Disclaimer: The advice provided in the Financially Fit series is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.
I have a confession. I’m a CPA (which stands for Certified Public A-word Accountant). This is a fancy certification that basically says I spent way too much of my 20s studying debits and credits. It also says that, legally, I could do your taxes and you could pay me for it. And that’s not even the embarrassing confession.
Here’s the embarrassing confession. Even though I spent a LOT (read: too much) time studying accounting, I still called on my dad to do my taxes until I was 24.
I know, I KNOW. But he was just so good at it, you know? Ok, that’s a poor excuse. I was lazy and taxes are boring and scary.
But when I was 25, I discovered a little secret that I want to let you in on. Taxes are unnecessarily complicated, sure, but they aren’t that scary – I promise. And in a weird way, they aren’t boring. Work with me here. It’s like a fun puzzle to solve – a choose your own adventure tale, if you will. Do you have income from investments this year? Skip to Form 1040 Schedule D! Did you move for your job this year? Continue your journey on Form 3903.
OK, so maybe that doesn’t sound like a super fun adventure compared to a spontaneous trip to Florida right now. But with nearly eight out of every 10 Americans getting a tax refunds, it can be a lucrative one. And even if you are the 20 percent that owes money to Uncle Sam (I feel you, bro), you get the satisfaction of adulting (Noun: the act of doing grown up things like filing your own damn taxes. Used in a sentence: Janice is really good at adulting because she can fix basic household problems, doesn’t wear American Eagle clothes anymore and generally arrives to work on time.)
Listen. It’s March. We all are aware of the dreaded April 15 filing date. You probably have that W-2 from your employer sitting on your desk staring at you, mocking you, “Do your taxes! Go ahead! I dare you!”
“But I just want to drink wine and watch The Bachelor: Women Tell All,” you scream back.
I’m here to tell you that you can have your wine, and Bachelor too, but it’s time to get these taxes done. And it’s not that hard. Here’s what you need.
- Your social security number, but you already have it memorized so it’s NBD
- Copies of last year’s tax return (you don’t *need* this, but it helps)
- Bank account number, because if you’re one of the lucky eight in 10, you’re going to need somewhere to put that cash money refund $$$
- W-2s (the weird, top-secret looking thing that came in the mail from your employer)
- Literally any form you have that starts with “1099.” For most people, this usually means dividends from investments (you can snag this information from your bank online) or money from freelance work. If you’re unsure, hop in your email account and search “1099” and see what pops up. If you collected unemployment last year, cancelled your debt (lucky!), received income from sale of a property or if you received social security benefits you would also have 1099 forms for those things.
- Any other income you receive (including but not limited to: rental property income, jury duty income, gambling winnings, scholarships, business or farming income). I know it seems overwhelming, but it’s pretty easy. Ask yourself: Where does my money come from? And then go get all the paperwork to support it. Most of us aren’t bosses like Beyoncé (… YET!), so this information likely isn’t *too* robust to track down.
Adjustments to your income:
The government is cool sometimes and doesn’t want to penalize you for doing good things with your money like paying down your student loan interest, tuition or paying IRA contributions. If you moved far for a new job or paid alimony this past year, the government doesn’t want to tax you for that, either. Gather any information related to these types of payments and get ready to do a happy dance.
Itemized deductions information:
Most people opt to use the standard deduction for their taxes each year ($6,300 if you are single, $12,600 if married filing jointly). If things like child care costs, education costs, charitable donations, adoption costs and mortgage interest adds up to be more than that standard amount, you’ll need to gather the proof to deduct those items instead. If you’re in the majority that uses the standard deduction, woohoo – less paperwork for you! If you itemize, though you have to gather more information, you’re also getting more deductions. Win, win!
Taxes you’ve already paid and other miscellaneous things:
Gather documentation if you paid things like personal property taxes or real estate taxes in 2015.
By now you might be thinking, Ok! I think I’m ready, but I want to check with a more detailed check list. Sure, TurboTax has a pretty great reference guide here. And if you’re a nerd like I am, here’s a list of strange (but legit!) tax deductions.
So now you’ve got all the information you need to be a successful tax-paying, law-abiding citizen. You’re more than half-way there. High fives and cheers to you!
I have more good news. This is the year 2016, which means we have the internet and software on our side. Gone are the days of fumbling over printed documents and leaving our precious fingers susceptible to paper cuts – hello to $0 (or not much money) to file your taxes on the Interwebs!
If you watched the Super Bowl commercials (or any commercials on your TV after January) you might have noticed two companies talking a lot about taxes: TurboTax and H&R Block. Both are good options; I suggest you shop around and assess which one is right for you.
I have not used H&R Block myself, but I can speak for TurboTax. It’s very user-friendly and you can save your progress as you go. Dare I say, TurboTax software even makes taxes a little entertaining by asking about your feelings and explaining things in layman’s terms.
Sometimes you need the pep talk (more specifically, a financial pep talk). I’m always here for that.
Hey, you. Yes you. You can do your own taxes! You’re going to do great, just like you do great mostly every single day (except for that one time). You’re going to maximize your deductions and (maybe even, hopefully) get a nice refund. You’re a badass and nothing, not even taxes, can shake your swag.
Now go call your mom or dad and say, “What about my taxes? Pssssh, no, it’s okay, I’ve got this,” and listen to that sweet, sweet silence of unuttered pride on the other end of the line.