It’s me again with another tax filing tip for you. Got taxes heavy on the brain right now. Don’t most of us? This is a trick that I use every year. Since my tax situation has varied quite a bit over the past few years, I always try to get an idea of my bottom line before I actually file.
The good news is that because so many companies are vying for our business each year, there are a bunch offering to electronically file your federal return for FREE (and in some cases, your state taxes too). All the major tax filing companies offer this for free through the IRS’ website. Get the details here: Free File: Do Your Federal Taxes for Free
So, to see if I’ll be getting a refund, or if I’ll owe, I plug my information into TWO different free file programs to see if they come up with the same or very similar results. If they do, then I feel fairly confident about what to expect that year. If I’ll be getting money back, I file asap (Yep. Just like you.). And if I owe money, I typically wait longer to plan out how to pay it (Again, just like you. Chuckle).
Give it a try. Try plugging in your information before you actually file to see what your bottom line will probably be. If you happen to have investment or business income, a mortgage, etc. (or a more complex situation), I suggest skipping this step completely. Rather than inaccurately plugging in any information and getting the wrong results, just leave all of that up to the tax experts.
However, if you have a fairly simple return with employment income, student loans, etc., and are a renter, this is a pretty good option for you. And honestly, it’s NOT as hard as you think. Really. The programs do most of the work for you. If you think this would be too hard for you - or just plain ole’ too boring - ask a trusted, more-financially-and-computer savvy loved one to do it for you.
It’s an excellent way to know what to probably expect WAY before you sit down to file your taxes this year. And the more (and sooner) you know how your taxes will affect your money, the better you can plan the rest of your year. You’ll have a much better idea of whether you’ll have splurge money for that trip to Jamaica this year, or if you’ll need to focus on pulling in some extra money from your gigs.
About Yolanda Ransom
Yolanda Ransom is a financial educator, speaker and workshop trainer who teaches clients to confidently master their money so that they can achieve all of their financial dreams. She is the CEO of Yolanda Ransom Consulting and provides transformational financial literacy training. Follow her on Facebook, Instagram, Twitter and at her website yolandaransom.com