Learn How to Manage your Own Taxes

by Dual Income No Kids on December 15, 2009 · 0 comments

Let’s face it, the American tax system is anything but easy. Try to wade through the mire of tax codes and you’ll likely soon be going cross-eyed trying to make sense of it all. While it is certainly complex, there are a couple of simple things that you can do to get ahead when it comes to tax season.

Learn How to Do Your Own Taxes. First things first, you must learn how to do your own taxes, and if you’ve got kids, make sure they learn how to do their own taxes. There is something powerful about sitting down and sorting it all out. You’ll be happy that you know how to do it yourself, even if later you end up going to an expert. It empowers you and gives you financial confidence.

But…Aim for Complex Taxes. I know this may be antithetical to managing an already complex system, but sometimes it helps to apply like to like. The reality is, the more complex your taxes are, the more likely you are to be finding ways to shave money off your tax bill. Start out with a 1040-EZ, but eventually you’ll be better off with a stack full of deductions. We realized how complex our financial lives were, when our first time filing jointly produced a 65 page tax return, though the upside was that we paid much fewer taxes than we would have otherwise.

Learn about Taxes, but Work with a Professional. It is your responsibility to actively learn about how to keep your tax bill low. There are lots of resources out there to learn what you might be eligible for. Top on that list is owning a small business, which can help you get ahead in multiple ways, taxes being just one of them. While we work with a tax accountant, we certainly earn the full value by asking all sorts of questions and doing extra research on our own.

Do-It-Yourself vs. Professional. To tie it all together, we have the example of going to the dentist. You wouldn’t attempt a do-it-yourself root canal, you would go to the dentist. At the same time, you learn how to take care of your teeth from the time you are a small child and ultimately depend on yourself for your dental well being. The same holds true for taxes and life in general! It’s up to you.

Readers: We’d love to hear your tax story? Did you start off doing your own taxes? Do you work with a tax accountant now? Have any tips for us and our readers?



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