10 January 2008 133 views 4 Comments Print This Post  Email This Post

There’s a TV spot I’ve seen a couple of times in the past week: a man informs his wife that he can’t figure out their taxes. She suggests that he asks for help, to underline the point that, because he decided to do their taxes himself, he doesn’t have access to any help. These sorts of commercials annoy the heck out of me: they imply that the average American can’t do his own taxes.

I understand that the tax code can be complicated, and worse, that it changes every year. However, in most cases, it doesn’t take a financial genius to complete a tax return. For a simple tax return — say that you’ve been employed at one job all year long and haven’t earned income outside of your employment — you can easily pay $200 to have your tax return prepared. If your tax return is at all complex, it can shoot up from there.

It’s not just a matter of saving money, though. I think that one of the reasons many people struggle with their taxes is that they really don’t have a good idea of their personal financial situations. Doing your taxes correctly requires you to pull out your various financial statements for the year and get a good idea of where you stand. Aside from that whole paying the IRS a chunk of money thing, preparing your taxes can be a real opportunity to review what happened during your last financial year.

Personally, I feel competent to file my own tax return. It doesn’t take much more than basic math to complete a 1040. The IRS routinely publishes step-by-step directions on how to file a tax return. Despite the federal government’s reputation for hard-to-understand forms, the IRS really has gone out of their way to make their materials easy to understand. They even run a help line (1-800-829-1040) to answer your tax questions.

If you do have a fairly complicated tax return, it may be worthwhile to use tax preparation services, expensive as they might be. But for simple returns, consider the option of filing on your own. All the forms are available online, as are instructions. From my own experience, it’s not a difficult proposition — it can be done completely on a spare Saturday, although it’s worthwhile to spend a little extra time to double check your math.

If you’re interested in filing your 2007 taxes yourself, your starting point should be IRS Publication 17 (Link goes to .pdf). Don’t be intimidated by the fact that the instruction manual for filing a tax return is 300 pages — the majority of sections won’t apply to you, and you certainly don’t need to read it straight through. Instead, look over the sections that apply to you. For instance, if you sold your home in 2007, you’ll want to read the section titled “Selling Your Home.” All of the other forms you’ll need are available as .pdfs on the IRS website.