File your taxes early (& cheap)

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We should be receiving our W2s in the mail in the next couple weeks. I always try to file within two weeks of receiving all of my paperwork. It’s better to get it out of the way, right?

Be sure you’ve collected all of your documentation, including W2s, interest paid to mortgages and student loans, interest earned on financial assets, education expenses, medical expenses, and more. MSN Money has a helpful list of tax documents you’ll need to collect.

Some of these documents will come from your employer, lender, or financial institution. Other information (such as medical expenses and education expenses), you are responsible for tracking throughout the year. You may be required to offer proof if you’re audited, so be sure your numbers are correct.

Once you’ve gathered all of your documents, you don’t have to pay an accountant to get your taxes filed. Here are some alternative tax-filing options that will cost you a fraction of the price of a tax-preparation service:

Check with your library, church and employer.

Many times you can get free tax advice or professional tax preparation services from these organizations. Also check with your employer. They may offer tax preparation services as a fringe benefit.

Ask family and friends.

If you know your tax return is going to be complicated (for instance if you recently inherited a large sum of money), it may be best to get help from a professional. Before you head to an expensive tax prep service, ask around to see if you can find someone who prepares taxes out of their home.

A friend or family member may know someone with experience. Chances are their rates will be more affordable than a service. Just be careful. Ask for credentials and references to make sure your tax information is in good hands.

Do it Yourself.

If your return is simple, don’t be afraid to do it yourself. It may seem intimidating, but I think you’d be surprised how easy tax software is to use.

E-filing your federal tax return is free at the official IRS website (if your income is under $56,000 a year) or  TurboTax (for simple returns). You’ll have to pay to file your state return if you choose this route.

You can also purchase tax preparation software that suits your needs. We will be using TurboTax this year. It’s relatively cheap (about $40 for the version that includes federal & state filing for personal tax returns). It’s also incredibly easy. It guides you through filling out the forms in simple terms, and helps you determine if you qualify for certain deductions.

No matter how you choose to file your taxes, make sure you keep a hard copy for your records filed with all of the pertinent documents. Though I scan and file most documents electronically in pdf, tax returns are the only thing I keep in hard copy. You never know when you’ll need them.

2 thoughts on “File your taxes early (& cheap)

  1. frankie

    Very good summary, thanks for writing it. I’ll prepare a step-by-step todo list on the basis of it, because my files are so messy and I always have troubles with paperwork…

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