For the past 2 weeks I have been on hiatus from this blog and instead working on my income Tax filing for 2013. All told, I spent between 25 and 30 hours on this effort. Cutting to the chase, I got my highest tax refund ever due to some educational expenses - and of course due to the fact that my employers withheld more in taxes throughout the year than I owned in the end. I learned some great stuff in the process as follows:
1) Yes - you can do it yourself
Tax law is a mess of regulations, special cases and if-then scenarios. Tax Act makes it easy by following an interview style of question and answer. Doing so is an education in itself. Did you know you can deduct moving expenses or the costs incurred in looking for a new job? After the question and answer is done, Tax Act produces the Tax Return documents which you can sanity check against prior years.
2) It costs less
In prior years, I paid an accountant $575 to file my taxes. This year, I paid a total of $254, almost $76 to Tax Act itself, and $179 for Gainskeeper as discussed in a separate post. Granted I don't get to deduct the $575 but cost avoidance is better than a deduction any day.
4) You are in control
Through the process of using Tax Act, the program calculates your Federal and State refund (or liability) and displays it in the upper right hand corner. For every entry, you can determine the impact on the bottom line. Using these features, I was able to deduct some medical expenses from my state returns which I had not considered in prior years.
5) E-filing - No more trip to the post office
Most like you already pay your bills with on-line and get paid via direct deposit to your bank account. So why pay your taxes though the mail? Instead e-file and save the postage. Not only that, within 12 hours of submitting the e-file, I got e-mail confirmation that my returned had been accepted by the Tax authorities. I never got that peace of mind when filing via snail mail.
6) Faster Refunds
When you e-file, you have the option of receiving your refund via check or direct deposit. I highly recommend direct deposit so you can get your refund faster.
To summarize, doing taxes yourself with Tax Act is better, faster and cheaper. It is the tax equivalent of on-line bill pay. Not only is it better, its better in many ways. Give it a try yourself and come back later for a summary of what I learned regarding the Tax consequences of all my trading activity.
Get some rest and enjoy your weekend, you earned it.