Friday Question #13
Do you do your own income tax return, or does someone else do it for you? What is your general feeling for income tax return time?
Are you disturbed that I am asking you these questions on the first day of February? Seems a bit early, doesn’t it?! Well, my answer will explain why I am asking so soon…
Last year was the first time I paid someone else do my taxes for me. I (or my dad, when I lived in Rome) have done my own taxes since I was 14, but last year I had W-2s from two states and all those pesky student loan and tuition documents to try to figure out… so I sent my taxes to H&R Block with Steven’s. We’ll be sending them to H&R Block again this year, and probably for the rest of our lives. Ha ha. It’s so much easier.
We look forward to having our taxes done, because we usually both get a hefty return. It’s like this huge surprise bonus that we forget about every year until the middle of January… then we anxiously await to receive our W-2s and send them out. We save the money, pay off debt or buy expensive toys (the truth). We are dropping off our tax info today, so it’s on my mind.
But when I told my dad this, he pointed out that the government has my money all year long, and that if I was a responsible adult, I could have it in my own savings account earning interest on it. Something he admitted to not being able to do himself, but I think he had hope for me.
I see the point, and it makes me curious as to what other people’s strategies are. Right now, I’d rather overpay than have to pay in. Maybe someday, when I have actually savings, I will take a closer look at what is withdrawn from my check. But I am playing it safe for now, because I don’t want to be stuck paying in.
Themocracy
I don’t like having to pay more taxes at tax time. So, we try to only just barely overpay. The other way around.. well the truth is it’s hard to suddenly come up with an extra $500 or more, because money gets spent. I think I would probably be even more angry with the government than I already am at tax time if I had to do that. We do our own taxes, but they’re complicated with my businesses. Usually it gets dangerous around here and it’s really the only time hubby and I fight.
We pay to have ours done. I have ‘extra ‘ taken out of my checks so I don’t have to pay in at the end of the year. Last year, our state return came out even, and I think we got less than $200 back from Federal. At least we didn’t have to come up with a bunch of money to pay them.
I’m in a similar situation to Kyra–because I am technically self-employed, I end up taking mine to an Accountant. That way if something gets messed up I’m not the one legally bound to it. 😉 (Uh, remember I was an ENGLISH major. I haven’t taken a math since I was a Jr. in high school!)
I have fun figuring out the deductions!! I am hoping to get that all done this weekend because I prefer to pay up and have it off my mind.
As for money in savings, the interest on your savings gets taxed anyway which makes me just as grouchy. :p
Scott does ours. When I was younger and living with my parents my mom would do them, but I’d sit with her and knew how to do it.
He did our taxes a couple weeks ago and we owe. A lot. Damn. This is the first year we’ve ever owed and it sucks. Even the refund won’t be enough to cover what we have to give. I’m kind of bummed about it, but Scott’s surprisingly not… I think he thinks it’s cool that we make enough to owe that much.
i have mine done… my best friend is a cpa (and so is her mom) so they’ve been taking care of my taxes for years… up until this last year i would have done them myself since it was nothing but w2’s and retirement info but after we opened the restaurant there’s no way i would still be doing them!!! this year is going to be a doozy… we’ll have the restaurant, sales tax on my car, our “old” house we sold, the “new” house we bought, and on top of that we’ll be able to itemize because of all my medical expenses because of my back…
i’m like you though on saving the money… i’d rather them hold more out of my paycheck so that right now i don’t have to worry about paying in… i look at it as a savings account… no interest but that’s ok…
i do work for my best friend, her sister, and her mom (all 3 are cpa’s) during tax time though… i really enjoy it too… but once again this goes back to me being a “nerd”!!
🙂
I do my own and I am like you get a bit of a hefty return every year (mine should be here Feb 8th)!! Yep I am a do it the second I get my W2’s!!!
Yep the government has mine all year long but honestly I am responsible but not that responsible (I wouldn’t be able to pay off the bills—buy the big toy if it was up to me LOL)!!!!
i usually do my own and i tend to screw them up. this year i am using turbo tax. it helped me last year.
