How to Do Your Own Taxes
If you’re just starting in the world of finance, it can be easy to turn to the “experts” to do your taxes for you. But when you realize just how simple it is to do your own taxes using tax preparation software, you’ll be thrilled to save the fees of the tax pros who are more than happy to fill out a simple form on your behalf – after all, it takes them no more time than it would take you to do it yourself.
If you have a salary and don’t own your own home, it’s unlikely that you have enough stock sales or other income and expenses to justify doing a full-fledged tax return. Consider this – if you are a typical employee, you get a W-2 in February that tells you how much you made for the year. You might also get bank statements letting you know how much interest was paid on your savings. If these are the only two things you get at tax time, you’re in a great position to use the standard deduction.
For the tax year 2008, the standard deduction is $5450 for a single filer and $10,900 for the married couple filing jointly. When you offset the deduction with the amount of taxes you’ve already paid, you’ll likely wind up with a refund. Without a home or other complicated assets, you are almost certainly better off taking the standard deduction than itemizing your deductions. (Once you own a home, however, you often are better off itemizing as the interest on your mortgage is deductible among many other things.)
Unless you are already tax savvy (and therefore not reading this article), you shouldn’t bother with forms provided by the IRS. Instead, rely on tax preparation software such as Turbotax, which you can now use online, and a tax forum for advice and instructions. So long as you are planning to take the standard deduction, the process is simple. In fact, it’s exactly
what the tax prep folks use when they ask you questions and use your W-2 on their little computers.
- Create an account with standard tax preparation software such as TurboTax
- Fill in your personal information.
- For income, use your employer’s W-2 to fill out the corresponding boxes. Your W-2 form will be numbered the same way as the fields you use on the computer.
- Work through the process answering all other questions including any children or special situations that would allow you to take special tax credits.
- When you have the option, select “Take Standard Deduction.”
- Finish the software application going step-by-step, it’s highly unlikely you’ll find a question that you don’t know the answer to if you’re taking the standard deduction. If so, consult a forum or help through the software for clarification.
- File your taxes online using the software.
If you are taking the standard deduction, it will only take you thirty minutes or less to complete your taxes, including filing. The hardest part might be finding the bank account numbers to give the government so that your refund can be deposited into your account in a matter of days – without paying anything to a middleman.
Easy Step By Step
- Find good tax preparation software to use.
- Register an account and gather your information including your W-2 for the year.
- Follow the steps in the tax software to complete your tax return
- File electronically
Warnings, Advice, and Suggestions
Avoid guessing or randomly filling in fields when you’re doing your own taxes – you might be held accountable for a big mistake by the IRS. Instead, if you come to something you don’t understand, take a few minutes to read the help message provided by the software. In most cases, the messages should clear up any confusion.
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