Taxes
Taxes/Homeownership

Tax Time Is Here, How Will You Get Your Return Done?

Jan 14, 2008 - Now that the New Year has begun, it's time to start thinking about last year's tax return and to be more specific, how you'll get it done.  Are you normally an early filer or do you typically file your return right on April 15th?  Perhaps you fall into the late filer category and plan to file an extension or will even file your return as late as October which is now permitted after filing only one initial extension request whereas it used to require filing several.  But how you go about getting your return done should depend in large part on how complicated your return is.  The goal of course should be completing your return in a timely manner, hopefully you will not need to invest too much time in the process and will take full advantage of all the allowable deductions permitted to you so that you never pay more in taxes than you actually owe.  

There are many IRS publications which can help you research specific tax subjects.  These publications are generally available in printed form at the public library and online at the IRS website.  These tax publications go into minute detail on a variety of tax topics and will take some time to sift through, so if you think completing your return will require researching more than one tax publication you may want to consider consulting with a tax advisor.  The non-tax professional's best use of the IRS tax reference guides is to refer to them to confirm information you already believe to be accurate and then to send them off to the recycle bin.  Contacting the IRS directly for advice can be a difficult proposition, though they have improved their service significantly in recent years, the information given at the height of tax season when the phones are ringing off the hook and less experienced agents may be the manning the lines could prove to be a decision you later regret if you rely on their advice in a potentially costly situation.  Again it may be better to take detailed notes of your conversation with a particular IRS agent and then confirm the information elsewhere such as in a pertinent IRS tax publication.  

If your personal finances are not complicated and you do not file any complex tax schedules, you may be able to save money by completing your return on your own.  Also if you have not experienced any material changes to your finances from the previous year, you may be able to use last year's return as a template for completing this year's, of course tax laws can change each year and you must verify whether or not any of the changes which occurred applied to you.  As an added benefit, the more knowledgeable you become about taxes, the more likely you will be able to shave money off of your tax bill in the future so preparing your own return can help transform you into your own personal tax expert.  This will allow you to plan and think about your taxes throughout the year so you can maximize your deductions and pay only the minimum amount owed.

There are several ways to go about completing your return on your own.  One is to go directly to one of the tax preparation websites.  The best way to access one of these sites is to link onto one directly from the IRS website as this may allow you to file your return electronically at no cost.  If you were to log onto one of these websites directly, rather than through a link within the IRS website, you may be required to pay for the electronic filing service.  Be sure to print out your return before filing it electronically for your own records and note that you may be required to install Adobe Acrobat if you do not currently have it.  Also you may be required to pay a fee in order to file your state return.  For more information go to: http://www.irs.gov/efile/article/0,,id=118986,00.html   

Another convenient and popular preparation option is to purchase one of the widely used tax preparation software packages for non-professionals.  There are many inexpensive packages which can simplify the process considerably and you can choose both your package and related price based on the complexity of your return, of course be sure to pick up the adjoining software package to complete your specific state return as well.  You should always purchase the simplest most economical software package that will get the job done, the software should be easy to install and simple for the novice tax-preparer to navigate.   A key advantage in using a software package is that you can save your work for future changes to your return and any changes made will be processed and re-calculated throughout the return.  The tax software may also alert you to any deductions you may have overlooked yourself.       


Nancy Osborne, ERATE.com Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.

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