Tips for saving money on taxes and tax preparation.
Avoid Tax Return Loans Or Gift Cards
It is very tempting to try and get your money faster by taking out a loan. Don't do it! The interest rates tend to be higher that your credit cards and, if you e-file" the IRS usually gets refunds out within a couple of weeks, especially at the beginning of the tax season.
Another caution is that many tax preparation services offer you a portion of your refund into gift cards. Although you may save a little bit on the face value of the card, you have already spent the money. Don't treat your return as a windfall.
Check With Accounting Classes
My daughter is going to a vocational school. She has decided to go into accounting. Here for practice, they'll do your taxes for free. Call your nearest high school, vocational school or even college and ask for the department that teaches accounting. See what they have to say. Even if it's no, it's worth a try.
By LRP
Tax Professionals Can Save You Money
I would recommend going to a tax professional at least once in awhile. Usually they do know more than you do about taxes and you might learn from them. The first time we went, we learned that if we used my college tuition as a credit rather than a deduction, we could get a bigger refund. Since I'd done the taxes myself the year before, I thought I had missed out on some money, but the tax professional told me I could amend any return for the past three years. So she fixed that one for us at no cost and we got money back from that year, too. Also, I'm pretty sure H & R Block has a deal where, if you aren't happy with the results, you don't have to pay. So you could do them yourself, go to H&R block and see if they can get more money back for you, and if not, you don't have to pay. You don't have anything to lose by going to a professional.
I spent the entire day on Wednesday doing our taxes. I paid $20 for the Tax Cut program from an office supply store. It took me all day but I did mine and my husband's taxes, my business and my son's taxes. I spent $170 last year with H & R Block and the lady there didn't know any more than I knew about taxes. It took her over 2 hours just to do our regular taxes and I understand they use the same program. And for those of you who make under $52,000 per year, go to the IRS site: http://www.irs.gov. You can do your taxes and efile for free with some of the companies. I tried myself to open them up but I have lots of firewalls with my computer because of my line of work I do at home but most should be able to pull them up. The IRS gives you all the info you need to contact these places.
If you are expecting a big refund back, your withholding is probably too high. Go into work and fill out a new W-4 and then channel that extra money into a savings account or toward high interest credit cards. It's your money, why should you let the government have it interest free!
Free Online Filing For Low Income
I don't know how many of you are low to moderate income but there is a way to file online for free if you qualify under the income guidelines. I believe you can make up to $52,000 and still qualify. I did mine through H & R Block using the free file and it uses the same program to file as you can get online or in stores. In order to see if you qualify, just go to the IRS web site online: http://www.irs.gov/ and look on the left side for the free file option. The link takes you to where you can go through step by step instructions for finding a company to file your return (different companies have different requirements). Most of the companies are big name companies so you can be assured they are not fly-by-nights. If you can save on fees to file your taxes and get the piece of mind that you are getting professional services, that is true savings in my book.
By Diane
TaxAct Online
I used Taxact.com and it is free to file your federal electronically. Then I went to my states taxation page and filed my state tax for free. It took me less than an hour. Taxact charges $12.95 to file your state taxes, which is still considerably cheaper than going to a professional if you just wanted to do it all on Taxact. I had my refund in 8 days deposited into my bank account.
If you are on Social Security, you may not need to file taxes. But if you don't file and need a copy of your tax return, you don't have one to show them. It may be worth it to download the tax forms, fill them out and mail them off (or efile through the IRS).
Then if you need a copy of your tax return for a loan or another reason, you will have one. Otherwise you need to get a form from the IRS telling the loan company that you didn't need to file rather than just showing them a copy of your return. Also, this year there is a phone credit so even if you didn't pay any taxes you may get a return for the money taken over the years on your phone bill. It is a 30 to 60 dollar refund.
I actually have done my taxes myself since 1985. One year in the mid-1990s I went to H&R Block to see if they could get me a better refund. They actually skipped the smaller deductions! So I ended up redoing my taxes myself and getting a bigger refund.
Don't waste your money going to a "pro", especially a large corporation. Instead, get TurboTax or other software to help you. I have used TurboTax since 1998 when we did a Roth IRA conversion. The conversion was so complicated I just could not be sure I had it right. And Consumer Reports and other professional surveys say the IRS gets 50% of the help line calls wrong anyway.
But since TurboTax went up to $45us this year, I still bought it but next year I might try a less expensive option. My taxes are no longer that complicated (ROTH conversion rolled off after 4 years).
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