Last week, I recommended every taxpayer should use a Tax Pro - at least occasionally. I recognize, however, many of you are the type of people who founded this Nation, independent, never quit, and strong-willed souls. For you "do it yourself" types, the process can be easier and a lot less stressful with some basic guidelines. From gathering your paperwork to actually filing your return, the things I've learned over the years that help you avoid mistakes, overlook deductions or credits, might also help you avoid the dreaded call or letter from the IRS. Number one, start now; really, you'll be surprised at how quickly time goes by when you've got a dining room table covered in receipts, statements, forms, and notes.
If you've read my posts before, you know I'm a proponent of keeping it simple. Use a big accordion-style folder, an envelope, shoebox, or trunk to collect all your tax paperwork, just put everything in there all year long - every piece of paper you have related to your taxes. Later you will organize it as you like. If you don't know where to begin, use my buckets: income items, deduction stuff, life change stuff, and stuff to look at later. Try not to dump everything in the stuff to look at later compartment though. It's probably a lot of the mail you are receiving now, not just your W-2 or 1099-INT. It is everything from charitable donation receipts to your doctor bills, home improvement purchases, taxes paid, paystubs, and don't forget a copy of last year's tax return. Another tip, keep a notebook with you or in the shoebox and jot down mileage, tips you find interesting, life changes, family issues, large purchases, actually - anything big in your life. When it comes time to sit down and prepare your taxes, it will help job your memory. Every year, I'm surprised at how many things I would have forgotten if not for my trusty notebook.
Once your paperwork is in one place, you can decide which tax software to use to prepare your tax return. If your income is under $64,000, you can use one of the free file options available via the IRS Free File: Do Your Federal Taxes for Free page.The IRS estimates that about 70% of taxpayers can use one of the options. Choices are plentiful, if you can't or don't want to use free file, some are off-the-shelf solutions you install on your computer and others are online.
Various accounting and sophisticated tax programs for different income streams, expenses, depreciation, capitalization, and offering different levels of help or support are available. Many of the online versions proclaim free filing without clearly defining what is or isn't included. I've had friends tell me they attempted to use X-Y-Z free file only to find, after some time and effort, that to use certain aspects of the program they would need to pay to "unlock" a much needed feature. Keep that old adage in mind, "You get what you pay for." Typically, the more complex your situation is, the more forms you are required to fill in, the more knowledge you need, and the more room for error or discrepancies. You owe it to yourself to invest some time and money in finding the best program for you, checking your work (the results), and consulting a pro if you need to.
When you finish your return - efile it! It really is that simple, the safest as well as quickest and easiest way to file your return is electronically. I do not recommend mailing your return. When you efile you will receive an acknowledgement form the IRS letting you know your return has been processed. If there are any problems with processing your return, the sooner you know the quicker you can work on solutions. Filing a paper return does not provide you with any acknowledgement until you get either a refund check or some scary notice.
At first blush, doing your own tax return might seem like a good idea, but then cutting your hair might seem like an easy task as well. At first you think, why pay someone when you could just cut it yourself? You know how to use scissors. You even have a mirror ... what could go wrong. But, then, when you're sitting in the barber's chair, spending more of your time and money, while a giggling receptionist is trying to, unsuccessfully, discreetly take a selfie with you, you realize that some things are best left to experts - your tax return might be another one of them. Pro or not, the sooner you file your return the sooner you can get the biggest tax refund you deserve so you can put your money back where it belongs - in your pocket.