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How to File Your Own Taxes and Save Money

Updated on October 4, 2015
DeborahDian profile image

Deborah is the mother of grown daughters and loves to write about fashion, gifts, diet, homemaking, technology, money and the holidays.

While a Computer Generated Form is Not Essential, It Does Make Life Easier

This is an example of the forms you can complete by hand ... or you can download or purchase software and prepare your taxes online.
This is an example of the forms you can complete by hand ... or you can download or purchase software and prepare your taxes online. | Source

Inexpensive Tax Software in Available Online and Will Save You Time and Money

Many people are intimidated by the idea of filing taxes. However, with a home computer, an internet connection, current tax software and the necessary documents, you can easily file your own taxes at home in a few hours.

My husband and I used to always use a tax preparer to file our taxes, and we advised our adult children to do the same. However, as our children grew older and began to file their own taxes, they showed us how easy it can be. They completely modernized our thinking. In fact, I am always amazed by how much I have learned from my adult children, especially when it comes to using technology. While I was a little distrustful of my ability to file our taxes online, my kids convinced me that this was something my husband and I could and should do for ourselves.

If you own a business, have income from a number of different sources, or you have a lot of complicated long-term and short-term gains, you may still prefer to use a live tax preparer to help your with your taxes. However, the vast majority of Americans will discover that they are perfectly capable of preparing their own taxes.

TurboTax is the Leading Developer of Tax Software

TurboTax provides a variety of different types of tax software, so you can choose the one that will work best for your personal or business needs. Note that some of the Turbo Tax products will allow you to instantly download their software using your internet connection, and products will mail you the disks. In addition, some of the Turbo Tax products are for the PC, and some is for the Mac. Make sure you are buying the one you want before placing your order.

If you want to read more about any of the tax software from Amazon mentioned in this article, simply click on the blue product name and you will be taken directly to its Amazon homepage where you can see prices, etc.

When you click on a product name, you will be taken to Amazon's site where you can check out the other software options, too. You will also be able to look at the various options before your order goes through.

Federal and State Returns Available in a Variety of Formats

TurboTax Premier 2014 Fed + State + Fed Efile Tax Software [Old Version]
TurboTax Premier 2014 Fed + State + Fed Efile Tax Software [Old Version]

If you live in a state without a state income tax, then the software above, which only deals with Federal taxes, is probably all you need. If you have to file state taxes, then this is the software that you will need. Click on the blue product name to go to its Amazon page, so you know that you are getting the right format for your computer.


What If You Also Own a Small Business?

Do you own a small business or work from home? This software package includes what you need for both your home and business returns. It is also available in a variety of formats ... discs or downloads.

This Is The Software You Need to do Both Your Home and Business Taxes

TurboTax Home & Business 2014 Fed + State + Fed Efile Tax Software [Old Version]
TurboTax Home & Business 2014 Fed + State + Fed Efile Tax Software [Old Version]

Even if you own a small business, you can still file your taxes yourself, as long as you have the correct software. This package will help you file both your personal and business taxes with the Federal and State governments. Click on the blue product name to make sure you are ordering the right format for your computer.


Do You Need to File Your Taxes?

The U.S. Government has a record of most of the income you receive each year, so they will know if you fail to file your taxes, or if you under-report what you earned. In addition, even if you earned very little, you may be eligible for a tax credit or tax refund. You won't know if you don't file.

Any business that has paid you over $600, and any financial institution, mortgage company or student loan agency that has charged you interest, is required to provide both you and the Federal government the appropriate forms. They must mail you the appropriate documents by January 31 each year. Therefore, the government already knows how much you should be showing in income, as well as the amount of your major deductions. By filing a tax form you are simply confirming what they already know.

In addition, you are informing the government if you have dependents or additional business expenses you can deduct, if you had unusually high medical expenses, or if there are other circumstances that could lower your tax liability. Your tax form also allows you to settle up financially with the government. You may need to pay them a little extra money or, for many of us, you will get a refund.

