Friday, January 30, 2015

Top 3 Sites to File your Taxes

Top 3 Sites to File your Taxes

filing taxes

About 80% of American's will get a tax refund this tax season. On average that return will be a little over $3,000. This is great, but it's also very important to remember where that tax money is coming from...YOU! You're getting back some of the money you ''loaned' the government.  

Well, that's not entirely true.

Millions of lower-income earners actually get more money then they gave the government. Not only are millions not paying income tax, but they also get tax credits. 

I should know because as a student I am one of those people (my gross income for 2014 was about $29,000). I paid about $1,100 in State and Federal taxes and I will get an estimated tax refund of $7,700. Isn't that crazy?!? 

Am I happy about getting a large refund? Am I going to do everything I can to get the largest refund? Absolutely. Do I agree with the way the tax system is set up? No way! Maybe it's okay to not have to pay any taxes, but to get thousands of dollars...I don't know...

What do you think? Is it fair that not only will I end up paying ZERO taxes, but that I'll get over $6,000 in my "refund"?

Okay, next point...

How can you file your taxes for FREE?

Even though 80% are getting a refund this year, doesn't mean you should pay to get it done. Why pay $50 in taxes when you don't have to? Most people don't need an expert to have their taxes done for them. If your situation isn't complicated YOU can do it!

Note: If your taxes are not simple (i.e. 1040, or 1040ez) and not straight forward (i.e. capital gains, stocks, business, etc.) then you probably won't be able to get your taxes done for free. I'll make a little list of some good options for you later in this post!

But for those whose taxes are relatively simple...

Here's an updated list of a few different options of filing your Federal AND State taxes for free. Most online companies will have Federal taxes available for free, but not STATE taxes. I've listed them from the best option to least best option. 

1. TurboTax -  This is the first year they are offering free Federal and State tax filling. Very user friendly and easy to use. It's actually kind of fun! Income needs to be less then 100k and must use standard deduction (not itemized). 

2.  MyFreeTaxes - If your income is $60,000 or less you can get your State and Federal done for free. This is done with H&R software.

3. State Website Filing - Many States let you file the STATE taxes directly with their website. It can be a little bit of a hassle to use a separate site to file your state taxes. Here is a list of states that offer free state tax fillings: 

 Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Kansas, Luisiana, Maine Maryland, Massachusetts, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington DC, and Wisconsin. 

What if I don’t qualify for Free Tax Filing?

If you don't qualify for the free editions because you your tax situation is more complex or your income is higher than what is allowed...congratulations! You’re probably making a lot more money than I am! Here are the cheapest options for you: 

1. Tax Act - Only about $20 ($13 Federal + $7 State) for Federal and State. Includes all major forms. Also very easy to use. $50 if you are filing as an LLC or Corp. 

2. TaxSlayer - $35 + State - Includes all major forms. 

3. Turbo Tax -  $30-$80 + State.  Ranges depending on which forms are needed. 

Finally, I'll give you my top 3 things to do with your refund

First off, don't fall into the trap of viewing your refund as "free money". Money is money. So don't just throw it away. If you want to do something fun with it, then spend it in September or October. That way you have time to forget the false idea that it's free money. If you really want to still spend that money later in the year, go for it. 

But here are my top 3 recommendations:

1. Build an emergency fund. If you don't have a small emergency fund, built it up a little.  Then go on to recommendation #2. 

Pay off Debt - Boring right?...but debt is killer! Destroy it, before it destroys you. 

3. Invest in a Roth or traditional IRA - Pay your future self! Yourself won't regret it later!

Now it's your turn. How are you going to file your taxes and what are you going to do with the refund?

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