February 2019 – Tax Prep!


Information and Help

The Internet is a wonderful source for information about filing taxes. Googling up a term which has you confused is a great way to take some of the headache out of this annual ritual. Of course, as with any internet research, you need to consider the credibility of your source!

If you are wondering what has changed for tax year 2018, The Motley Fool did a good rundown here:  Your Complete Guide to the 2018 Tax Changes

Sometimes, especially when significant sums of money are on the line, I like to get my information straight from the horse’s mouth. The United States Internal Revenue Service has spiffed up its help pages since the last time I looked. Their main tax preparation page is in a blog format — there are 18 pages of snippets of articles you might want to read further on! They also have a Google-powered search engine on the site.

I am really impressed with the Nerdwallet site. You could do worse than spend a little while perusing the articles linked from the page where they discuss free tax help . They feature a review of tax software, and articles about various changes in the tax law. They are also very upfront about their sponsors, which is nice, so you can decide for yourself whether they might be lining their own pockets with their recommendations. In general, they partner with financial services firms, so I don’t think they have much of a bias when it comes to tax issues or tax software.

I thought the Nerdwallet article 9 Ways to Get Free Tax Help From a Human Being was very worthwhile. Of particular interest are two free programs for senior citizens: AARP Tax Foundation, and Tax Counseling for the Elderly The article also points out that if you use tax software to prepare your taxes, support from actual humans is often included in the fee.

I am a longtime fan of Consumer Reports. These folks don’t take advertising at all, and I find that what I learn by researching one big purchase a year easily justifies the annual subscription fee, which is currently $24/year for the digital only subscription. Searching on “Tax Preparation” on their site yielded 87 articles, with titles like “5 Questions to Ask a Tax Expert Now“, “Where to Get Professional Tax Preparation Help”, and “How to Choose the Right Do-It-Yourself Tax Software

Doing it Yourself the old-fashioned way (with a little help from the computer)

There are a lot of options for people who want the computer to help with their taxes.

If you are accustomed to using paper forms, you probably receive them at home in the mail. If you are missing one, no longer is it necessary to schlep to the post office or the library to find it, forms are downloadable from the IRS Forms and Instructions page. Pro tip – For 2018, there is no longer a Form 1040A, nor is there a Form 1040EZ. Everybody does a Form 1040 this year. The IRS explains the situation on the Form 1040 page, which also links out to other commonly used forms and the instructions for filling them out.

Using the computer to “e-File”

I am a big fan of e-Filing the taxes, which just means filling them out and sending them electronically instead of filling out paper forms and mailing them. Computers are way better at checking my math than I am. I also really like getting an electronic confirmation that my return was received (that doesn’t happen with paper submissions.) Apparently the IRS likes this feature too, because with less checking to do, refunds come much faster for e-filed returns than for paper ones, usually within 3 weeks of filing. The IRS has a nice rundown of e-Filing options here.

Free Federal e-Filing

Say THAT 3 times fast! People with adjusted gross incomes of $66,000 or less can download software to file electronically for free.

If your income is greater than that, it’s possible to instead use the Free File Fillable Forms (because our tax dollars are supporting the creation of tongue twisters as well as tax prep aids) offered by the IRS. These forms are not exactly software, but they do do the math. No state filing option is provided with the Free File Fillable Forms, but as Illinoisans, we can e-File the IL-1040 for free at MyTax Illinois

Commercial Tax Prep Software

Figuring out which of the several tax preparation software offerings meet your needs is a little bit complicated, but I found several reviews that helped shed some light:

Getting (and keeping) things in Better Shape for Next Year

One of the things I promise myself each year at tax time is that I will do a better job of keeping things organized for next year. I have made various improvements over the years, some high tech, some low, and went looking for ideas for all of us.

Strategic Record Keeping

This is a pretty good rundown of current tools available: HOW TO COMPLETELY ORGANIZE YOUR FINANCES AND YOUR MONEY LIFE

The 12-month accordion file

A $7.00 investment which changed my life. I pay a bill, and put the statement in the appropriate month. Need to find that bill for the doctor’s visit back in July? It’s either in July, or you know, August!

Personal Finance Software

I’ve used personal finance software for over 20 years. At first, it was sort of a pain to record every transaction, but over the years, most of the applications have put in capability to slurp down your transaction records from your bank, credit card, and even investment accounts. I appreciate the ability to create reports that look at all of the places cash has been flowing in and out.

  • Nerdwallet offers this guide, updated for 2019: How to Choose the Best Personal Finance Software. They leave off their own offering, but it is reviewed below
  • PC Magazine’s review is here: The Best Personal Finance Services for 2019 (includes review of Nerdwallet)
  • Consumer Reports, interestingly, doesn’t have a real review, but points out that it’s often possible to consolidate your account information at your bank’s website. They think that is the reasonable place to begin, since features vary so much from software package to software package.

Wishing you a calm and productive tax season, this year and next!