Doing Taxes Online Yourself
3 Easy Ways Doing Taxes Online Yourself Can Payoff
I know that tax time is one of the most enjoyable times of the year for you, and how much you look forward to it. Just kidding, of course, but it is a very important event, and taxes have to be done, and on time. For that reason, we’ll see why doing taxes online yourself isn’t hard to do.
I know tackling this issue on your own seems a bit overwhelming, but it doesn’t have to be. Understanding the basics of taxes will make them a lot more manageable. As a practicing accountant and tax preparer, I’ll show you the easiest way to do your taxes online.
Reasons why you should be doing taxes online yourself
If you want to take control of your finances, you need to better understand all aspects of it like taxes, budgeting, retiring debt, retirement planning, savings, and investing. Even for a tax newbie, learning how to file taxes online for the first time isn’t complicated.
You probably already have some understanding of finances or you wouldn’t be reading this article. Don’t wait until later in life to set up a workable budget…you’ll be really pressed for time to accomplish your goals.
Tackling the budget aspect of finances first, will guide you through and on to the tax area. Once you have these basics under control, you need to decide how your taxes get prepared. Two choices…you have a tax professional do them or you plan on doing your own tax return online.
For those just starting out, there is no reason to have a professional do them and pay a high fee for his services. Depending on the area of the country where you live, tax preparation fees for a very simple return, using the standard deduction, average from $150 to $350.
If you’re filing as single, no dependents, only one W-2, you can probably have the federal return prepared free at the IRS web site or one of the online tax filing websites listed on the internet. Bear in mind though, only the federal return is free, and you’ll have to pay to have your state return done.
You can save a few bucks by doing taxes online yourself at one of the best online tax filing sites, EZ Tax. Our firm teamed up with 1040.com many years ago to process our online tax returns for our primary subsidiary, EZ Tax, as well as our main firm.
They do a great job, and after processing over 150 million tax returns, are going strong.
What do I need to start the process?
If you filed a tax return for the prior year, it will be a good guide to let you know what to look for in this current year. If not, and you want to know how to file taxes online for the first time, we’ll do a check list for you.
If you’ve decided that doing taxes online yourself is the best way to go, I agree. In many ways, and for most taxpayers, we recommend doing your tax return online rather than going to an expensive tax professional.
What’s the easiest way to do your taxes online?
1. First and foremost, is to gather all tax information possible, even if you’re not sure you’ll need it.
Keep all of that information in a separate folder so you can get your hands on it when you need it. Putting receipts in it throughout the year will save you a lot of time when tax season rolls around.
If you’re working at a job as an employee, you’ll get a W-2 for your earnings and various withholdings. Some employers mail them to you, and in many government departments, you can download them and print them out yourself.
If you also have a side hustle, you may get a Form 1099-NEC reporting your earnings. Be advised though, not all earnings will be reported on a 1099-NEC. If you didn’t earn at least $600, you probably won’t get one. You are required to report that income anyway, so keep track of it.
With today’s savings interest rates so low, you probably won’t get any of those. If you have some money invested in stocks, you may get a 1099-DIV that needs to be reported.
If you bought a home and took out a mortgage, you’ll probably get a 1098 reporting the interest you paid, and sometimes, the real estate taxes the bank paid on your behalf through an escrow account.
If you have a side hustle, keep all receipts for expenses you paid operating that business, including a log showing how many miles you used your vehicle in that business.
This is by no means, an all inclusive list. You may have other expenses that you can deduct based on the type of business you have.
2. The next step in doing taxes online yourself, is your filing status
If you use our EZ Tax website to determine this, you’ll be asked a few questions, and the program will let you know the status you qualify for.
There are only 5 choices and we’ll describe them here briefly. You file as single if you’re not married, you don’t have anyone you’re the sole support of, or you’re legally separated or divorced.
You can file as married filing jointly if you’re legally married before December 31 of that year, and your spouse agrees to file that way. For various reasons, you may have to file as married separate, which is a higher tax rate, and also eliminates several tax credits you may have been eligible for otherwise.
Sometimes there are various reasons why a married filing separate status may be advisable. One of the spouses may have a high unpaid IRS tax balance, and if you file married jointly, any refund due will be applied. Even if your high withholdings created the refund, you lose it.
The status of head of household is a lower tax rate than single filers. If you maintain a household for a dependent and provide over 50% of their support, you can probably use this status. The dependent doesn’t always have to live in your home either. You may have parents living in their own home and you’re providing their support, you would qualify.
There are special rules the IRS has that determine your filing status, such as how the dependent is related to you, so be aware of them.
You may qualify to file as a widow or widower if your spouse passed away during the year and you have a child as a dependent. These statuses may appear to be confusing, but as you answer the simple questions at EZ Tax, it will walk you through it easily.
3. Review your tax deductions and tax credits
One of the reasons that I say the best online tax filing is at EZ Tax, is because it will know what deductions and tax credits you are eligible to receive. When you answer the simple interview questions, it will know immediately.
Some of the more common credits and deductions you may be eligible for are child care costs, higher education costs, earned income credit, and a few more. The amazing program at EZ Tax will have those deductions and credits on your tax return if you are qualified for them.
The easiest way to do your taxes online
Once you’ve gathered all of your tax information together, you’re ready to sit down at your computer and file those taxes. You basically have 2 choices that I can recommend. The first one is the option to file a free federal return.
If your income and other filing requirements qualify you for a free federal return, you can use the IRS website or one of the many other sites that advertise a free federal return and extra for the state. If you live in a state that has no income tax, it’s a no-brainer.
If you don’t, many of the vendors that charge extra for a state return have a range of prices from $19.95 to $39.95. Why use them when you can use our EZ Tax and pay a flat fee of $25 that includes the federal return and state return plus e-filing and free support if you need it?
You can check this program out at https://eztax.llc. Click on one of the 2 buttons at the bottom of the page and create an account with 1040.com. You can enter all of your information and review your return. If you don’t like it, leave and you are under no obligation for anything. It’s that simple!
There’s another method of doing taxes online yourself and that is to download the blank fillable forms from the IRS website. With the tax laws being so complex and convoluted, we don’t recommend this method unless you’re an expert at taxes.
What’s the best option for me?
It boils down to a matter of preference. If you have a complex tax return maybe going to a tax professional is your best option. Be prepared though, to pay a high fee to have them done.
If your return is simple or an average type of return, then doing taxes online yourself makes a lot more sense, and a lot cheaper. You’ll also get a better understanding of the tax system and how it ties in with your financial situation.
If you decide to do your own taxes, we recommend filing them with EZ Tax/1040.com. Not only will you get an all inclusive price of $25 for everything, but you’ll get a better handle on taxes in general.
What ever way you file, if you have a refund due, make sure to have it directly deposited in one of your bank accounts, and not a check sent to you in the mail. We’ve had some horror stories this past tax season in dealing with the IRS through the postal service. Long delays in the mail and then not delivered to the right address were common ones.
We can’t emphasize enough to keep good records and hang on to your receipts during the year. Keep them in a folder separate from your other records. Get organized as soon as tax season rolls around, and before you know it, you’ll be doing taxes online yourself like a pro! This link will take you to the EZ Tax online tax filing site.