Have the Necessary Tax Documents on Hand

Before you begin to enter information into your tax software, you will need to make sure you have the necessary tax documents on hand. You will receive these documents either by mail or by e-mail. You should receive income forms from your employers and financial institutions, as well as anyone who has paid you more than $600 during the year for services or contract work. You should receive interest statements from your mortgage companies and student loan providers. Here are examples of the forms you are likely to receive:

W-2: This is the income statement you will receive from each employer you worked for during the past year. It shows how much you earned, as well as your withholdings for income taxes, Social Security, Medicare, retirement plans, health insurance, etc.

1098: This is your mortgage interest form, and for most homeowners your interest is tax-deductible. Your lender may not use an actual 1098, but a form of their own, and this is perfectly acceptable. It will provide you with the information you will need.

1098-E: This is the form that shows your student loan interest. You will receive one if you have paid at least $600 in interest during the past year. If you just took out the loan, you may also be able to deduct loan origination fees or other loan expenses your incurred.

1099-INT: This form reports the interest your received from a bank account if it exceeded $10, or if you cashed in a savings bond.

1099-DIV: On this form you will see the earnings you received in dividends and capital gains distributions if they exceeded $10.

1099-B: Did you sell stocks, bonds or mutual funds during the year? Then your broker or mutual fund company will report the information on this form.

1099-G: If you received a refund from your state or local taxes during the previous year, you will have to report the income that is shown on this form.

1099-K: If you have received payments from PayPal, Amazon, eBay or similar companies, you will receive these forms. However, if you received income through these sources and you do not receive a 1099-K, you are still expected to report it.

1099-R: Did you get a pension or distribution from an IRA or other retirement plan? You will receive this form.

1099-MISC: If you are self-employed and earned over $600, you will get one of these forms from each independent job you had during the year. You still have to pay taxes on all those little projects! However, if you were paid through a third party payer, such as PayPal, they will issue a tax statement to you, instead.

If you made contributions to an IRA or an education savings account during the year you may receive forms 5498 or 5498-ESA. They can run late. If they do, in some cases you may have to file for a tax extension.

If you received money from an estate, trust, partnership or S corporation, you will get a Schedule K-1. However, they can also run late.

If you need documents and cannot get them by April 15, you may need to file an extension. Once you have everything, however, you should be all set to do your taxes using your home computer and your tax software.

If you have a problem or have any questions, you can also call the IRS tax hotline and real people will help you. Their number is (800) 829-1040.

Do You File Your Taxes Yourself, or Do You Use a Tax Preparer?

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    • Au fait profile image

      C E Clark 2 years ago from North Texas

      I don't understand why people are so intimidated by income tax forms. This year they didn't mail the booklets out. They're online for reference if needed. Probably didn't mail the booklets because most people don't do their own taxes anyway out of fear they'll end up in jail if they make a tiny mistake.

      I make mistakes on mine sometimes and when I do, I don't write hubs from jail. Nope, they just correct my mistake and if it affects my refund they adjust that refund to reflect the correction.

      What 'they' get snotty about is people failing to report income, or taking illegal deductions -- like the cat, the dog, or some of the neighbor's children, etc.

      Anyway, I can't believe what people pay to have their taxes done for them. Most people don't have complicated income so it's pretty straight forward. A bright 6-year old could do the 1040EZ and that's the most common form used.

      You should always save copies of your tax returns so you can refer to them the following year. Check to make sure they haven't changed them up, but most of the time they don't change the actual forms so you can use last year's as a guide.

      Besides using them for a reference, copies of tax filings can be used for a lot of other things too, when proof of income is needed.

      Anyway, as it happens, Tax Day and Easter are the same day this year. Two such totally different things.

      In fact, the government could make the tax forms easier to understand and I don't know why they don't do that. If your 10 year old can't understand it, then it's too complicated. They should use that as a test as to whether or not they've explained it simply enough so that everyone who can read at a 4th grade level can understand it.

