Things I Learned From Doing My Taxes

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.

Filing Taxes Was Easier Than I Thought

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…..

Filing Taxes Was More Difficult Than I Thought

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!

Things I’m Doing to Make Tax Time Easier Next 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.

A Few Final Notes on Taxes

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.



Author

By , on Feb 16, 2009
Lynnae McCoy I'm Lynnae, wife of one and stay-at-home mom of two. I'm committed to getting out of debt by being frugal with my choices in life.

Freebies

Popular Articles

{12 Comments}

  1. I do agree that filing taxes can be hardwork. I live in the UK and I’ve registered for the online service and it’s amazing how much easier it is than filling out paper forms! Hopefully you’re earning enough money now from your fab blog to pay a company to do your tax returns for you!

  2. Great post!

    Taxes can seem like a taunting task, but it goes pretty quick.

    Paying those estimated taxes is important, but I always do estimated taxes throughout the year to be sure not to overpay and give Uncle Sam a free loan (http://divorceddadfrugaldad.co.....-loan.aspx).

    As for receipts, folder them by month or by category during the year and it will be much easier at tax time.

  3. Nicole:

    There is a website http://www.icanefile.org that allows for people to file their state and federal income taxes for free (it hasn’t been approved in every state yet, so check the site to find out if you can file your state return).

    This is a completely free site designed for the low-income worker to use to e-file their taxes and helps them get their Earned Income Tax Credit which places like H&R Block hardly every check for (and you don’t have to pay half of your refund to them as a fee!).

    The website is designed for individuals who do not have extremely complex taxes.

  4. Make sure to claim any expenses used for the car with self employment. Also if you had to buy anything (stamps, computer, paper, etc) for business it is deductable. Even if you say bought a computer and use it 1/2 for business & 1/2 for personal use, than 1/2 of depreciated value is deductable for this year and next few.
    I run an in home daycare and even the toilet paper the kids use is tax deductable, as well as when I go to store to buy daycare stuff.
    I do pay a CPA who specializes in home business to do my taxes as she knows so much, and she is a work at home mom too, so this helps ease paying her.
    I already filed (efile, my first time) and got my refunds back.
    I got about $4,000. I gave myself some mad money and the rest is for bills and to fully fund my freedom account(account for stuff that comes up but not monthly, ie-gifts, car repairs, my glasses, AAA membership, Christmas, oil changes, etc.) It feels so good to be ahead, with no debt at all.
    Next I start working on the house fund (we rent a small house.) I want to save 20% to put down on ahouse in next 5 years.

    Thanks so much for your blog!!!

  5. I just finished completing our taxes the old-school way. I’ve used both H&R Block and Turbo Tax in the past but decided to save $ and do it myself. Good thing I did because a refund is not coming our way this year. Oh, well. At least we’ve enjoyed our money every week, and we’re not waiting for our ‘loan’ to the gov’t to come back to us. We’ve always been happy to break even. Being a homeowner, in the early years it’s great claiming all of that mortgage interest in the deductions. However, after so many years, you begin paying on the principle and not as much on the interest. And, I think this will be the last year I can claim my deduction, uh, I mean my son.
    Great post! I always enjoy your blog.

  6. Great post! I also need to get more organized. Every year I think I’ll do better well next year I am!

  7. Thanks for the ideas. I will be doing mine soon enough.

  8. AngelSong:

    I empathize with the first time homeowner status; that’s where we were in 2007. Fortunately, Texas does not have a state income tax! I also do not deduct anything I am not certain of. I have an excellent filing system, and it does help. Good for you for not waiting until the last minute to file…I generally do ours early as well. I’ve used Turbo Tax in the past, but I have used TaxAct for a number of years, and it is also excellent.

  9. Mike:

    Great post!

  10. Lynnae:

    Ah, to not have a state income tax. That would be great! Of course we don’t have a sales tax, so that helps…

    I always have to file early. Every year we get money back from the federal government, but we have to pay the state. So I file federal as soon as we can, and then wait for the refund, so I can use the refund to pay the state. LOL

  11. “at long last” WOW! you are way ahead of most indies who are even now not really moving toward getting their tax info together. I know because I’ve been a tax and financial consultant to talented, wonderful self-employeds for a long time.

    For your blog visitors who have not yet put their pen to paper or finger to keyboard please let them know that they can get a complimentary LIST of 100+ INDIE BUSINESS EXPENSES from my site or blog.

    Please continue giving your useful info in such an accessible style. Indies need as much help as they can get.
    June Walker

  12. I think I’m about to learn a bunch of things too! Great tips, thanks!

Leave a Reply

Your email address will not be published. Required fields are marked *

Disclaimer and Legal Mumbo Jumbo

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.

In accordance with FTC guidelines, I state that I have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. I do my best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

For additional information, please review our legal disclaimers and privacy policy.