Save on Tax Preparation: File Your Own Taxes

Tax preparation can be costly so save money and try doing your taxes yourself. Tax preparation can cause you hundreds especially if you opt for an expedited refund. Filing your taxes yourself is easy with the help of the Internet. Several tax preparers offer online tax services in which you can file your taxes for very little if anything at all. Depending on your income, you may even qualify to file your federal taxes for free.

Where is my W-2?

By the end of each January, employers must mail your W-2 wage information to you if you are a wage earner. If you are self employed, you will not have a W-2 form. Other tax forms, such as 1099s, you may receive for other income such as investments, retirement, or contract work. If you do not receive your W-2, contact your employer or the IRS. The IRS can send you a Form 4852 with your income information on it to complete your tax returns.

How to Begin Your Tax Returns

Begin filing your tax returns by deciding whether you are going to complete paper forms or file electronically using an online tax preparer such as TurboTax, TaxAct, H &R Block or IRS FreeFile.

Gather all income forms such as W-2s and 1099s. If you are married and filing together, you will also need your spouse’s W-2 and 1099 forms. To begin filing your tax returns, you will need basic information such as your name, address, phone numbers and social security number. You must decide how you are filing your taxes such as single, married filing separately, married filing jointly, or head of household. Each filing status has requirements and if you are using an online tax preparer it may help you decide which filing status fits you the best.

Standard Deduction vs. Itemize Deductions

After entering your income information, which will come directly off of your W-2 and 1099, you must decide on whether you will accept a standard deduction or itemize your deductions. Your standard deduction is an allowable deduction from your taxable wages that the IRS allows conditional on your taxation filing status. Dependent on your actual expenses and allowable tax credits, a standard deduction can possibly be beneficial. To determine which deduction you prefer to file, review your allowable deductions and tax credits. Charitable donations, legal fees, prior taxes paid, tax preparation fees, student loan interest paid, educational expenses, job-related expenses not reimbursed, childcare costs, as well as volunteer time are all allowable deductions and tax credits that can reduce your taxable income.

If these deductions and tax credits are more that the standard deduction the IRS allows, it is more advantageous for you to itemize. But, be careful because those that itemize deductions are more probable to be audited from the government. Ensure you have receipts for all expenses you deduct. If you are audited and do not have receipts for expenses you claimed, the IRS can adjust your return which could cost you thousands of dollars in taxes.

IRS: Publication 501: Exemptions, Standard Deduction, and Filing Information.

http://www.irs.gov/publications/p501/ar02.html#en_US_2010_publink1000221074

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