How to learn taxes

[Murse]

It is getting to be time to do taxes, this will be my first year doing them myself and I am eager to learn as much as possible. Someone previously told me the best way to learn was to get the paper documents and go through it that way, I can't figure out where to get these forms.

So question 1) is there anywhere I can get these forms? And which ones do I need? My situation isn't very complicated, contributed to a 457 and a Roth, had 2 jobs. That's about it. (Also I live in Oregon)

I'm thinking I will do them by paper just for the learning process, then I will buy software for the convenience, thoughts?

[GizmoTX]

irs.gov for forms -- you'll have to print them out. Don't forget the instruction document for each form.

Tax software is useful for prompting you through the process so you won't forget something. Try TaxAct for free & to check your results. The paper forms are notorious for being very laborious & non-logical, except for the EZ version.

[seattlecyclone]

Start with irs.gov/form1040. Your main 1040 tax form and instructions are linked from that page. Just go to irs.gov/formXXXX for any additional forms you find you need to submit as you go through the 1040.

You don't need to buy tax software. Free File Fillable Forms lets you take the numbers you filled out on the paper form, put them into an electronic version, and e-file from there. It's all free.

[redcedar]

I would suggest an alternative to paper only learning. Get a copy of any of the tax software variations. Pay if you have to. Install a copy that a friend or relative already purchased - no I am not advocating piracy unless a EULA wonk tells me otherwise. This is not to file the return but to learn from the software Q&A and their explanations. These can really really cut down on the frustration of learning by paper version only.

[galliver]

You can usually get the paper forms, already printed, from the library, but honestly I don't see the point. Tax code changes so much year to year that anything I learn this year might change by the next. I'm a 27 yo grad student and have used the free online programs (such as TurboTax, H&R Block, TaxAct) every year but last--last year I paid for a more advanced version that handled the effects of my summertime interstate move for me and it was worth every penny!

Anyway, do it online. If you're earning enough that you have to pay $10-20 for it, do it. It'll be super straightforward. Have a trusted older relative run through what you've filled out if you're concerned about doing it right.

[MDM]

I'm thinking I will do them by paper just for the learning process, then I will buy software for the convenience, thoughts?

You might spend a little time now putting your own calculations into excel (or the spreadsheet tool of your choice).  Once you have done that for your 2015 taxes, you can copy to a new column and voilą, your 2016 tax projection is ready to go.  E.g., see http://forum.mrmoneymustache.com/ask-a-mustachian/turbo-tax-vs-cpa/ and http://forum.mrmoneymustache.com/taxes/am-i-witholding-too-much/.

www.excel1040.com has the fanciest tax spreadsheet I know of.  You won't need - and shouldn't bother with - all those bells and whistles for yours, but it might give you some ideas.

[PhysicianOnFIRE]

I think the post office will also have paper forms.

You could also start by inputting your actual numbers into simulator such as Taxcaster (federal) https://turbotax.intuit.com/tax-tools/calculators/taxcaster/ or tax-rates.org (federal and state) http://www.tax-rates.org/income-tax-calculator/?action=preload to estimate your taxes and learn how they change as the data input changes.

[teen persuasion]

Call your library first - we haven't received our federal forms yet this year (have got a very limited supply of state forms). Last year, budget cuts at the IRS meant that very few forms were sent out to libraries, and we had very little warning.  There may be a single set of reproducible  forms and you must pay for each copy you need.

You can get forms online and print your own.  In theory you can order paper copies to be mailed to your home, but it may take longer than expected (I tested this out last year to see if it was a viable option for our patrons while waiting for the IRS to send a minimal set of forms to the library.  It took over a month, and I'm not sure I ever received all the forms I needed).  The 1040 instruction booklet is quite long - don't print that one!  You can download it, and refer to it online.

Personally, I prefer filling out the forms to the Q & A format of tax software.  Much more direct, much cleaner, I don't have to guess why I'm asked a question and what significance it has.  Part of that IS because I'm used to the format of the paper forms, and the interview questions seem to jump around randomly.  I know which parts I need to fill out, which don't apply to me.  If I was new to doing my own taxes, and didn't know what applied, I'd have to explore every single section to figure it out.  That's much shorter on paper, even on worst case scenario 1040 (not EZ or A); it still fits on 2 sides of one paper.  Yes there may be extra forms to add, but you'll find them by their line and instructions.

Once I'm satisfied with my paper forms, I run it thru SW, so I can efile it (only reason for me).  I make sure their answer matches mine; if it doesn't, I find out why they are different.  Usually it is some obscure internal box that needs to be checked off to approve something (I am not a student, e.g.).  I look at the generated 1040 (and other forms), not just the bottom line.  Submitting it is saying everything is correct - I make sure it is.

You can do this - I walked my teenagers thru filing their taxes once they had their first jobs.  DS2 was 15.  They have never filed an EZ, always A or full 1040.  There's just lots of blank sections that don't apply, yet.  Each year adds a new thing for them to learn - taxable scholarships, work study earnings, stock dividends, interest, ACA stuff, credits like AOTC, etc.  DS2 will have to tackle SE tax this year.  Should be interesting.

[Reynold]

I tend to agree that learning how the system basically works is more effective by working through the paper forms.  Obviously you don't need to truly print them on paper, though I still find that a faster way of looking at some long documents.  It helped me, at least, when going through the software to figure out what was relevant there, and act as a sanity check for the software Q&A.  Plus, in some cases, the "answers" in the software don't make much sense if you aren't familiar with how the overall system works. 

In my view, there are two things the software does well;

1. Find obscure things you may have missed.  Having some understanding of whether it really SHOULD apply to you is helpful for that, though, and I've also had cases where the software didn't ask about something I knew should be relevant from knowing the overall system, so it isn't perfect. 
2. When you realize you missed something, and make a change, the software is obviously much faster at updating everything. 

[Jack]

You can usually get the paper forms, already printed, from the library, but honestly I don't see the point. Tax code changes so much year to year that anything I learn this year might change by the next.

No it doesn't. At least, not the parts of the tax code relevant to individual filers (as opposed to businesses). The only thing that changed on the 1040 (that I've noticed) is the stuff like tax bracket boundaries, AGI cutoffs for credits, and maximum contribution amounts -- i.e., the stuff that's designed to rise with inflation. Sure, certain credits expire and other ones get invented, and other rules sometimes change, but to say that it changes "so much" that learning it is futile is simply incorrect.