Save Money: File Your Own Taxes

Save Money: File Your Own Taxes

Filing taxes is a great example of a basic financial skill that should be taught in school. For most people, filing your taxes turns out to be a fairly simple proposition. But it certainly doesn't seem that way from the outside!

If the only tax-related stuff you get in the mail is a W2 (or several), then congratulations! You can file the 1040EZ, which is ridiculously simple. You can even do it over the phone! Just call the number, and the phone system will walk you through the process.

Incidentally, if you are expecting a refund, it may not take as long as you think. Gone are the days when it took up to two months for a refund to arrive. Most people report that they get a refund by Direct Deposit within a few days of filing their taxes. And the turnaround time is a week - two at the most - for a paper check.

When tax prep places like H&R Block and Jackson Hewitt offer you a predatory tax refund loan, in part they are leveraging the perceived amount of time it will take for you to get a refund. I suspect a lot of people would hold tight and wait, and save themselves the 170% loan interest, if they knew how quickly their refund would arrive!

The EITC is the biggest tax deduction that you're probably missing. A lot of qualified people don't claim the EITC because frankly, the credit's rules are kind of confusing. As a general overview, it's a tax credit for people who don't make very much money. The best way to find out if you qualify is to use the IRS's EITC Assistant here, which will walk you through the steps to find out if you can claim it or not.

If you have more "stuff" than a W2 that you need to work into your taxes, then you will probably need to start with the 1040. This is a somewhat daunting form to fill out. It comes with an instruction booklet that's almost 100 pages long, for pity's sake!

If you are filling it out at the computer, you can type into the PDF form's fields and save the document. If you are filling it out in paper, then I recommend getting two copies. One to work with, and one to fill out at the very end when you're positive you have everything right. And even so, you will want to fill out your working copy in pencil!

If you're still feeling overwhelmed, then a tax accountant can be your best friend. DON'T USE A NATIONAL CHAIN. Their fees are a rip-off, and they will lean on you to get one of those crazy-expensive "refund anticipation loans."

Instead, find a local tax accountant in your community, and explain your situation. Most tax accountants will be happy to prepare your taxes for you and give you a copy of their work. This way, you can use their paperwork as a template to help you prepare your own taxes next year.

Having your taxes prepared for you usually costs about $200. But it's worth it if you just need some guidance, so that you can file your own taxes in the future.

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