Tips for saving money on taxes and tax preparation.
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.
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.
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!
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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