Now, I know what you're thinking: Me? "Complicated" tax forms? Math? No thank you. The reality, though, is that many people turn their financial and personal information over to other individuals and buy pricey software unnecessarily.
Here's why you should consider completing your federal taxes yourself this year:
1. Because you should know where your money goes
Whether you are trying to create a budget for the first time, pay-down debt, or just get a handle on your overall spending, knowing exactly how much money is coming in via employment and how much is going out through taxes is a necessary part of understanding your household's cash flow. Being aware of what's on your tax return and where your money goes can help you do that. Further, when you are the one to prepare your return, you will internalize those numbers and can work towards better preparing yourself for next year. That might mean tightening overall spending, delaying a major purchase, or simply adding money through a W-2 form to be held back by your employer for taxes the following year. Smart consumers know where their money goes, and tax forms are an excellent way to keep track of the "big picture.”
2. Because you can use IRS forms and services free
Live and online assistance is available to help you determine the right forms you need or to answer preparation-related questions. The IRS Interactive Tax Assistant acts similarly to a paid software program that prompts you for answers to questions in order to determine what you need to file. Then, use the search box from the IRS homepage to type in the form number and retrieve a copy, along with complete instructions on how to fill it out. And if you'd rather speak to someone in person, you can get free face-to-face assistance at a local office.
3. Because you can use an old return as a guide
If you are overwhelmed by the language and line-item requests in tax forms, use an old return (like a previous year's return prepared by a tax professional or one generated from a software program like TurboTax) as a guide in preparing your current year's return. Don't have one? Get a copy of last year's return for free here. Having this is especially useful if your household had no major income changes, like change of job type or marital status. If there has been a change, or you have a question about a tax law change for the year, use the "What's New?" section that prefaces the directions of certain forms (like this one for the 1040 — see page 5 of the form) to learn about any changes that may apply to you.
4. Because you shouldn’t have to pay someone else to file your return for you
The IRS allows free filing, even electronically, so don't be duped by a tax preparation firm's claim that they’ll "file your return for free!" You can do that yourself, and knowing exactly when your return was sent or received will serve you peace of mind that a third-party company can't give you — no matter how reputable they may be.
5. Because the IRS will review your return for you, anyway
Some people like using a tax preparation service because of the extra set of eyes — but rest assured that Uncle Sam will do this for you! If you have placed an amount in an incorrect column or used an inapplicable form by mistake, an IRS professional will, in most minor cases, amend your return and send you a copy of the changes. Even if an error results in a change to payment (refund or pay-in), the IRS will right this by sending you a check or sending a bill for the difference.
6. Because you shouldn’t be surprised by the bottom line
Smart family financiers know what April 15 holds for them: either an underpayment pay-in or an overpayment refund. If you were excited to learn that you were to be issued a large refund, think twice about your reaction: the money being returned to you in the first place was yours to start with and was held/used by the government for months without interest to you. You could have invested that money throughout the year and actually made a profit from the interest on it. Doing your own taxes will allow you to know what's coming each year and will help you plan for it.
I'm not an accountant, and I have zero formal tax law training. But for the last twelve years, I've been faithfully filing my own return, improving my knowledge of doing so every year. Nothing beats the personal satisfaction of knowing I am in charge of my money.
So even if completing your own federal tax return is not something you've considered, this year might be the right year to tackle it.