So, itís the second week in February - have you done your taxes yet? What, you donít do your own taxes? You pay someone else to do it for you? Well, Iím one of those people who canít stand paying anyone for something I can do myself. Am I a glutton for punishment? Maybe. Cheap? Definitely. And Iím a Jack of all trades and master of none. Iíve dabbled in auto mechanics, small electronics repair, ceramic floor/wall tile, drywall, carpentry, and the list goes on. Iíve even been going by Webmaster as of late. But, getting back to the subject at hand, Iíll put on my Tax Accountant hat for a moment.
Iím writing this to encourage everyone to do your own personal income tax return. Aside from the fact that misery loves company, there are several legitimate reasons I feel you should join me in performing this annual ritual:
1. Itís fun! (okay, I didnít think youíd buy thatÖ) 2. Itís easy! (no?) 3. Itíll change your life! (?)
Alright, so the above statements are a little exaggerated - there are elements of truth in each statement. First, while not necessarily fun, doing your own taxes will definitely provide a feeling of accomplishment and perhaps even a boost of confidence. Having tackled this task that is perceived by most to be difficult and daunting at best, you may raise your fist victoriously and cry ďHa!Ē in the face of the bureaucrats responsible for the current tax code. After trudging through the overly complex and horrendously long and confusing forms, instructions and IRS supplementary documentation, you will emerge brimming with the confidence that having successfully completed your own return, there is not anything you canít conquer Ė well, at least anything that comes on 8-1/2 x 11 forms. And hey, whatís more ďfunĒ than staying up until all hours of the morning, fueled by chasing caffeine pills with coffee, with Jay Leno pontificating in the background while you stare at the computer screen and fine print until your eyes throb from the strain?
Now Ė about it being easy. Maybe that is oversimplifying the process a bit. Still, with the tax return software available, itís certainly much easier than paper and pen. This is a must Ė go get a copy of Taxcut or TurboTax, it doesnít matter which. But, since it doesnít matter, Iíll tell you that I prefer Taxcut. Not because itís superior or cheaper than TurboTax (itís the same price and as for itís superiority, Iím making an educated guess as Iíve never used Turbotax), it just happens to be the one Iíve always used. Iíve done my returns with Taxcut since 1996. It hasnít let me down and Iím familiar with their processes, so Iíve stuck with them. Another reason might be that they are typically offered each year with Microsoft Moneyís latest version free after rebate. As I have always used MS Money, this allows me to stay current by upgrading to the latest version for free after the rebate included with my Taxcut purchase. Similarly, Turbotax is paired with Quicken, so if you prefer Quicken to Money, go with Turbotax.
Both titles use a process of questions and answers to guide you through filling out your return. Depending on the answers you give, you be taken to different sections as required and youíll skip over the irrelevant stuff. Thereís plenty of help along the way. If your unsure of whether a deduction applies to you or if you should include a certain form in your return, the help files offer great direction and provide several examples where you will find your situation described. If all else fails, there are links to the IRS website where you can access the bulletins that they provide for additional directions to each form in the return.
Taxcut will check your return for all types of errors, both typographical and comprehensive. For instance, if you mis-enter your SSN or forget to enter a value, it will prompt you to go back and correct this. It will also show you any items that are typical ďflagsĒ to the IRS. For example, Taxcut might say something like ďYour total for charitable deductions is $5,000 Ė the average donations reported by people in your income range in 2003 was $3,000.Ē Not necessarily an error, but good to know so that you can make sure you have all the proper documentation to back up something that might raise an eyebrow at the IRS.
While you could probably still not refer to doing your returns as ďeasyĒ, these software packages have certainly streamlined the process.
Finally, will doing your own taxes really change your life? Honestly, I think in some small but positive ways, yes. The satisfaction of having completed this project on your own is somewhat uplifting and should give you a slight boost in self esteem. Add ďI do my own taxes!Ē to enhance your resume. This certainly displays your ability to solve complex problems and shows your go-getter attitude. But seriously, preparing your return will definitely force you to pay attention to certain critical aspects of your own personal finance. Itís wise to be familiar with the tax code or at least the portions that pertain to you and effect your return. Arming yourself with this knowledge will allow you to plan and make future decisions with some idea of how your strategy will impact your tax standing. Knowledge is power and all thatÖ
One parting thought Ė I cannot imagine going through this task, through all of the pain and suffering, questions and answers, receipt hunting, number crunching, gut wrenching process only to find that your refund calculates in the negative. So, if you are one of those unfortunate, under-withheld individuals who ends up owing Uncle Sam every year, then by all means, hire an accountant!