Money Saving Tips, Taxes

Let’s Talk Taxes

Taxes! The bane of the working man in the US is taxes. But it is that time of the year and we have finished our filing for the year and received our refund from the KGB.

 

Can you do it yourself?

We help a number of friends and family each year to do their taxes and it’s generally pretty easy to do provided you don’t have a very complicated situation. Well then the question becomes: What is complicated?

  • Do you make income working from significant real estate or a business that you own?
  • Do you make income from investments that are outside of the normal distributions from a retirement account?

I’m going to hazard a guess and say that 90% of the US population could do their own taxes using one of the online tools for a small fee and avoid paying for someone else to do them. There’s a double benefit here: you save money and you learn something. If you work a traditional job and don’t have a lot of really strange deductions you likely have a simple to do tax return.

 

But it’s really scary!

Yes but companies like TurboTax have gotten really good at making it simple by asking you one question at a time and guiding you through the process. It’s really not that bad. I promise!

If you have received all of the documents from the different entities that matter (employer, banks, investment houses, insurance companies, etc) than you’re halfway there. The next step is to enter that data into an online tool and answer the questions it asks.

 

Tools You Can Use

The available tools today is incredible and there is no way that we could list them all so we’ll list some of the major ones here and let Google do the rest:

  • The IRS Free File Program – Many people do not know about this at all, but if you make below a certain income ($64,000 Adjusted Gross Income) then you can use someone’s tax software for FREE!
  • TurboTax – Likely the most well known tax filing software tool available. They do a great job with a moderate fee for more complicated situations.
  • HRBlock – Very competitive with TurboTax. They got their start using in person assistance programs and have developed a pretty darn good online software to help.
  • TaxAct – TaxAct is another one of the very good online tax prep software. They don’t have all the bells and whistles of HRBlock and TurboTax but they will complete your taxes just the same.
  • TaxSlayer – I have not personally used TaxSlayer but they do come highly recommended by a number of sources and I have no reason to believe that they would not provide a good outcome.

One important thing to note is that you should get the same exact outcome no matter which tool you use! If you are getting a different number then you need to double check your entries. The tax code is the tax code and no tool should provide a different interpretation of it than another.

 

Refunds!

This year has been the best year ever for Mr. Joe and Mrs. Jane! We got a $99 refund…..schweeet!

Only $99 you may ask? Isn’t that really small?

Of course it is. If you have a large refund you essentially paid the IRS too much money throughout the year and they are kindly returning it to you without any interest! Even the “too big to fail” banks pay better interest rates than that!

If your refund it too high or you owe the KGB too much, you need to adjust your withholding. This is done on a W4 that is filed with your employer. It tells them how much money to give the IRS throughout the year based on your estimated income and tax liability.

To estimate what your W4 form should have on it, the IRS has a nifty calculator: IRS Withholding Calculator

(They really do have a way too common sense approach to naming things.)

2 thoughts on “Let’s Talk Taxes”

  1. I used Credit Karma for my tax returns filings this year. It’s free for both state and federal for everyone! And the user interface is very easy to navigate, it’s similar to HR Block’s, which is what I have used in the past.

    1. Hey Eden!

      I looked into Credit Karma for the returns (we use them to keep an eye on our credit scores) but in looking at a few different reviews it looked like they have some issues this year with the more complicated returns. We tried to use them ourselves but they indicated a much different tax liability than TurboTax, TaxAct, and HR Block did.

      However I’m hopeful that they’ll keep working on it and will continue to try to use them in future years.

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