There is nothing pleasant about filing taxes. Whether you are a believer in the current system of government assistance or not, sending in your tax forms each year is a requirement for those who have earned enough. That means that you want to save as much money in the preparation process as possible, without bending the law.
Do-It-Yourself
Gone are the days when someone filing taxes would sit down with a pencil, a calculator and a slide rule as well as a bagful of receipts. Today, if you want to go at it alone, you can find several excellent Tax Prep software products at many brick and mortar stores. Which one you choose is really a matter of personal preference, but after you try one or two you will know what works best for you. You can also use online versions, which is essentially the same as a program you install on your computer.
These programs will walk you through the process of filling your tax forms and optimize any and all deductions for which you qualify. Another nice feature is the flexibility to walk away and get back to things at a later date.
Avoid Seasonal Tax Prep Offices
Each year numerous companies suddenly offer Tax Preparation services. They charge you to use the same kind of software you could purchase yourself for less money. The only difference is that they organize your bills rather than you doing so. Frankly, take a couple of days and sort your own stuff. Why pay someone else $300 to do the same thing you could accomplish with $80 of software?
Barter for Services
If you have a friend or acquaintance who is a CPA, offer to trade services with them. I, for example, am a massage therapist, and I have a CPA friend. Each year I offer him two massages to prepare my business taxes. He often gives the massages as gift certificates to his wife as birthday gifts, and I get my taxes done by a professional. It’s a great set up. You can surely find a service you can use in barter.
Don’t Miss Your Deadlines
If preparing your taxes by the deadline isn’t possible, make sure you send in an extension request, and then don’t forget to send them on the revised date. If you miss your date you will end up paying fines as well as interest, so it just isn’t worthwhile. Staying on top of this is your job, not that of the IRS.
Don’t forget that while you can file an extension for your return, you cannot be late with any amount that you owe the IRS. If you need to be late, you still need to send in every dollar that you think you will owe.
Be Old Fashioned
Filing electronically is faster and you save money on stamps. Make sure you hold onto a copy of your Federal and State files. You can send them electronically at no charge through the Federal IRS website. However, you want to be very careful. If you don’t watch out you will be hit with a bunch of fees and it would have been cheaper to file the old fashion way.
While giving the government your money may not be your favorite activity in the world, it is possible to pay them properly while saving money on filing taxes.
This is a piece taken from the How to Save Money on Everything. Check out the free frugal email newsletter and get your free copy.
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For those who don’t make more than $51K and don’t want to prepare your own tax return, a local volunteer may be available. I’ve been a volunteer for years and love it.
http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers
I have been using the free version of TaxAct for several years now and have been very pleased! They also have a deluxe version for 9.99 which provides support to those less knowledgeable about taxes and, an Ultimate bundle for 17.99 which includes state return support. Two years ago I did spend 225.00 to take the H&R Block Tax course, so I would be more informed. They did offer me a part time job, after I successfully completed the course, but that was not for me.
Unfortunately, bartering can be illegal and is the one of the first questions an IRS auditor will ask in the interview beginning an audit. What a can of worms that will become. The reason is bartering understates income and is usually in exchange for something that is taxable to the provider giving, but not deductible
on receiving – thus income avoidance. Shouldn’t be recommending that regardless of frugality.
This are good ideas. These are a few simple ways to save money when filing your taxes. Saving money is all a matter of being aware of all possible options. This can be done with some research or having access to a good accountant.
I’m a Bank of America customer, so I was elegible to get 30% off the cost of Turbo Tax for federal. Just log into your BofA account and search on TurboTax. You’ll be taken to TurboTax, and when you go to file, you’ll see the discount. We saved like $20, which is always nice.
Tax prep software has certainly come a long way and makes it much easier for quite a few people to prepare their taxes. However, some people, such as entrepreneurs, may have more complicated tax situations and finding the right professionals can certainly help. It can be expensive, so you may want to get quotes from multile preparers to make sure you get the best rate (bartering for services may work, but that might be hard for most people.). If don’t want to ask your friends for recommendations, there are several good sites like Yelp.com or Wealthvisor.com, which allow clients to rate and review local tax preparers that might be worth checking out.
FYI – Bartering is still income, and you have to claim it as if you had received money from the transaction, so it’s not totally free, you’re supposed to pay taxes on it.
Amber,
You must work for the IRS.
It is defenitly a pain. With our farm work it is never ending and documenting is an understatement. Paper work, paper work, and then of course the are archives of paper work. Sigh.
I’ve been DIY for a long time, but I will probably need to get an accountant soon. Our tax is getting more and more complicated every year. We always owe the IRS money so I usually do my tax in March and wait to send it in until the last minute.