Taxes Are Guaranteed. Tax Prep Is Not.

Welcome to the How To $ave A Buck Newsletter! Each week, I share actionable ideas in personal finance, investing and how to save a few bucks in the process!

The Tax Man Cometh

Breathe easy - it’s not tax season!

Thankfully.

Saving money on taxes is important - but have you ever thought about saving money on your tax preparation?

While reflecting on this year’s taxing season (see what I did there?), I realized people are spending way too much on their taxes.

I repeat - this isn’t about paying taxes - it’s about PREPARING taxes.

And that preparation comes with a potentially huge cost.

The Usual Suspects

TurboTax, H&R Block, TaxSlayer, TaxAct, etc...are all the same. Almost.

We live in a time when completing your personal taxes is more complicated than ever. It takes at least a day if not several to get through the receipts, documents & statements.

The government could fill in every line for you...they have all that information. Once you compiled all your docs, you still have to become a data entry employee and enter every single detail.

We spend billions of hours doing this and spend billions of dollars on the software.

We shouldn’t have to, but the TurboTax and Jackson Hewitt’s of the world lobby against our government so they can continue to make tons of cash off of us.

For comparison, my previous tax accountant service increased their tax preparation charge from $425 to $800 minimum. $800! See ya.

So I moved to online software and decided to slog through my taxes myself.

I used TaxAct and TurboTax. Why both? To save money! Yes, I spent my quality time loading up my info in both versions, but it does 2 things:

1) Double-checks my data entry and prevents human error

2) I can see the final tally of both (refund vs owe; Fed & State) and pick the least expensive service. (Hint: you only pay for the service when you file.)

My total net cost: about $135 (Fed & State)

I calculate I saved about $715 by not using my local tax accountant and not using a more expensive software service. (Your mileage may vary here.)

Tax Tools to Make Life Easy

Not getting your sh*t together in the first place envokes laziness which inevitably leads to hiring a professional.

I challenge you - start now to prepare for next year.

Below are a few tools and suggestions to make your tax life easier and cheaper.

• use a receipt app where you can take photos of your receipts or track your expenses throughout the year - this way the info is waiting for you to review it

• Set up your own tax filing organizer which compiles all the places that may come under tax review such as: banks, investment firms, brokerages, etc.

• Create a digital folder where you can scan documents and organize everything digitally as you move through the year- this makes it easier to access information no matter where you are

• Start preparing on February 15! This is usually the date most firms release their investment forms. It gives you another 2 solid months to prepare.

• Use online chat tools within tax software - if you are paying for these services, use them! Tax professionals can help you on a per-item basis and the cost is included in some plans (it can help reduce your own human errors!)

• Compare online software and maybe use both. There is no harm in using two different services, and then picking one right at the time of filing. Depending on your tax needs, this may totally be worth the effort.

Taxes are guaranteed. But spending a boatload on preparing them does not have to be.

Save On,

Chris