Author Topic: Did my own taxes!  (Read 1541 times)

Bettis

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Did my own taxes!
« on: March 14, 2018, 11:54:55 AM »
I don't post here a lot but basically I'm a pretty smart guy who is lazy and needs his hand held with a lot of stuff.  I always would take my tax stuff to a CPA to get done.  Last year the cost went up to $210 which seemed like a lot since I have a fairly simple return (1040 with std deduction plus HSA stuff).  So I had an epiphany, do it myself.

I took the 2016 return that was prepared for me, re-did it with pencil and paper, and tried to fully understand every line and every number that had anything to do with my situation.  Then I did a 1040 with my 2017 forms and got what looked like a good number (added a child and wages were a bit less overall but the totals made sense for Fed and State.

I didn't want to buy software because we have old computers and weren't sure if we even could get a Turbo Tax or HR Block that would work on Ubuntu.  Then I found MMM's post from a few years back and he mentions 1040.com.  I did the return on there and sure enough, my Federal refund matched my pencil and paper amount.  Then i did my state and was about $500 low on my refund.  This is where I am glad I used pencil and paper first.  I would have normally accepted it or not known where to find the discrepancy but I had made a mistake on the site.  I forgot to count healthcare for my wife as I only chose my name instead of "Both" which would incur a penalty on her behalf.  When I made the change, the total matched my expectation.

All in all, it took maybe 3-4 hours learning the ins and outs of my prior year return and another 1-2 hours actually completing the return.  It still cost about $70 but a savings of $140 is pretty nice.

One thing about the Fed return that confused me was line 2 of the 8889 HSA form.  My CPA had $0 in that field even though I contribute about $6000.  Sure enough, doing my research, he was right because my contribution was done through payroll and was already deducted from my W2 so if I entered $6000 in the 8889, I'd have been double dipping pretty badly.

DavidAnnArbor

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Re: Did my own taxes!
« Reply #1 on: March 14, 2018, 02:01:24 PM »
Congratulations and it will get easier and easier each year you do it.

BlueMR2

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Re: Did my own taxes!
« Reply #2 on: March 23, 2018, 06:44:52 AM »
Nice job!

This was also our first year doing our own taxes.  I estimate that between the 2 of us, we invested around 36 total hours of time into the process, but it should be much easier next year.  Lots of painful hours spent researching oddities which we now understand.  Fed stuff was a nightmare, kept hitting little footnotes that say "see document 8810" or such.  Those documents kept turning out to be 75+ page books with their own footnotes...  State was similar in concept, but only about half as painful.  Our city tax website (should have been the easiest part) wouldn't work for us at all, so my wife went down to city hall and they filled it out for her.

Bettis

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Re: Did my own taxes! - Buried a question in here too
« Reply #3 on: March 23, 2018, 07:33:51 AM »
Thanks.  I'm glad mine was nice and simple.  If it got very complex, I'd give it a try but then use a CPA to compare and learn.  Strangely 1040.com reversed their 69.90 charge (which seemed like it was too high based on my return anyway) so now it looks like I filed for free.  I got my refunds already so I know it all went through okay but the charge reversal was an oddity.

I tried doing 2018 back of the napkin style and with the increase in child tax credit, it looks like I owe $0 (and may get some back for refundable credits).

Using an estimated salary number:

$60,000 of W2 income + taxable interest
Minus
$24,000 of std deduction for MFJ
Equals
$36,000

Tax burden of $36,000 = $3,939

Two $2,000 child tax credits plus a $200 Savers credit = $4,200

The child tax credits are refundable up to $1400(not sure if per child or total) but the Savers credit is not.

Assuming I change nothing, would I get refunded the $261 difference or only $61 since the savers credit is part of the equation?

FlorenG

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Re: Did my own taxes!
« Reply #4 on: March 23, 2018, 08:03:01 AM »
Great!

Keep in mind that by learning how your taxes work you are not only saving money on not needing a tax accountant, but it's also helping you figure out strategies to minimize your taxes. Things can get a lot more complicated than a simple 1040 and 8889 when you also have a business and/or you run your own brokerage account. Paying for someone to do your taxes may save you a lot of time, but at the very least spend some time figuring out what it all means so you don't pay more than you need to in the future. Chances are taxes are your bigger yearly expense, even more than housing!


BTDretire

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Re: Did my own taxes!
« Reply #5 on: March 24, 2018, 05:11:21 PM »
I don't do my own taxes yet. We are self employed with a fairly easy accounting task.
 My wife does the daily count and logs that on a sheet and puts them in a large envelope
for each month. All the months receipts also go in the envelope. Her task, about an hour a week,
or 52 hours.
 I record the receipts and reconcile the month. If I'm lucky, about 2 hours each month,
or 24 hours.
 At tax time I pull all the months together and enter all our info on the accountants forms,
about 8 hours.
Then I spend a little over an hour in his office while he puts it in his program and prints it out, about 29 pages,
for 1 hour. $600 last year, his assistants do message the forms before he gets them.
 85 hours or two weeks of paper work per year.
 I'll go back to doing my own taxes when we no longer own the business.

MDM

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Re: Did my own taxes! - Buried a question in here too
« Reply #6 on: March 24, 2018, 05:39:48 PM »
Assuming I change nothing, would I get refunded the $261 difference or only $61 since the savers credit is part of the equation?
It depends on how the IRS implements the 2018 child tax credit.  See this post in Case Study Spreadsheet updates and the link therein for more.

You may want to consider one or more of
- 401k and/or traditional IRA instead of Roth, at least for the first $2K, and
- having each spouse contribute $2K, so the saver's credit is doubled.

Bettis

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Re: Did my own taxes!
« Reply #7 on: March 26, 2018, 07:40:25 AM »
Thanks MDM.  So basically, we don't know the answer to the credit "order of operations" yet.

