KJ: It’s tax time, and what’s more fun than doing your taxes? Pulling teeth or giving a cat a bath have got to be top contenders with filing your taxes for the most entertaining thing to do on a weekend. Seeing as how we’re almost to that all-time favorite moment of the year, we thought we would pull together some tips on helping this time of year be a little less stressful.
The biggest question around taxes is: do you prepare them yourself or do you solicit the help of someone else? We’ve done our own taxes (helps to have a CPA mom for guidance!), but the question you have to ask yourself is if your CPA is worth the time spent. If you are spending a few hundred $’s for a CPA to prepare your taxes, then it might be time to see if your CPA is finding you several hundred $’s in tax savings you wouldn’t have found yourself. Sure, convenience can be a factor, but when you’re looking to cut expenses, this area might be one area to consider depending on how complex your taxes are.
Make a list
It helps to start by making a list of what you need to watch for. This list could include:
- 1099’s from brokerage and investment accounts,
1099’s from any saving accounts,
1099’s generated for any contract work,
1099’s from any retirement plan distributions,
W-2’s from any employers throughout the year,
1098 if you own your home and have a mortgage,
documentation showing real estate taxes paid,
itemized receipts for sales tax if you live in a state like Texas that allows you to take this itemized deduction,
listing of all medical expenses throughout the year (noting you have a pretty hefty hurdle to overcome – now 10% of your adjusted gross income for 2013),
K-1s for any partnerships.
While this list is not intended to be a comprehensive list (otherwise, it would probably be 20 pages long, and we thought it best to not bore our readers to tears!), once you have identified what you need to be on the lookout for, then it makes tax time all that much quicker.
Make use of technology
Especially if you use a program like TurboTax, many of these forms and documents can be imported directly into the software come tax time. Some of our 1099’s imported directly into the program this year, which made filling out the forms a breeze.
Also, we use ItsDeductible.com to keep track of our donations throughout the year. It’s a free website that is powered by TurboTax, and it’s a great way to keep track of any cash or non-cash donations.
Turn the complex into something simple
With so many thousands of pages to the tax code, it helps to have a program like TurboTax walk you through the very important questions that impact your taxes: have you moved, did you have any children, did you purchase energy efficient items throughout the year, or did you generate any self-employment income? What better way to make sense of the tax code than to ask a series of simple questions? Then, based on your answers, the program guides you through step-by-step on any additional information needed to file the proper tax forms. Plus, they have a support staff to help answer your questions…oh, and that’s free! Getting TurboTax can cost about $20-60, but when you compare that to what many of the other services charge (let alone a CPA), you may find that you are coming out way ahead. Don’t get me wrong, there are many reasons why you would want a CPA’s oversight – particularly if you have a complex tax situation with business interests, complex investments, etc. – but the average person can turn this part of their life to DIY!
Preparing taxes can be particularly frustrating at times, but if you’re equipped with the right tools, it can become a much less burdensome task.
- Do you prepare your own taxes?
Tell us about the tools you use.
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