How to Do Your Own Taxes

If you’re a typical person, who earns money from an employer and has no complicated financial dealings, it’s not hard to prepare your own taxes. I prepare my own taxes every year, and I haven’t messed up yet! All it takes is a little organization and a good tax program.

Organizing to Pay Your Taxes

The first thing you’ll want to do is gather your paperwork. You’ll need W-2 forms from your employer(s), tax paperwork you’ve received from your bank, your student loan company, and your mortgage company. If you itemize, you’ll also want to gather receipts for your deductible expenses.

Hopefully you’ve been saving your receipts in an organized manner throughout the year, or this step might take some time.

Select Your Tax Software

In the past I’ve used both H&R Block and Turbo Tax. Both are good, straightforward programs. I personally prefer Turbo Tax, because I find it slightly easier to use.

Both programs offer a free option for federal taxes, though you’ll have to pay, if you want to file your state taxes with them. If you decide you need a more robust program, you always have the option to upgrade. Because of my blog income, I always need to upgrade. It’s still cheaper than paying an accountant, though.

The thing I love most about Turbo Tax is that you don’t pay until you actually file your taxes. That means you can play around with the program and see if it’s for you, before you commit to paying any fees (if you decide to upgrade or file your state taxes with them). If you free-file your government taxes and do your own state taxes, of course, there are no fees.

It’s Not Hard to Prepare Your Own Taxes

If you don’t have a lot of complicated financial issues, it’s really not hard to prepare your own taxes, using software like Turbo Tax. I was a little worried about it last year, since we had bought a house and I had some self-employment income. But as Turbo Tax walked me through the form, I found it really easy to plug in numbers and let Turbo Tax do the calculating for me.

If you’re worried about not getting all the deductions you can, there really is no worry. Turbo Tax will ask you about every possibility, so you don’t miss any deductions or credits. And if you find you’d get a bigger refund with another tax software? Turbo Tax will refund your money.

For complicated financial issues, it’s probably best to get an accountant. But if your taxes are straightforward, it’s not hard to prepare your own taxes.

Do you prepare your own taxes? Or do you use an accountant? Why?

Photo by alancleaver_2000.



Author

By , on Jan 12, 2010
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.

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{26 Comments}

  1. The Prudent Planner:

    I’m curious to know what everyone thinks about the audit protection plans some of these online tax programs offer such as Turbo Tax or the H&R Block software?

  2. Rey Ortiz:

    Hi, I am new to this. As this will be my first time filing my taxes. But what to you mean by having complicated Financial issues? I don’t want to do my own taxes and screw them all up.

  3. Tabby:

    Good luck with that!,Sabastian

  4. Michele:

    I use Tax Act. I learned how to do taxes, simply by reading the instructions and having a love of numbers helped. I have done my taxes way before the software programs and I have been doing taxes for my family as well. I have used Turbo Tax for my relatives who live in NY (its free for New Yorkers State and Federal).

    I would advise everyone whether they do their own taxes or use an Accountant, they should look over their taxes, signing on the dotted line means you acknowledge the figures are true and correct. Meaning, you cannot blame your accountant for any errors when you signed.

    Go to the IRS website and download/order PUBLICATION 17. It is very helpful.

  5. Jeff C.:

    I also use TaxAct. Its pretty cheap and I found it to be really easy.
    I prepare my wife and I’s taxes as well as my three oldest kids taxes.

  6. Been doing my own taxes for 20 years and wouldn’t have it any other way. Several years ago I began using Turbo Tax and hand calculated them just to make sure. I’ve been on the wrong side of the IRS once and will never go there again!

    Turbo Tax works great even with more complicated issues such as relocating, trading profits/loss and rental incomes.

    If you have significant non-cash donations make sure to go for the it’s deductible option! It Rocks!

    • Lynnae:

      I love It’s Deductible! Makes tracking all those Goodwill donations easy!

  7. Kate:

    I have always prepared my taxes and it got me in trouble because I didn’t know I had some stocks to report. However, I still do my own taxes, just make sure you know all of the income you need to report.

  8. Angie:

    We have an accountant because we own 80 acres of farmland and my husband drives truck (Small Business). So we have wayyy to many things to do. I go and see him and the end of December so we know where we are standing at that point. Sometimes he will tell us to purchase fertilizer for the spring and sometimes he will tell us that we need to put more into the HSA. It really helps to know where we are before the end of the year so we can decide if we need to do something to help with the tax situation. We also pay quarterly taxes. Sometimes I think we are taxed to death with the semi.

