey
Momoi, told me the most common mistake he sees on tax returns is missing out on credits like the child credit and dependent care credit, which both reduce the amount of taxes you owe just for having a child and paying for child care.
Good to know, but I don't plan to be able to claim those credits anytime soon. I have a job and I'm paying off my student loans, which are essentially the only two circumstances that figure into my taxes. Break No. 2 for Millennials doing taxes: If you've paid interest on a student loan in the past year, that's tax deductible up to $2,500 and depending on your income. If you've paid $600 or more, your lender should provide you with a form called the 1098-E that will tell you how much interest you paid.
And while I seriously considered leaving it off because, well, who would ever really know? I also included more than $500 I made babysitting in the fall in the "other income" category (although I was told afterward that anything over $433 should technically be filed as self-employment income, which requires a different form). Because if I'm going to write publicly about doing my taxes, I probably shouldn't lie about them, right? Plus, disclosing this only reduced my refund slightly, and I figure I get "being a good person" points. Another FYI: If you work in a restaurant and receive cash tips, you have to report those as well.
After entering my W-2 and student loan interest information, that was it. The information was transferred to my state return. I answered "no" to the rest of the questions I was asked by the programs and was sent straight to the e-file part of the process. The programs automatically calculate your deductions and credits and tell you how much money you owe or can expect to get back.
Unless you have an incredibly complicated tax situation, I'd say at least try to do your taxes yourself first. Online programs will walk you through the whole thing step by step and tell you what forms you should have on hand to be able to provide the right information. Doing mine with H&R Block in person was going to cost me almost $200 in expertise and labor! The expense takes into account personalized advice and the risk factor associated with your return, Momoi says. Doing them online would cost $28 through H&R Block and about $24 through TaxSlayer.
Most tax-filing programs let you do a federal return for free but charge for state returns because they're more complicated to process. I ultimately filed through TaxSlayer for the cheaper state return. H&R Block does offer a free "second look" where a tax pro will go over your return once you've already filed. Though if you have to amend and refile, there's a charge.
In a few weeks, I'll be a couple thousand dollars richer, all for about 45 minutes' worth of work (at least, if I had stuck with just doing my taxes once!). Thanks, government — even though most of it will go back to you anyway in the form of my federal student loan payments. T@$#!Source: www.usatoday.com