When I was younger, I used to love doing my own taxes. My dad would pick-up a 1040EZ form from the library and help me get my W-2 together from my employer.
Things were easy then. And, I always got a refund.
Fast forward to today – and I struggle to keep up with all the new tax changes and making sure that I can deduct enough to offset my supplemental income. If I were filing by mail and all the forms were stacked up, they'd struggle to stay thinner than a National Geographic magazine.
Times have changed. I've used many different means to prepare my taxes: have done them myself the old school method (painful), hired a tax pro and have done them online using various tax prep software.
Of all the methods, I really prefer to do them online. You can do it at your own pace and the filing is a breeze.
Getting your tax info together
While I think I'm fairly decent at organizing all my tax info – I still have room to improve. With the supplemental income that I bring in (mainly from TTG, rental income and doing some design work), it is sometimes difficult to make sure that I'm keeping all my receipts, tracking mileage and other miscellaneous details together for next years filing.
The best way that I've found to make sure that I'm keeping good records, is to set up an Excel spreadsheet of expenses / income for each particular category.
If don't have any supplemental income and other complex financial situations going on, your tax filing will likely go fairly smooth.
One of the first things I do is to get out my tax forms from the previous year. If you file online with a service like TaxACT, you can easily access past returns if you don't have them handy (TaxACT charges a nominal fee to access old returns).
Otherwise, check out TaxACT's free and handy “What I need to file” checklist to make sure you have all the necessary information together to start your return.
Estimating your taxes
If you aren't quite ready to file yet – perhaps you are waiting on a few items or documents from your financial institutions – it's always helpful to do a quick estimation of what your taxes might look like.
TaxACT has a useful tax calculator tool that you can use to complete this task at their website. You'll just want to make sure you have the following information handy to get the best estimate:
- All income tallied that you have received in (this includes interest income, profit/loss on a business and federal income tax withheld (or estimated payments)
- Any deductions you have (IRA contributions, student loan interest paid, mortgage interest, charitable gifts, etc)
- And, credits you might receive (childcare, energy, education and miscellaneous)
Do you usually do a quick estimation of your taxes before you file?