I always thought $2,000 was the max that counted and since my MFJ AGI puts me in the 10% credit bracket, $200 is the max credit allowed for my family.

Right now I contribute about $8K into a 401K (not including match) and $5,500 into a Roth IRA.  If I can reduce my Roth to $3,500 and do a $2,000 spousal IRA, I'd get $400 credit instead of $200?

radram

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Re: Did my own taxes!
« Reply #8 on: March 26, 2018, 07:49:16 AM »
I don't post here a lot but basically I'm a pretty smart guy who is lazy and needs his hand held with a lot of stuff.  I always would take my tax stuff to a CPA to get done.  Last year the cost went up to $210 which seemed like a lot since I have a fairly simple return (1040 with std deduction plus HSA stuff).  So I had an epiphany, do it myself.

I took the 2016 return that was prepared for me, re-did it with pencil and paper, and tried to fully understand every line and every number that had anything to do with my situation.  Then I did a 1040 with my 2017 forms and got what looked like a good number (added a child and wages were a bit less overall but the totals made sense for Fed and State.

I didn't want to buy software because we have old computers and weren't sure if we even could get a Turbo Tax or HR Block that would work on Ubuntu.  Then I found MMM's post from a few years back and he mentions 1040.com.  I did the return on there and sure enough, my Federal refund matched my pencil and paper amount.  Then i did my state and was about $500 low on my refund.  This is where I am glad I used pencil and paper first.  I would have normally accepted it or not known where to find the discrepancy but I had made a mistake on the site.  I forgot to count healthcare for my wife as I only chose my name instead of "Both" which would incur a penalty on her behalf.  When I made the change, the total matched my expectation.

All in all, it took maybe 3-4 hours learning the ins and outs of my prior year return and another 1-2 hours actually completing the return.  It still cost about $70 but a savings of $140 is pretty nice.

One thing about the Fed return that confused me was line 2 of the 8889 HSA form.  My CPA had $0 in that field even though I contribute about $6000.  Sure enough, doing my research, he was right because my contribution was done through payroll and was already deducted from my W2 so if I entered $6000 in the 8889, I'd have been double dipping pretty badly.

What cost you $70 if not buying software?

I buy H&R Block Deluxe($35), free electronic fed file, and mail in my state($7 ?).

Why wasn't your total cost only the cost of mailing?

MDM

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Re: Did my own taxes!
« Reply #9 on: March 26, 2018, 08:04:57 AM »
Thanks MDM.  So basically, we don't know the answer to the credit "order of operations" yet.

I always thought $2,000 was the max that counted and since my MFJ AGI puts me in the 10% credit bracket, $200 is the max credit allowed for my family.

Right now I contribute about $8K into a 401K (not including match) and $5,500 into a Roth IRA.  If I can reduce my Roth to $3,500 and do a $2,000 spousal IRA, I'd get $400 credit instead of $200?
Yes!  See https://www.irs.gov/pub/irs-pdf/f8880.pdf: you treat the spousal contributions separately, then add them together.

RoberTST86

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Re: Did my own taxes!
« Reply #10 on: March 26, 2018, 10:32:22 AM »
Thanks. You gave so many tips on this topic I'll try to do it myself next month.

Bettis

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Re: Did my own taxes!
« Reply #11 on: March 26, 2018, 10:58:48 AM »
I don't post here a lot but basically I'm a pretty smart guy who is lazy and needs his hand held with a lot of stuff.  I always would take my tax stuff to a CPA to get done.  Last year the cost went up to $210 which seemed like a lot since I have a fairly simple return (1040 with std deduction plus HSA stuff).  So I had an epiphany, do it myself.

I took the 2016 return that was prepared for me, re-did it with pencil and paper, and tried to fully understand every line and every number that had anything to do with my situation.  Then I did a 1040 with my 2017 forms and got what looked like a good number (added a child and wages were a bit less overall but the totals made sense for Fed and State.

I didn't want to buy software because we have old computers and weren't sure if we even could get a Turbo Tax or HR Block that would work on Ubuntu.  Then I found MMM's post from a few years back and he mentions 1040.com.  I did the return on there and sure enough, my Federal refund matched my pencil and paper amount.  Then i did my state and was about $500 low on my refund.  This is where I am glad I used pencil and paper first.  I would have normally accepted it or not known where to find the discrepancy but I had made a mistake on the site.  I forgot to count healthcare for my wife as I only chose my name instead of "Both" which would incur a penalty on her behalf.  When I made the change, the total matched my expectation.

All in all, it took maybe 3-4 hours learning the ins and outs of my prior year return and another 1-2 hours actually completing the return.  It still cost about $70 but a savings of $140 is pretty nice.

One thing about the Fed return that confused me was line 2 of the 8889 HSA form.  My CPA had $0 in that field even though I contribute about $6000.  Sure enough, doing my research, he was right because my contribution was done through payroll and was already deducted from my W2 so if I entered $6000 in the 8889, I'd have been double dipping pretty badly.

What cost you $70 if not buying software?

I buy H&R Block Deluxe($35), free electronic fed file, and mail in my state($7 ?).

Why wasn't your total cost only the cost of mailing?

I admittedly didn't do a ton of homework before deciding how to do my own.  I have an old computer that only runs Ubuntu so i didn't expect Windows/Mac software to work (could never figure out how to get things to work with WINE).  I googled it and found MMM did a post and mentioned 1040.com.  I made sure it's still legit and did it on there.  After my 69.90 charge went in, a reversal for the same was also on my account.  Now both are gone and it looks like I didn't have to pay anything.  I already got my refunds so it all went through fine but it was odd.

 

Wow, a phone plan for fifteen bucks!