It’s Tax Season ~ Get it Done!

by Mike on February 15, 2010

It’s tax season and unless you are an accountant or just love numbers, the idea of doing your taxes may bore you as much as watching paint dry. However, it is better to do them sooner rather than later for a number of reasons:

1. Procrastination vs. Discipline: It is always easier to put things off, but effective financial management takes discipline. This is a tangible victory you can achieve. Set a S.M.A.R.T. goal and get it done!
I will file my taxes by ____________________.

2. If you are getting a refund, why wouldn’t you want your money sooner rather than later?

3. If you owe money, it is best to know exactly how much so you can budget accordingly. You wouldn’t want to find out on April 14th that you owe thousands of dollars would you? Of course you can file for an extension as applicable but why deal with the added hassle if it can be avoided by planning.

Here is a little information to get you started:

TurboTax & TaxAct both offer FREE filing of Federal Taxes should you decide to do it yourself. If you have a simple return this may be a viable solution. Since I started doing my own taxes a few years ago, I use TurboTax. I like the interface, the fact it will import information from the previous year, and even pull W-2 information from employers database (depending on employer). I haven’t used TaxAct but I’d imagine it provides similar features.

Rather you set or appointment with a professional or do it yourself, make sure you have all your tax documents with you. The most common ones are:

  • W-2s
  • Any 1099 forms (income from interest, dividends, unemployment, miscellaneous, retirement etc)
  • Receipts for deductable expenses (may include charitable donations, expenses for volunteer work, education, child care etc)
  • Any 1098 forms (interest paid for student loans, mortgage, etc)
  • Any other document that comes in the mail that says “IMPORTANT TAX DOCUMENT ENCLOSED”

If you are claiming the first time home buyer tax credit, you’ll need to file on paper

If you are a military veteran, you may be eligible for additional tax exemptions, however these vary from state to state…so be sure to do your homework.

If you purchased a new vehicle or made your home energy efficient in 2009, you may be eligible for tax breaks.

Set up direct deposit for any refund. Double & triple check the bank routing and account number. This is faster and more secure than waiting for a check to arrive in the mail.

Avoid instant tax refunds at all costs! They are high interest loans, though the euphemism is refund anticipation loans. You’ve given Uncle Sam a free loan all year, why pay insane amounts of interest when a little patience will get you all the money you are due? Also, instant tax refunds are based on your estimated return amount. If for some reason you borrow more than you actually receive with a refund you could end up owing money.

Of course there are plenty more tax tips, but I wanted to point out the basic common ones.

What about you?
Can you think of more basic tips that should be included?
Have you filed your taxes yet?

{ 3 comments… read them below or add one }

1 Joseph February 18, 2010 at 3:12 pm

True that Latika! “Avoid instant tax refunds at all costs” It is surprising how people look forward to get the refunds as quick as possible.
.-= Joseph´s last blog ..How do you deal with frustrations? =-.

2 Wise Finish February 16, 2010 at 9:51 pm

Lakita, Great article. I used TurboTax 2009 Deluxe because the free version didn’t quite fit my needs. It gave me some strange options for getting a “virtual” instant tax refund that seemed a bit iffy. I prefer a check or ETF!

3 PF Journey February 16, 2010 at 10:02 pm

Hmmm…I don’t know about that virtual instant tax refund…I must have passed right by that and went for the ETF since it saves my settings from the previous year. That may be an anticipation loan…but I’ll have to research before I can say for sure.

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