It’s January y’all!! That means fresh starts, new goals, refreshed hearts and minds annnnnddd taxes. Ugh. I heard everyone just sigh with frustration already, right? Me too! Taxes are no fun. But they don’t have to be stressful!
I truly believe that if you stay organized throughout the year and don’t procrastinate, then doing your taxes will be as easy as possible!
When I first started doing my own taxes, I really had no idea what I was doing. I would sit down in front of the computer and just stress out because I had no idea what any of the forms meant. The first year I did them on my own I had to ask my mom what “gross income” was! Yikes!
There were so many questions I had, and so many things I had no idea about, that the thought of doing my own taxes stressed me out so bad I ended up going to a popup tax office and paying them to do my taxes. It was not only a very impersonal experience (I felt like I was such a bother to the guy doing my taxes!) but I also had to pay over $150 just for them to work on my taxes. By the time I paid them I was getting barely any tax refund back!
Needless to say, I vowed to learn whatever I could about doing my own taxes so that I wouldn’t have to spend my hard earned money on that again!
If you’re in the boat I was in, please don’t stress out! Take a nice, long, deep breath and relax. It’s going to be okay! Taxes do not have to stress you out!
So, to help you all in trying to make an unpopular topic less stressful and to streamline the process I wanted to gather all my knowledge about organizing, prepping, and doing your taxes.
Most cases are simple enough that you can do your own taxes using a simple program like TurboTax. This is what I use and I love it! It makes everything so easy. TurboTax is the #1 best-selling tax software. Learn more about TurboTax here. All I have to do is have all the information right in front of me and input it when TurboTax asks for it!
Keep in mind that I am not a CPA or professional financial advisor. Anything mentioned in this post is just my own opinion and what works for me. There are many different situations and circumstances of yours that might be different from mine. Some things I might not know about yet because my life might look differently than yours. For example, I don’t own a home or have kids. Two very big areas in the tax world! For the areas that I might not have the knowledge, I have linked very reliable articles to help you if you are in those tax situations.
The point here is to just help give the basic information and to (hopefully) help you streamline the process so you can spend your very valuable time on more important and enjoyable things!
Let’s start with everything that you will need to do your taxes for the 2016 tax year.
Step 1: First thing is to find out if you even have to file. Chances are if you work and get a paycheck then you’ll have to file. Rule of thumb is that if you are single and not a dependent on someone else’s tax return then you must file your own tax return for that year if your gross income is over $10,300 in the tax year. If you are married filing jointly then you must file if you and your spouse make a combined gross income of $20,600 or more. (For more detailed information click here. Just click the “begin” link and follow the directions!)
Step 2: Once you’ve got that figured out (and chances are you DO have to file) then you must determine your filing status: Single, Married filing jointly, Married filing separately, Head of household, Qualifying widow(er) with dependent child. To find out your filing status click here.
Step 3: Third thing to figure out before getting started is what tax form you will actually be filing. I find that the most common form is the form 1040EZ unless you are itemizing in which case you will file a form 1040. To see which form you will be filing click here. To Learn more about itemizing click here.
Okay, so now you should know if you indeed need to file taxes, you know your filing status, and which tax form you will be filing. Now, we need to work on gathering all the forms and information you will need.
Personal information –
SSN for you, your spouse and any dependants you may have.
Bank account information (account numbers, routing numbers, how much in each account).
A copy of last year’s tax return if available (you should be retaining all tax returns and supporting documents for 7 years!).
Income Information –
W-2: this is basically just an income report from your employer. Keep in mind that if you switched jobs or have multiple jobs then you will have a W-2 from each employer. You will need ALL these W-2’s as they will all reflect income from each individual employer.
1099’s that you might have (debt cancellation, unemployment, sale of property, etc.) See here for a more detailed list of 1099’s and descriptions.
Additional common forms: Rental income information, alimony received, etc.
Anything that could be considered income! Gather all these forms together.
Income adjustments –
This information would be anything like tuition paid, self-employment health insurance payment, alimony paid, moving expenses (have receipts for EVERYTHING as proof), IRA contributions, etc.
Itemized Deduction Records –
Daycare/preschool expenses, charitable donations (political donations do NOT count), medical expenses, home business expenses (the IRS is very picky about what you are allowed to claim for a home business. For detailed information on that read here).
Taxes you’ve paid –
State and local income tax, personal property tax, real estate taxes, etc.
There are plenty other things you might have to consider based on your situation, however, these are the most common and basic things you will need to have on hand when you sit down to do your taxes.
When you are prepared it will not only make the process less stressful but it will also take less time to actually DO your taxes which in turn leaves more time to spend with loved ones!
I tried my best to keep this list nice and simple for y’all! Because no one likes talking about taxes, but every year we must deal with them so we must be knowledgeable and prepared!
Hopefully, this little list helped some of you who, like me, knew nothing! Again, I’m totally not a profession tax guru but I know taxes can be super stressful and wanted to do my part to make this process a little easier for y’all.
Please feel free to post any questions you might have in the comments below. Or if you’re a tax professional and can give additional advice on common questions, we would love to hear those nuggets of wisdom! Help us all out, will ya!!
Next post I will be talking about organizing all your paperwork throughout the year so that next year, you’ll be even more organized and ready to tackle tax season! Now head over to TurboTax and get to it!
What are some things you do to help keep the stresses of taxes at bay?