Doing Your Own Taxes

by Alden Smith

Filing your taxes should be as painless as possible.  Everyone gets anxious at tax time and frustrated with the tons of deductions available and trying to figure out whether to deduct dear old Aunt Maude's new hearing aid.  Tax time shouldn't be troublesome.  This article will focus on ways to do your own taxes, including available tax preparation software and using online help.

Organization

The most important thing for anyone filing their own taxes is to keep very organized files. Categorizing these files will help tremendously.  Nothing is more frustrating than sitting down with a huge manila folder on April 14th trying to figure out what is what.  Do yourself a favor -- keep your paperwork organized. 

Software For Taxes

There is a lot of software on the market designed to help you prepare your taxes -- some good, some not so good.  Probably one of the best is Turbo Tax.  It installs quickly on your computer and has the capability to connect to the Internet to upload your taxes using the E-file method.

One of the things that is troublesome with Turbo Tax is that you need to download the software for your state tax preparation.  This is understandable -- for TT to include this software for each state would cost a small fortune for the end consumer.  Because the tax laws change so quickly, a new version must be downloaded every year.  Of course, TT will attempt to get you to upgrade to the newest version.

Using the intuitive interface is easy.  You create a profile and give answers to basic questions, such as annual gross income, state and federal taxes paid, and social security information.  The interface then walks you through the entire process.  It checks for errors, and gives tax tips and suggestions as you continue the process.  Turbo Tax is highly recommended for people who have a straightforward tax position, with the minimum of deductions.  Considering the price you pay for TT versus the cost of hiring a CPA to do your taxes, the choice is obvious.

Using QuickBooks for Tax Preparation

QuickBooks is the bane of CPAs.  It is a very good resource for people filing taxes that may have a bit more of a difficult tax outlook.  QuickBooks, owned by Intuit, must be set up for tax filing purposes.  It is then a step-by-step process to file taxes.  Let's look at the steps, but remember, the scope of this article is only giving you the information in a nutshell.  The manual on QuickBooks takes a full day to read, and longer to understand!

1. Insure QuickBooks is set up for taxes.
2. Determine the filing situation.  If different  tax forms, such as 990, 990PF or 990TF are used,  this information must be defined in the program.
3. Determine your tax position.  QuickBooks recommends  you set up a "dummy" corporation and use the data to  compare with your own company's situation.
4. If everything appears to be kosher after comparing the report from the "dummy" corporation to your own account, and then export the information to the tax    preparation software. Print the file from the external tax software, check for errors, and send in your taxes.
   

Accounting software and online resources makes it easy for the average person to file taxes.  Use all the resources available, and tax preparation should be a breeze.  Again, the best advice for preparing taxes with no hassle is to keep all records and receipts well organized in individual categories.  The extra time it takes to do so will save you a lot of headaches at tax time!

Alden Smith is an award winning author and regular contributor to DoItYourself.com. He writes on a variety of subjects, and excels in research.