5 Tips for Doing Your Own Taxes

Tax

 

 

 

Remember that time I said I was going to get an accountant?

Yeah, that didn’t happen.

Don’t get me wrong, it’s not like I completely forgot about it or just decided to disregard the matter. It’s more like I asked around and it led me pretty much no where.

Besides, I figured since I’ve actually been keeping an eye on my finances for a while now that it would be good to do my own taxes for once – you know, instead of having my dad do them for me.

So I rolled up my sleeves, made a very strong cup of coffee, sat down with my financial files (color coded of course), and revved up my copy of TurboTax. I’d always heard what a pain in the ass doing your taxes can be, but I was determined not to be defeated.

And you know what? It wasn’t that bad. Not only did I manage to get a refund, I also had money left over in my Taxes 2011 savings account which allowed me to pay off my credit cards and put the rest into savings. All in about three hours. Not too shabby, eh?

So how did I manage to do this so painlessly and effortlessly? It was thanks to a mix of technology and good old fashioned organization and money management.

1. Get TurboTax

This was the first time I’d used TurboTax on my own. I’d watched my dad do it before so I figured it couldn’t be that difficult, however it was still software that I wasn’t all that familiar with so I was nervous I would screw something up.

Did I screw something up? Yes, I absolutely did – but Turbo Tax caught it and I was able to correct it. You know what else I love about TurboTax? It walks you through the whole process and asks you about everything – from your W2s and 1099s to the money you make on your side hustle. It also walks you through deductions so you get the most bang for your buck.

Seriously, even if you don’t have to do too much come tax time it’s a great way to learn about all this stuff.

2. Keep organized files all year around.

I had all of my finances from 2011 organized in colorful files. I have a folder for just about everything – retirement, investments, side hustle income, regular income, deductions, tax papers, and more.

Once a month I would just go through my statements, mark my deductions, and see how much money I’d brought in. This alone saved me hours worth of work when doing my taxes because I already knew where I could find the information I needed.

3. Have a separate savings account just for taxes.

Aside from keeping your files organized this is by far my favorite part! Make sure to always have a separate savings account just for taxes.

This is especially important if you have a side hustle! And even if you don’t, you might end up owing Uncle Sam more than they already took out of your check, so it’s better to be safe than sorry.

At the beginning of each year I open up a new savings account specifically for taxes. With each check I get – regardless of where it came from – I immediately put away 15% into that account. If I lived somewhere where state tax applies I would have to account for that as well.

The great thing about this method is that you’ll be prepared for any surprises. As for all of you freelancers and solopreneurs, it ensures you won’t have to scramble around for money when Uncle Sam comes to get his cut.

You know what else is great? Thanks to the deductions I can make as a freelancer I usually end up saving way more than I actually needed, that money then goes to paying off debt or straight into savings. There’s nothing better than realizing you have extra money :)

4. Don’t wait until the last minute!

I hate procrastinating. In fact, I’m quite thankful that the idea of procrastination stresses me out or else I’d never get anything done.

Taxes (and anything having to do with money, really) are kind of a big deal. The last thing you want to do is realize you have a shit ton of work to do on April 15th. I can’t imagine that it’s very fun. Besides, by starting early you have time to make sure everything is right – you’ll also get your refund faster!

5. E-file your taxes.

By filing online you’ll get immediate confirmations of when your taxes have been submitted and accepted by the IRS. No need to worry about the Post Office losing your taxes.

You’ll also be able to deposit your refund straight into your account which is way faster than waiting for the IRS to cut you a check. You can also track your refund online so you’ll know exactly when to expect it.

Overall, doing my taxes on my own wasn’t as difficult or as complicated as I thought it was going to be. It was certainly less stressful than last year simply because I got organized with my money in 2011.

Thanks to TurboTax and my organized financial files I was able to breathe easy get through the whole process rather painlessly.

Are you doing your own taxes this year? What are some of your tips?

 

Image via 401k Calculator

 

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