I do my own. Until last year, I even did them by paper-and-pencil — once including the dreaded 1040 (not 1040A or 1040EZ)! It’s dreaded for good reason; I think it took me a whole weekend.
Last year I only needed the 1040A, and did both my federal and state taxes online w/ H&R’s web app. It took only a couple hours IIRC. I’m definitely using them again. 🙂
Your dad is right about saving, due to the time value of money: basically, thanks to purchasing-power-reducing inflation, a dollar tomorrow buys less than a dollar today.
And if the government has your money — a tax refund is nothing more than the government saying “sorry, we overcharged you, you can have the amount you overpaid back now” and returning the difference a year later — then it’s impossible to do something productive with that money, like saving it (and earning interest) or investing it e.g. in stocks, bonds, mutual funds, etc. (and, hopefully, earning a profit)…
Many people think the government is doing them a favor by taking their money away from them for a year, then giving it back (clearly you know better!). In fact, just the opposite is true. Even if you stuff that money under a mattress and let it depreciate due to inflation (a $100 refund in 2008, at 3% annual inflation, is worth the equivalent of $97 last year, even though your money was actually worth $100 last year), at least it is liquid, i.e. available for you to use as you see fit — including paying off debt or buying expensive toys… 🙂
My strategy is to take as many allowances as possible on my W-4 (though figuring this is , and pay-up what I still owe at tax time. That way, I underpay and get as much use of my money as possible as long as possible. You have to be careful though, b/c if you underpay too much throughout the year, the IRS assesses a 10% penalty. I’ve never had that happen to me (though I came too close for comfort last year), but I think the underpay limit is $1,000… Ideally, I’d balance it such that I pay no taxes and receive no refund, but that’s a practical impossibility, so I try to err on the side of paying-up at tax time. :-/
I pay someone to do my taxes. I have had to pay for the last several years. Some people think I should be happy that I make enough that I have to pay additional taxes, but somehow when you see how much you have already paid and then you see you have to pay MORE, it doe not make me happy. My accountant told me a few years ago that I needed to buy a house because it would help with deductions. So I bought a house. And one thing after another seems to go wrong with it—all of which cost me money and I still pay additional taxes. My accountant now tells me that having a couple of kids would help my deductions. OMG!
Dread. Overwhelming dread.
Tax time is not happy funtime for a single girl with no children. It does, however, mean I get to fill out the EZ form or telefile.
We have so many things going on and so many tax returns coming in that doing taxes ourselves would be dangerous. We pay a family friend who is a licensed CPA and he charges us very little. His work is guaranteed, so why not? Besides, I’d have no idea how to do it. In terms of finances, I’m very incapable of doing a lot of things other than paying bills and balancing a checkbook.
I did our taxes for years until I made mistakes (in the IRS’s favor) two years in a row. Since then, we’ve been taking it to get it done. 🙂
We have always done our taxes ourselves, but used an accountant last year to see if we’d get a larger refund that way. The amount ended up being about the same (or, slightly less for some reason?!), so this year we are doing them ourselves again and saving the tax prep fee.
I used to claim zero exemptions so that I could get a fatter refund check in the spring, but I now claim my exemption on the W-4. Your dad is right, it’s better to have the money in “had” rather than let the Feds play with it all year 🙂
Letting the gov’t keep my money is the most fiscally irresponsible thing I do. But…
With interest rates as they are, having the gov’t keep $1,000 or more isn’t really going to break you. Especially compared to the joy of cashing that “bonus” check. Plus, I really hate sending them money, even if it’s just a few dollars.
I just picked up forms from the library a few minutes ago. I did mine with software last year but I’ll do them by hand this year. I’ll compare it to last year’s forms when done to see if I missed an area…
I used to do ours until it got complicated…kids, home daycare, etc and after we took it to our guy and I didn’t have to do any work at all with them, I wondered why we didn’t do it sooner.
We always get a huge refund which is nice since we can’t seem to save any money for ourselves. For our kids college, we do fine, but for us if we have it we tend to spend it.