Save Money Every Tax Season by Filing Your Own Taxes

Filing taxes is something that is dreaded by millions. Some tax preparers charge hefty fees to prepare and file tax returns. For uncomplicated tax returns, there is really no reason for taxpayers to hire a tax professional to complete their returns. They can save themselves expensive tax preparation fees by filing taxes themselves with tax filing software programs. These programs come with easy-to-follow instructions that can make tax filing much simpler. Several software companies offer tax filing software and most are fairly inexpensive. Some programs allow taxpayers to prepare and e-file their taxes online for a fee rather than having to purchase the software. There are some programs for qualified applicants who will allow taxpayers to e-file their personal tax returns for free.

IRS Free File: IRS Free File is a service where tax payers who qualify can prepare and file their tax returns online for free; allowing them to choose between approved tax services who use IRS-approved tax software. There are different requirements for filing with the various tax services. There is a tool available on IRS Free File where filers can ask the IRS to find a company for them. Advantages to filing with IRS e-file include the ability to have refunds electronically deposited into checking or savings accounts. There are also credit or debit card options for making payments to the IRS.

CompleteTax: With CompleteTax, taxpayers can choose from the basic, deluxe, and premium tax preparation programs. The basic option is fine for uncomplicated tax returns and supports the most common tax forms and schedules, including the earned income tax credit.  Tax filers who want to file state and federal tax returns for one price can choose the deluxe version. It has calculations available for profit and loss for sole proprietorships and the credit for first time home buyers. The premium edition performs more functions such as itemizing investment and retirement income and common deductions. For all versions, technical support is available and there is also an advanced help section to answer frequently asked questions.

H&R Block: H&R personal tax preparation software comes in two versions, basic and deluxe. One nice feature about the H&R tax software is that it offers error checking software. If tax filers enter a miscalculation, this tax software may be able to find it. Both versions offer step-by-step instructions. With the deluxe version, guidance is offered for homeowners and investors. The software help taxpayers find maximum deductions for things such as mortgage interest and charitable donations. Filers can file both their state and tax returns with this software.

TaxACT: 2nd Story Software designed a tax software program developed by tax consultants and their own in-house computer programmers. The software guides users through an interview, asking relevant tax questions and completes the tax form as the user proceeds through the interview. The basic version is for federal returns. With the deluxe edition, taxpayers can file both their federal and state returns.

TurboTax  : TurboTax is a tax software product of Intuit Inc. TurboTax offers for different software tax preparation programs: basic, deluxe, premiere, and home & business edition. All TurboTax programs will transfer over information from last year’s tax return and import W2s and 1099forms, which can be a real time saver.. Free technical support is provided by telephone. Tax filers can use the online options for free and pay only when they file their taxes or pay for the download or CD. The software searches information provided for over 350 possible deductions tax filers may have missed on their own. .

Personal tax documentation checklist

Save Money Every Tax Season by Filing Your Own Taxes

To avoid unnecessary delays in completing tax returns, tax filers should gather all the necessary information beforehand. Doing so will allow the process to go quickly and smoothly. Keep a tax preparation checklist handy for each time tax season rolls around.

  • Income information: Gather together all W2s and 1099 forms for the taxpayer and also the spouse if filing a joint return. All income must be reported whether from an employer or from some other source such as alimony, Social Security payments, rental or property income, farm income, IRA distributions, income from selling property, gambling winning, money received from scholarships, and other sources of miscellaneous income.
  • Income adjustments: It is important for taxpayers to keep detailed records of adjustments to their income. These adjustments could result in a greater refund or serve to lower the amount of tax liability owed.  Income adjustments that should be included in tax documentation include: interest on student loans, IRA contributions, alimony contributions, expenses from relocating, self-employed pension plans and health insurance payments, and money paid into medical savings accounts.
  • Deductions and credits: To maximize tax deductions, tax filers should have their documentation in order to make sure they get all the deductions they are entitled to receive. Keep receipts for child care costs, along with the provider’s name, address, and federal tax identification number. Form 1098-T is necessary for claiming education costs. Expenses for adopting a child can be claimed such as medical, legal, and transportation expenses. For the expenses, the taxpayer must include the child’s social security number and receipts for all expenses incurred. Keep receipts for all medical and dental expenses as these are a deductible expense if over the minimum amount required. Other miscellaneous information for claiming deductions and credits to keep on hand include union dues, money spent on uniforms, continuing education, and travel expenses.

Filing your own taxes is a great frugal living tip to help decrease expenses when living on a fixed budget. The tax filing and preparation process does not have to be complicated. By keeping careful and detailed records and using tax preparation software; the tax preparation and filing process is one that even people who have never filed their own taxes can easily master!

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