Prepare Your Own Taxes and Save Money

For the first few years after my husband and I were married, we took our taxes to a well-known tax service and spent a couple of hundred dollars to get them prepared. Although going to a professional seemed somewhat easier than doing our own taxes, it was actually costing us a lot of money we could have put towards something else. We now prepare our own taxes and save over a hundred dollars each year.

Most major tax services have online tax preparation programs that enable you to simply go on the computer and prepare your tax return. There is also software available such as TaxAct and TaxCut that you can purchase for a very low cost at any major department store. If your annual income is less than $52,000, check out the irs.gov website and search for "free file". You will have a variety of options to file your federal taxes for free through the Internal Revenue Service.

Unless you have a very complicated return to prepare or an unusual financial situation, filing your own taxes online or through software is extremely easy. All you need to do is input information into the system, which does all the "hard" work for you. In less than an hour, you can have your tax return completed, including e-filing. In a couple of weeks you will receive any refund due to you via check or direct deposit (the faster way to get your refund). If you owe the government money, you are able to pay online or print out your return and send a check.

Here are some of the documents you will want to get together before you prepare your taxes:

1. Last year's tax returns (state and federal)
2. You and your spouse's (if applicable) dates of birth and social security numbers
3. Social security numbers and dates of birth for any dependents
4. End of the year bank statement - Form 1099-INT
5. Home ownership information showing interest and points paid - Form 1098
6. W-2 Forms from all jobs

These are just documents needed for a basic return. Depending on your situation you may require several other documents like child care or child support information. Of course, if you are self-employed, you will also need additional documentation. Most information you will need to get started is available online through tax sites or the IRS.

Cost to prepare taxes through an online tax service (if you are not using Freefile), is approximately $10-40. State returns will usually be an additional $10-20. However, when you compare this to what you would spend going to a tax office, doing your own taxes is a good deal.