Do Your Own Tax
Do Your Own Tax in 3 Easy Steps for just $25
Tax time is not at the top of anyone’s bucket list for something enjoyable to do. But, the fact of the matter is, taxes have to be done, and on time. For a first-timer, it may seem a bit overwhelming to tackle this on your own. Once you understand the basics though, you’ll quickly discover that you can do your own tax without much effort.
Should you do your own tax now?
As you begin to spend more time eliminating any debt and building up emergency and retirement savings, you’re improving your financial literacy. Going through that part of your financial journey makes doing taxes by yourself the next natural step.
As soon as you’re more comfortable tackling the various areas of your personal finances, doing your own tax return won’t seem so overwhelming. Not only will you be in better control over your finances, you’ll be able to do your your own tax online and save some money.
In addition, you’ll see that it’s much cheaper to do your own tax instead of hiring a tax professional. Even better, if you file your taxes electronically with us, it will cost you only $25 for the whole package.
What’s needed for doing taxes by yourself
The first thing you need to do is to get organized. The best way to begin is to gather all of the tax information and put it in a folder. Not only will this save you a lot of time, but it will help to eliminate errors.
If you have to stop the filing process to find some document you need, it takes time and increases the chance of making an error. The following 3 topics will help you to have a smoother filing process:
1. Organize all of your tax documents
The best way to begin to do your own tax, is to get all of your tax documents and other receipts you need organized. If you have everything at your finger tips, you’ll have a much smoother and easier tax filing process.
W-2 form(s) – If you’re employed by anyone during the year, a W-2 form will have been sent to you by the end of January the following year. Some employers will allow you to go online and download your W-2. This method will provide you a faster and safer way to get it.
1099 forms – There are a number of different Form 1099’s that you may receive. You may get a 1099-INT for interest income, 1099-DIV for dividends paid to you, 1099-MISC for rental income & a couple other types, and a 1099-NEC if you have a side hustle. Generally, you’ll only get the 1099-NEC if $600 or more was paid to you for the year.
1098 – If you have a mortgage on your home, you’ll receive this form from your lending institution. It usually is reported on a Schedule A for interest paid, but it could also be reported on Schedule C, in the home office section.
If you’re operating a side gig, you need to keep all of your receipts for business expenses that you paid. If you’re claiming a deduction for a home office, you need to hang on to those receipts as well. Even using the optional IRS method for $5 a square foot, it’s a good idea to keep those receipts as a backup in case they question the use of a home office.
This list we refer to here is by no means all inclusive. Consider the type of business that you have and use it as a guide as to what receipts to keep.
2. Consider the filing status you will use
One of the most critical parts of tax filing is to make sure that you select the correct filing status based on your unique financial situation. Unless there are some very unusual issues, you should be able to determine your filing status with no problem.
At the present time, the US Tax Code has five tax status filing options.
Single – If on the last day of the year, you’re not married, or divorced or legally separated, this is the filing status you’ll use.
Married filing jointly – Under this status, you do your own tax with your spouse. The same requirement as single applies, you must be married as of December 31 of the tax year.
Married filing separate returns – Any married couple can choose this status and file a separate return from the spouse. The tax rate is higher for this status, and often more tax is paid.
However, there are certain circumstances when this status is highly desirable. One in particular is when one spouse owes the IRS for back unpaid taxes. If that couple filed jointly, any refund from the joint return would be taken by the IRS & applied to the unpaid taxes.
Head of household – This status is for those who are not married and maintain a home for themselves and at least one dependent. There are special rules that apply to this status and you need to be aware of them to make sure you qualify to use it.
Widow or widower with a dependent – This status applies to a surviving spouse, after one spouse dies, and with a dependent child. The surviving spouse can file using joint tax rates for two years after the one spouse dies.
3. Review and list your tax deductions
If you plan to do your own tax yourself, you need to be aware of the various deductions and tax credits that you may be qualified for. However, if you take advantage of the HBS Group online tax filing program, this will be done for you automatically. Based on your answers to the simple interview questions, our program will make sure you receive every deduction and tax credit you’re eligible for.
Some of the more common deductions and credits are the earned income credit, child tax credit, higher education credits, and charitable contributions.
How to do your own tax online
As soon as you’ve gathered all of the tax information you have, determined your tax filing status, you’re ready to do your own tax. There are basically three different ways that you can prepare and file your taxes.
Each of the three options has its own unique way of filing. Some are more costly, time consuming, and prone to errors.
Prepare them by hand
This method is by far the least desirable way to file your taxes. You can download the forms you need from the IRS web site for free, and then enter your information. After you’re done, sign and date them and mail them to the IRS and your resident state.
I can tell you from practical experience, this method sucks. Even filing a simple tax return can create math errors, and is time consuming. When the first tax returns were filed many years ago, they were done this way.
Use the IRS online free filing program
On the IRS website, they provide an option to file your tax return for free. Instructions are provided to help those who may be doing your own taxes for the first time. However, you can only file your federal return with this option.
Use an online tax filing program
There are many of these online tax filing vendors on the internet with varying costs, restrictions, etc. Many offer free filing, but the fine print says that doing a state return is extra. Costs to file the state vary quite a bit too, so be aware.
These types of programs generally use an interview method of getting your tax information. But many of them have multiple pricing tiers and one extra tax form or schedule can put you in a higher pricing tier to do your return.
File your taxes online with the HBS Financial Group
We teamed up with 1040.com many years ago to service and file our client online tax returns. This company is a subsidiary of Drake Software, who developed the same tax preparation program used by over 30,000 tax and accounting firms across the country.
A few years back, we saw how unfair the multiple pricing tiers were to the taxpayer, so we decided to offer a flat rate pricing of $25 for any return. From the very simple to the highly complex, just $25, and that includes doing your state return and free electronic tax filing too.
Is doing your own tax return for you?
Many of our online clients are doing their own taxes for the first time, and many others are seasoned veterans. By doing your own taxes online, you will feel that you’re in better control of your finances. Plus, filing your return with us will save you a lot of money.
Don’t let filing your first tax return scare you away, it’s easy to do. Plus, when you can do your own tax for just $25, it’s hard to beat. Why not give our amazing program a try? Enter your information and if you don’t like it, just leave… there’s no obligation. We believe you’ll agree with us and complete your returns here.
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Gust Lenglet – Platinum Author
