Filing Your Taxes: The Ultimate DIY Project


3 Comments
021517.turbotax_paperwork

Just a heads up, this post is sponsored by the folks at TurboTax. This should go without saying, but all content and opinions are our own and came straight from our own noggins.

When I was a freshman in college, I took one of those personality tests that would analyze your characteristics and spit out some careers that you might be well suited for. I had pretty lofty expectations for what they might suggest. A CEO? Maybe even a US Senator? Nope. Not even close. Ready for their top recommendation? A librarian. I was Dewey decima-ted. (I’m surprised they didn’t say comedian, am I right?) After analyzing the results, it actually wasn’t all that off-base. I like order, I like organization, and I like systems. And while I didn’t pursue the study of librarianship, it’s no wonder why I’m one of those weirdos who actually enjoys doing taxes.

But whether or not you’re part of the cool club of tax-filing enthusiasts, I’m going to share a likely unpopular opinion: everyone should be required to “do it yourself” and file your own taxes. No, not forever. But everyone should go through the process at least for a few years. Why? This shouldn’t come as a surprise, but we’re major proponents of being in the driver’s seat of one’s finances. If you’ve committed to starting a budget this year and you’re tracking your spending, one of the best ways to close out the year and reconcile all of your hard work is by doing your own taxes. You should know and understand what affects your taxes, where your money is going, and how to prevent more of your hard-earned money from leaving your pocket next year. And thanks to TurboTax, it’s totally possible to DIY your taxes this year without messing it up.

TT_Logo_Horz_Endorse_RGB_ibp

I’ve done our taxes all 9 years of our marriage except last year when we started our small business. Here’s how our tax filing usually goes. I’ll collect every scrap of financial paperwork that I’ve hoarded over the last 12 months, divide them into appropriate piles (W-2s, 1099s, business expense receipts, health insurance paperwork and bills, etc.), pull up TurboTax, and crank up some Rage Against the Machine (just because I like doing taxes doesn’t mean I like paying taxes). An hour or so later, we’re staring at our projected refund amount (because we don’t claim exemptions) and our taxes are on their electronic journey to the IRS.

A common misconception is that doing your own taxes means doing your taxes all by yourself. TurboTax lets you do your own taxes, while also offering step-by-step guides and on-demand help from actual, credentialed CPAs and enrolled agents. The software walks you through income, possible deductions, etc. in a super easy format while ensuring that you’re getting the maximum refund possible. A new feature we’re digging is the TurboTax ExplainWhy, which does exactly what you’d think — explains the “why” behind deductions, credits, and refunds as you go. For folks like us who like to know the nitty gritty of every little cent, this is an excellent “teach a man to fish” tool so that we’re all more informed taxpayers.

ExpenseFinder_Desktop

Early in our marriage, our taxes were pretty basic. (And psst, if you’re in that boat and file simple returns like a 1040A or 1040EZ, you can file completely free right here.) Admittedly, each year, our taxes have gotten more and more involved, especially now that we’re self-employed. With running a business, we’re now getting up close and personal with our taxes year-round. And TurboTax Self-Employed is a year-round tax prep and expense tracking solution for self-employed since it also includes a year of QuickBooks Self-Employed. So if you’ve got a side hustle or 2017 is the year you’re breaking out on your own (fist bump), make sure you’ve got your financial ducks in a row. Even better, right now TurboTax is offering OFB readers 10% off TurboTax Self Employed.

Here’s a final thought with taxes — you’re going to be doing them for a long time. The rest of your life in fact. So best to learn it sooner than later with software that will virtually hold your hand the entire way. Taxes might not be a DIY project you’d pin on Pinterest, but you’ll be more informed, self-sufficient, and prepared for your financial future.

Home Shopping: Comparing Properties – Apples to Oranges


2 Comments
Home Shopping: Comparing Prices

In 2013 my company moved our entire office from Santa Monica to Austin. This post is part of a series about things we learned while being first-time home buyers.

In 2013 we were moving cities (compliments of Mr. Employer), and we decided we should explore buying a place of our own. Because the move came about rather abruptly, we didn’t a have pre-determined idea of what we wanted for a starter home. I was open to almost anything: single family homes, apartments/condos, townhomes, duplexes, etc. What I soon found out was that it was hard to compare them with each other. The industry standard seems to go by dollars per square foot and leave it at that, but it became clear that this metric was an oversimplification. Here are two real examples from our search:

  • Home A is 1,359 sq. ft. and was listed at $186,000 = $137/sq.ft.
  • Home B is 2,668 sq. ft. and was listed at $400,000 = $150/sq.ft.

These two homes are pretty different from one another in both size and price. At first blush, Home A seems to be the better value even though it is smaller. I saw this and the sub-200k price, and that got me excited. Sure it was smaller, but we were coming from an even smaller apartment. We’d be fine.

What I didn’t tell you, and what this initial analysis failed to reflect was that Home A was a townhome that required a substantial monthly HOA fee to maintain the buildings, grounds, and amenities to the tune of $240/month. When I added up the mortgage, taxes, and HOA fees the realistic monthly payment came out to $1,511.25.

On the other hand, Home B was a single family home whose HOA was only $33/month, and it still included a community pool, parks, and vast walking trails. Its realistic monthly outlay would be $2,591.77. Yeah, the house was twice the size, but it was one-thousand more a month. House A is still the better bet, right?

Instead of looking at the purchase price divided by the square feet, let’s look at the monthly cost vs. the square feet:

  • Home A: $1,511.25 / 1,359 = 1.11
  • Home B: $2,591.77 / 2,668 = 0.97

By this metric Home B comes out as a better value on a per square foot basis.

We didn’t buy either home, but instead settled for something in the middle. I specifically chose two examples that were pretty far apart to show that it isn’t as black and white as real estate listing sites sometimes portray things. One could argue that you’d have $1k more to invest or allocate elsewhere with the smaller home, which is fair. On the flip side, if you are expecting your family to grow, maybe you don’t want to have to move again in a few years.

The point is that when looking at purchasing a property, don’t look at the purchase price alone or only the $/sq.ft. and think you’re getting an accurate picture of value. You also need to consider other, regular costs that come with any property. This could be property taxes, HOA fees, utility costs, deferred maintenance costs, ongoing landscaping, and much more. This monthly dollars/square feet metric aims to do that, but it only helps if you realistically understand the costs of homeownership.

Once I saw how much I would be paying the HOA of Home A, I calculated that it would result in equivalent monthly payments for a home that cost ~$53,000 more if it had no HOA. That was extremely eye-opening!

Anyone out there get fooled by only a $/sq. ft. comparison before? Have any monthly payments snuck up on you?

**Bonus: Because HOA fees are not tax deductible, you might want to calculate your after-tax monthly payment and then divide it by the square feet of the home for an even more realistic value.

A Chunk of Change: Generational Money Shifts


1 Comment
Generational Money Shifts

Just a heads up, this post is sponsored by the fine folks at Chase. This should go without saying, but all opinions are our own and came straight from our own noggins. Just recently, Johnny and I were driving through our college stomping grounds when we passed the abandoned building…

Continue Reading

The Right Time to Buy a New Car


22 Comments
The Right Time to Buy a Car

The kids and I love it when TJ gets home from work. First, it usually means a much-needed break for me while TJ builds Legos with our boys. It also means I get to speak with a human being about topics other than going potty or not using mommy’s Anastasia…

Continue Reading