If your taxes are complicated, or if you're utterly overwhelmed by the notion of tackling them yourself, then it might pay to hire a tax preparer to do the work for you. But if your return is fairly simple and you're up for the challenge, preparing your taxes solo could save you a bit of money. In fact, an estimated 33% of Americans file their own taxes each year, so if you're ready to join their ranks, here are a few tips for getting through the process.
1. Prepare your return early
This year, the tax filing deadline falls on April 17, 2018. In case you didn't notice, that's a couple of days later than the usual deadline. The reason is that April 15 falls on a Sunday, and Monday, April 16 is Emancipation Day, a legal holiday in Washington, D.C. As such, the deadline gets pushed back to April 17, giving filers just a touch more breathing room.
That said, you don't want to till the actual deadline to prepare your return for a couple of reasons. First, what if you run into a snag and can't file your taxes without resolving it? For example, in going through your paperwork, you may come to find that you're missing a 1099 form listing the income you received for a freelance job. Without that figure, you can't file an accurate return, but if you wait until the last minute, you may not get that data in time for the deadline.
Furthermore, if it turns out that you owe money on your taxes, you'll have fewer options for scrounging up that cash if you wait until April to get moving. And once you fail to pay your tax bill on time, you automatically start accruing interest on the sum you owe. On the other hand, if you get your return ready by mid-March and find that you underpaid the IRS last year, you'll have a month to come up with the cash.
No matter the specifics, procrastinating will hurt you when it comes to taxes, so if you're going to tackle your return without help, do yourself a favor and get a jump start.
2. Figure out whether you'll be itemizing this year
As a tax filer, you have two options when preparing your return: take the standard deduction, or itemize. With the former, you claim a uniform amount based on your tax filing status. With the latter, you'll need to sit there crunching numbers to see how much you can deduct.
If your itemized deductions well exceed the standard deduction, it makes sense to put in the added legwork. But if you don't own a home or business and didn't give more than a modest amount away to charity, then it probably won't make sense for you to itemize.
For 2017, the standard deduction is $6,350 for single tax filers, and $12,700 for couples. (Keep in mind that these numbers have nearly doubled for 2018.) If you don't think you'll beat these figures, go with the standard deduction.
3. File electronically
If you were planning to fill out a paper tax return this year, think again. Filing your return electronically is the smartest way to go. For one thing, it'll significantly reduce your chances of making a mistake that could otherwise cause your return to get rejected or audited. The IRS reports that the error rate for electronically filed returns is less than 1%, whereas it's a whopping 21% for paper returns. And that just about says it all.
Furthermore, if you're due a refund this year, you'll get it faster if you file electronically. And, you can check on your refund status within 24 hours. File on paper, and you could easily wait a month just to find out where your refund stands.
While there are plenty of tax preparers out there who are worth their fees, there's no reason to hire one if you feel that you're capable of filing your return on your own. And this way, you'll not only save money, but perhaps gain some bragging rights for accomplishing a somewhat daunting task without an ounce of assistance.