  9. Yep, I do my own taxes using TaxCut. Being able to pull up prior years info makes it much easier to complete your taxes. I thought my taxes would get more complicated with a rental property but the software even makes that a breeze.

  10. Ryan:

    I’d agree that filing taxes online is definitely ideal for those without complicated financial transactions. In some respects, TurboTax could even be used in this situation. The thing to keep in mind is double check your inputs several times over again. More often than not, its a careless mistake that causes an issue with a tax return.

  11. Lynnae,
    Thanks for having the spunk to challenge others to prepare their own taxes. I have done mine for years (before tax software was available) and I like the way it helps me understand my finances better. Because my taxes are slightly complicated (very slightly) I will have a professional check them over once every four or five years just to see if I am missing anything.

  12. Leslie:

    If you AGI is approx $57k or less, you can use “Freefile” from the IRS instead of having to spend money on expensive Turbotax. http://www.irs.gov

    • Lynnae:

      Turbo Tax provides a free version for those who qualify for free file. So you can use Turbo Tax and file free. State filing costs extra, but the IRS doesn’t provide state filing either.

      In the past (before I needed the paid version) I used the free version to free file my federal taxes, and then I did our state taxes by hand.

  13. David Y:

    I have used TurboTax the last couple of years. Found it easy to use. I like the way they can pull data from employers, investments, etc. Less chance of forgetting something or entering wrong data.

    Yes, TurboTax does have previous years data already stored.

    • DANO:

      The free online version does not store previous tax year data. The paid versions do.

    • DANO:

      I did my first tax return ever for tax year 2008 using Turbo Tax free version. It really boosted my confidence about taxes, and was easy as everyone else has mentioned. This year however, I found that I have some self-employed income (and thus SE taxes) which the free version does not handle. I was not willing to pay to upgrade, and had enough courage to attempt to do my 2009 return by hand.

      It was tough. My financial situation is not tricky, but reading through the 1040 instructions, all the supplemental forms and their own instructions from the IRS website took from 24 to 48 hours to make sure I covered and understood everything. A good solid weekend gone.

      I’m glad I did this. I learned a lot about the tax codes and many facets about taxes I didn’t know before, such as finances to keep track of for 2010 to deduct, and to check if I need to pay quarterly estimated taxes (unlikely, but good to check since I’m partly self-employed). Being an engineer, I’m used to checking my work and following tedious calculations, so I was able to get through, but it was no walk in the park. I only recommend it for those who are really curious about all the clockwork behind their tax software, or if you want to make sure the software (or your accountant) worked properly (even it/you make mistakes sometimes).

  14. Angelsong:

    Does TurboTax have your previous year’s income/employment information already stored? TaxAct does, and it is very handy.

    • Lynnae:

      If you use one of the paid versions, it does. I’m not sure about the free version. I don’t think that one does.

  15. It may not be hard but still have someone else do it for me right now. Would rather it get done and I’m in a situation where it doesn’t cost me anything to outsource.

  16. I have prepared my own taxes every year except one. That year I had my BIL do them (he’s a CPA) because we had a few weird things that year and he didn’t charge us.

  17. A:

    I prepare taxes for a firm. In my option 75 percent of the people I do taxes for could do themselves. They just don’t want to. It might take them longer to do it or they have to research when they do it, or they aren’t as organized etc. I have heard it all.

  18. Lynnae:

    I’ve never used TaxAct, so I can’t compare the two. Sounds like another good one, though.

  19. Angelsong:

    I do our taxes every year. I have been using TaxAct, but I am considering trying TurboTax this year. Our filing system makes it very easy to keep all of our records organized, and it takes less than an hour to get the taxes done. I love e-filing, too. I have never had an accountant.

  20. I use Ufile.ca (in Canada, of course) to prepare my taxes. It’s free to use, until you are ready to print or e-file, then the price is $15.99, and if you buy the program for your computer, it’s $19.99. Sometimes you can get it for free! There are coupons and codes floating around for it, especially if you are a student.

    They are really good about keeping it up to date and I like the fact that you don’t need software to use it! It’s web-based so can be accessed anywhere.

    I love the program – it keeps track of everything for you, only gives you the pages you need (through a quick interview process) and will roll your numbers forward each year.

  21. Christina:

    I use TaxAct. It’s free except for around $15 to e-file. I’ve used it with my business and it guides me through everything. I love it!

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