      Sent my taxes in about 2 weeks ago. Glad I don't have to think about it anymore. My computer is obsolete so I can't file online like I did a couple of years ago. Mailed them in the old fashioned way, and guess what? It works. Takes a little longer, but anyone want to bet me I won't need the refund just as much when it gets here in 2 months as I need it today? I still went with direct deposit.

      All that tax software is a great way for somebody to make money off you, but unless you have a more complicated income tax return to file than the 1040, you don't need it.

      That time of year again.

    • profile image

      Joyce 2 years ago

      You need new software every year tax laws chgane and the software only generates forms for that tax year anyway. The 5 efiles you are allowed are for the same year and is set up so that multiple family members in a single household can all file. Most of the turbo tax programs will include all schedules and forms that could go with a 1040 however, the interviews and help sections are more detailed with the more expensive versions like Home and Business. If you don't run a business for yourself and are not filing a Schedule C you really don't need to spend the money on the Home and Business version. The Premier will offer the guidance you are looking for to complete your Schedule D.

    • DeborahDian profile image

      Deborah Carr 3 years ago from Orange County, California

      Filing your own taxes is much easier than most people realize. If you have the documents and you can use a computer, you can file your own taxes.

    • DeborahDian profile image

      Deborah Carr 3 years ago from Orange County, California

      Many people think that doing their own taxes is a daunting task. However, it really is possible for nearly everyone to do it, unless they run a multi-million dollar corporation.

    • Au fait profile image

      C E Clark 3 years ago from North Texas

      I know people who pay $50-$100 to a tax preparer to do the EZ form for them! I always do my own taxes. The nice thing is that if a person makes a simple obviously not purposeful mistake, the IRS makes corrections for them. I had done the 1040 EZ for several years and then last year it became necessary to do the plain 1040. What a time I had, but I finally got it reasonably correct, and the IRS figured the EIC for me because I didn't even realize I qualified for it.

      I don't use any special software. In fact my computer is so old I can't file online anymore and have to use paper and mail my return in. I just read through the instructions in the booklet provided by our government, and those booklets are usually available in public libraries and other public buildings for people who need them, along with the tax forms.

      Most people don't need complicated forms, and with a bit of concentration could figure out the 1040EZ form for sure.

      Even when I did file my taxes online, I got the booklet and the form ( a couple of extras in case I made mistakes) and figured it all out before getting online and filling out the blanks. It's so much easier than trying to file and figure things out at the same time.

    • profile image

      fivestead 4 years ago

      Filing your own taxes and saving some money is always a good thing. Software is a good guided solution to assist in the process to get the most return and make sure all the i's are dotted and t's crossed. Great lens, thanks for sharing.

    • DeborahDian profile image

      Deborah Carr 4 years ago from Orange County, California

      @lesliesinclair: I think more and more people are trying to save money by doing their own taxes.

    • lesliesinclair profile image

      lesliesinclair 4 years ago

      I do it myself, but this can be helpful.

    • DeborahDian profile image

      Deborah Carr 4 years ago from Orange County, California

      @LornsA178: Thanks! I wanted to give people a lot more information than just the best tax software. I also wanted them to be aware of the documents they need in order to do their taxes.

    • LornsA178 profile image

      LornsA178 4 years ago

      Thanks for this very useful information on filing our taxes. This is very helpful.

    • DeborahDian profile image

      Deborah Carr 4 years ago from Orange County, California

      @WriterJanis2: Thanks! I think it will help a lot of people to know exactly how they can save money by doing their own income taxes.

    • WriterJanis2 profile image

      WriterJanis2 4 years ago

      This is great information to know.

    • DeborahDian profile image

      Deborah Carr 4 years ago from Orange County, California

      @CoolFool83: My daughters all use Turbo Tax, and love it. It seems to be the best, although there are other choices out there, too!

    • CoolFool83 profile image

      CoolFool83 4 years ago

      I love the Turbo Tax. Hassle free and easy for people like me. Really good lense!