This will sound weird. Most of you realize I’m weird, anyway, but you may still want to get your fist ready to punch an invisible me in the face. Ready?
I like filing taxes.
There. Phew… I feel like the weight of a small walrus has been lifted off my shoulders. I love a good step-by-step instruction guide, like IKEA furniture (cue more punches to my invisible face). Taxes are so rigid and formulaic and predictable — and I like all of those things. All of this smacks in the face of what I do for my day job as a creative professional, but I think that’s why it’s appealing. I’m so used to trying to “think outside the box” that sometimes it’s super refreshing to hop back in that unvarying, four-sided box and let my brain follow a predefined path.
While there’s plenty of other activities I’d rather do than nerd out over deductions and adjusted gross income, I wasn’t too bummed about sitting down and finishing our taxes this weekend. Here’s a brief explainer on how we make it happen:
Create a checklist
I always start out by writing a list of all income and necessary paperwork for filing. That includes W-2s (employee wages), 1099s (bank interest, dividends, consultant wages, etc.), business-related expense categories, charitable receipts, last year’s return, etc. I then go through our handy-dandy filing system and find each corresponding item on the checklist and place a check next to the ones I have in my possession. For the remaining unchecked items, I either go online and download statements or email old employers to get what I need.
Get that paperwork organized
Once I know what paperwork I need, I get it all out at once. By the time it’s all in front of me, it looks like I’m surrounded by a small paper fort, ready to defend my family from Uncle Sam’s advancing tax collector troops. I then place the paperwork in piles: my income, Joanna’s income, joint income, business expenses, non-business deductible expenses, etc. With the piles ready, I stretch my fingers out, crack my knuckles, and quickly remember why I have no friends.
Make tax magic with TurboTax
For the last four or five years, we’ve used TurboTax (psst, which you can win below) to file our taxes. It’s quick, painless, and relatively inexpensive. The software (available on the web or via download) has a nice selection of products, depending on your needs, and walks you step-by-step through every single potential filing requirement. It translates obscure, complicated processes into easy-to-understand steps that us unsmart people can understand.
From start to finish, the whole process usually takes me an hour or so (thanks in large part to the organizing done in steps 1 and 2). I usually try to tackle everything in one sitting, but you can always save your work and pick up where you left off after you’re done cleaning up all of the cat food that your 14-month old has thrown all over the kitchen (thanks, Sally).
Sample TurboTax screenshot (not our taxes)
You start by filling out your personal info. Then it’s on to your Federal Taxes, which includes all your income, deductions, credits, etc. After you complete each step, a real-time ticker calculates how much you stand to fork over or receive from Uncle Sam. It’s sort of addicting to watch how each step affects what you owe/are owed. Then it’s on to State Taxes, which drills down to more localized policies and deductions. Once the Federal and State are squared away, you review everything and fix any holes that the software spots. It then provides an audit risk level based on some algorithm that can detect certain red flags that increase your likelihood of an audit. Lucky for us, we’re usually in the green.
Pay or get paid
The final step is actually filing with the IRS and state and telling them where to send that fat refund paycheck (if everything turned out right). This year, we’re getting paid. We’re all about claiming zero allowances (meaning zero dependents, including ourselves) on our W4s, which means during the year, we’re usually forking over more than our share of taxes. While lots of people would rather see that extra money in their pocket each paycheck, we’re big proponents of playing it safe and having a sweet payday bonus in the middle of the year. It makes it easier to budget leaner when you’re making less throughout the year, and we’re not as tempted to spend a lump sum of cash.
If you’re planning on getting a refund back, TurboTax and Amazon have a pretty sweet promo going on. If you put any portion of your refund toward an Amazon gift card (which you can obviously use on yourself), you get 10% extra added to your total. Since we know we’ll spend at least a couple hundred dollars at Amazon this year, this was a no-brainer for us. So if you put $500 of your refund toward the promo, you’ll get a $550 gift card to Amazon, with no expiration date. Free money, peeps!
File your paperwork
After we’re done, I’ll save a PDF of our tax return and print a copy for our physical records. But what’s to be done with all that paperwork you just used? Don’t go throwing it away! In fact, you probably shouldn’t throw them away for the next 7 years (!). Using our filing system, we file all relevant tax paperwork and throw out anything that is no longer needed (like outdated insurance paperwork, old receipts, etc.). This is a great spring cleaning opportunity to get FY2014 off to an organized start.
Win a Copy of TurboTax
If you still haven’t gotten around to making your peace with Uncle Sam yet this year, we’ve got quite the giveaway for you. TurboTax has been generous to offer two copies of TurboTax Premier Online, which includes one free federal and state preparation and e-file for your 2013 taxes. All you have to do is enter below for a chance to win. Codes may not be redeemed for cash and are not for resale. The giveaway is for US residents only (which makes sense), and it closes Sunday at midnight ET.
Best of luck soon-t0-be tax-filers! And if you have any questions, comments, or ways you approach your taxes differently than yours truly, we’d love to hear about it in the comments below.