At long last, I’m finally just about finished with my taxes. I just need to add in my husband’s supplemental income from announcing high school basketball games, and Turbo Tax will be ready to file for me.
I learned a few things this year.
I was a little nervous about doing my own taxes this year. After all, we bought a house and my career as a full time, self-employed blogger has really taken off. Instead of relying on trusty W-2s to tell me how much we made, I had to collect and file a lot of the information myself.
That said, Turbo Tax really made things easy. I started the Turbo Tax process, thinking if things got too complicated, I’d give up and hire someone to figure out my taxes for me. But Turbo Tax is really straightforward. There’s a reason I use Turbo Tax year after year.
So as far as being self-employed and a first time homeowner, preparing my own taxes not that hard. However, in some ways…..
It turns out that when you’re self-employed, you need to be really organized when it comes to tracking income and expenses. Normally I am. But then we moved. From about August on last year, I had no method for tracking my income and expenses. I kept every single receipt for deposits and expenses, but my filing system went out the window.
Although filing taxes was easy this year, gathering the information took FOREVER. And once I filed my taxes, I realized how important paying estimated taxes is. Fortunately this year we’re taking the first time homeowners rebate, and I did pay some estimated taxes. We’re getting money back, though if it weren’t for the rebate, we’d owe a little to the federal government. And of course, we owe the state. We always do. At least we don’t owe a lot, like we did last year!
There are several changes I’m making this year to make tax time easier next year.
~Using a simple system for tracking income. Last year I tried to use Quickbooks for my blog income and expenses. Quickbooks is a great system, but it’s a lot more complicated than what I need. This year I downloaded Mrs. Micah’s blog income spreadsheet, and as my various payments come in, I’m entering them in the spreadsheet. That’s it. Easy.
~Organizing my receipts. I hate paper receipts. They get crumpled, and often they aren’t detailed enough for me to remember what they’re for. This year I’m filing all of my receipts in Shoeboxed.com. I either email or scan in my receipts and categorize them however I like. I’m using the same categories the IRS uses, so tax time will be easier next year. Since I’m frugal, I’m using Shoeboxed.com free plan, but they also have a plan where you can mail your receipts in, should you think scanning them in is a pain. And the IRS accepts electronic receipts, so I’m good to go as far as documentation goes.
~Reading up on taxes for the self-employed. I’m convinced I didn’t deduct nearly as much as I could have this year. The reason? I wasn’t sure what I could deduct! And since I don’t want to set off an IRS audit, when in doubt, I didn’t deduct. So when I saw that readers of My Two Dollars were receiving a discount on Self-Employed Tax Solutions by June Walker, I bought it. Next year I will be more informed.
~Diligently paying my estimated taxes. Taxes for the self-employed are high, because you don’t have an employer paying half of your social security tax. Therefore many individuals are surprised by the taxes they owe the first time they file as self-employed. Fortunately Turbo Tax has a feature where you can estimate your taxes for the next year. I estimated mine, and I will be sure to pay them, upping the payment as I go along if I notice my earnings going up significantly.
The IRS Free-File is always a great way to get your tax refund quickly. More people are qualifying for Free-File this year, too. However, make sure you use a reputable company. Someone I know started out on the IRS Free File page, and somehow ended up with a company that was charging him a lot for filing taxes! He’s going to use his regular accountant instead.
I’m not sure how that happened, but be careful. I always like to use reputable companies like Turbo Tax and H&R Block. I’ve used both in the past, and they’re both great companies. So while you’re on the IRS Free File site, look for those names first.
Filing taxes can be a real pain, and I always hate paying, especially my state taxes, because they are so high. However, since it’s the law of the land, it’s important to follow the rules and pay what I owe. I believe in taking every legal deduction I can, but cooking the books is not an option. I’m just glad I’m almost finished. Until next year, that is.
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I'm just an average mom, trying to live a frugal life and get out of debt. I write about things that have (and haven't) worked to improve my family's financial situation. What works for me may or may not work for you, and you should always consult a financial advisor before making important financial decisions.
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