‘Tis the Season to Do Your Taxes……

by David Bakke

how to save on taxesWell, guess what, it’s that time of year again. Tax season. Am I a little too early for saying this? Well, depending on whether you get a refund or have to pay money, you could be right or wrong. If you get a refund every year, why wouldn’t you want to file as soon as possible?

And, if you consistently have to pay every year, of course, you’ll want to wait to the very end to send them their money, but why not start to prepare now? Who knows, you may find an idea or two here that may take awhile to put into place that could provide for some major savings.

Before I go any further, I do want to let you know that I have a PDF report available for free. It is called “Ten Ways to Save Money at Tax Time”. Until I can get an actual button placed here on my blog, if you’d like a free copy, send me an email or simply comment on this post, and we’ll find a way to get it to you.

And I’d like to give you a quick preview of what is contained in that report.

The Number One way that you can save money at tax time is…….

Do Your Taxes Yourself

Unless you’re self-employed or have a very complicated tax situation, I would imagine that most everyone out there can and should do their taxes on their own. Let me tell you a quick story. I did my own taxes till I was about 35. When I bought my first house, that year I figured that my taxes would need professional assistance. I took them to a friend’s accountant (not a complete stranger, mind you, and I was assured I was getting a discount). He spent all of about 15 minutes on them, and charged me the absurd total of almost $300. It was then that I decided come hell or high water I’d be doing my own taxes from there on in.

And for those of you that take your taxes to those walk-in places, I have no idea how much they charge, but I’d bet that it is rip-off price. And that’s not even including the fee they charge if you’re stupid enough to pay extra money to get your refund check right away. However, I digress.

Let me be clear. Most everyone out there can and should do their own taxes!!! The process is not hard, and it is basically easy to understand. Plus, why wouldn’t you want to have a firm grip on your finances rather than trusting them to someone who doesn’t know your tax situation as well as you do?

Without going on forever, this is what I do and have done for the past 9 years. And I am pretty sure that I have always gotten back as much as I possibly can, and I am pretty sure that I have never broken the law. And I have never been audited.

Get yourself some tax software. There is a wide variety out there; I have used the same one year after year. If you pick one and stay with it, you can save time because it will automatically import your information from your previous year’s return. Be sure to get the version that you need, and price compare it for sure. I have seen some huge discrepancies on price with this software. Of course, they’ll always try to sell you the most expensive version, just read each one and get the one most applicable to you.

After that, it really becomes simple. They give you an “interview” where they ask you lots of questions about your finances for that year. You just answer them and they fill in everything for you. Of course, you’ll have to review it at the end, and fix any errors if they appear, but that’s really about it. They usually offer free audit support as well, if you should ever be audited.

Another thing I will tell you is that a lot of questions that they ask will require a little research on your part if you’re not used to keeping track of tax-related documents throughout the year (this is another subtopic in my free report-getting and staying organized). So, you may want to allow some extra time to do this research. And I would investigate each and every question they ask you to maximize your savings. A few examples.

-How much did you pay in out-of-pocket medical expenses for the year? I would definitely figure out this number. If you are married with children, this could result in substantial savings.

–How much in charitable contributions did you make? Again, think hard and figure this one out. Depending on how much you donate, you can impact your tax burden here as well.

And the list goes on.

Once you go through this process once, you should be able to set up a filing system for the following year that will allow you to track everything during the year as it happens throughout the year. This takes a lot less time than you think during the year, and will save a ton of time when you fill out your return.

In short, do your taxes yourself. It will save you a ton of money in the long run, it will probably take you a lot less time than you think, and it will give you a sense of control over your finances that you probably didn’t have before.

Comment below and I’ll shoot you the whole report for free.

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1 Dave January 6, 2010 at 11:50 am

I fully support doing your own taxes with some type of software. ( I have been using Turbo Tax for the last 8 years and have been very happy with it.

I always went with the walk-in type places until their prices got ridiculous. I have always had very simple tax situations but in 2000 H&R wanted to charge me almost 200 dollars for my tax return which was up almost 50 dollars from the previous year. I instead went out and bought Turbo Tax and have not looked back!!

It is very simple to use, but make sure that you have any documentation you will need (medical expenses, property tax statement, Interest statements, ect…) which will make things go faster and smoother.

It usually takes me about an hour to do both my state and federal with Turbo Tax.

2 David/Yourfinances101 January 7, 2010 at 12:31 am

Dave,

The key here is preparation throughout the year.

Yes, it can definitely be done in an hour or so, if you are ready to go.

Thanks for stopping by
.-= David/Yourfinances101´s last blog ..‘Tis the Season to Do Your Taxes…… =-.

3 Lana - DreamFollowers Blog January 7, 2010 at 5:53 am

great advice as always!
.-= Lana – DreamFollowers Blog´s last blog ..My 2010 Goals and 2 Awesome Techniques I Used to Set Them. =-.

4 David Bakke January 8, 2010 at 12:37 am

Thanks Lana, I do appreciate the support.

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