Hi Friendos,
Tax season is here! Tax season is here! I am on track to finish my federal and state returns today and I am here to encourage you to tackle your taxes earlier rather than later in the spring. Here are my top thoughts on getting it done once you have all your forms in hand:
- If you are owed a refund, of course you’d rather have it sooner. If you didn’t fully fund your IRA last year, you still have until April 15th and building financial security for the future is a great way to use a tax refund.
- If you file your return right away, you thwart any identify thieves who have your Social Security and would like to steal your refund. Resolving such issues can take a long time, so, better to try and avoid the problem.
- If you owe money, better to know about that sooner while you still have a solid 2 months to build up savings, rework your budget, and otherwise make a plan. You can file your taxes now and schedule payment for March or the first half of April.
- But! If you are still waiting on some tax forms, consider holding off. If you don’t have the precisely right numbers and then receive something different from what you assumed when you filed, you’ll have to file an amended return (hassle).
Ok great, you are into DIY tax prep and are ready to go. Now what? If you can file for free, that’s the right price, do it. If you can direct file under the new pilot program, try it out! With free filing, don’t get lured into paid products along the way (TurboTax and others don’t always make it easy for people).
If neither of those will work for you, you’re probably stuck paying for tax software. Some financial firms offer discounts. For example, I have a checking account at USAA and recently saw they were offering something like $10 off TurboTax. This turned out to be a discount off the high prices on the TurboTax website – no thanks, I can get it elsewhere for less than that “discounted” price. I know Fidelity sometimes offers TurboTax to clients for free, but this year I wasn’t one of the lucky ones.
I considered TurboTax, H&R Block, and a few others for my own tax software purchase this year. I have self-employment income which makes me ineligible for certain options. Yet again, I chose the desktop version (software download) of TurboTax “Deluxe” for my personal needs. If I had gone with the online version of the software, I would have had to buy the more expensive “Home and Business” product for $130 (don’t forget to add the extra amount for state filing to the “headline” price for the federal-only product). By going the desktop software route, I get a more powerful version of the product for less money.
Buying the desktop “Deluxe” product directly from TurboTax would have been $70. This would have been $90 in some states – laws in my state of NY ban this extra fee – if this is true for you, perhas you can efile directly with your state for free. I did some comparison shopping online and found desktop TurboTax Deluxe available from NewEgg for $57. Looking at that website today, it’s on sale for $45 – a very good price. I don’t think any of us should have to pay out of pocket at all to file our taxes, but if I must, I want to pay as little as possible.
The wonderful personal finance blogger Harry Sit recommends desktop software for DIY tax prep instead of online, and I agree. In addition to paying less for the product, I also worry less about my tax information on websites being shared with big tech companies like Google and Facebook.
So that’s my pitch for (1) filing tax returns early and (2) using desktop software for DIY tax prep.
Happy filing!
-Stephanie
p.s. If you are nervous about making a mistake in some aspect of your own tax return, I invite you to send me an email and ask a question or two. I am happy to have some correspondence at no charge to you and I will do my best to answer questions quickly and accurately.
Frequently Taxed Questions 