Doing Your Taxes
Doing Your Taxes
When an individual is younger, it is much easier to do taxes at the end of the year since there usually is not anyone to claim other than the individual him or herself, as well as the fact that not many assets are owned that could offset taxes. The basic form is very simple and straight forward, only asking for the basic information from the W-4 forms that the individual gets from his or her employer at the end of January. Otherwise there is just the basic information about the individual such as the address, social security number, date of birth and other contact information. All the individual has to do it look at the table and see what he owed, subtract that from what he paid and see what his return will be or whether he owes some taxes. Normally, when in the lower brackets, there are not taxes that are owed. Normally the person will have overpaid. As life goes on and the individual has more assets and a more complex savings and retirement plan structure, then the individual must take a more sophisticated approach.
Other Options
Although the individual is still free to do his own taxes, that is not the wisest choice as things get more complex, since there are new tax laws every year that he might not be aware of that could raise or lower his taxes. In addition, there are tax breaks that he might get if he knew about them, but not many individuals keep up with the changing laws in taxes.
To prevent mistakes, the individual has a couple of options. One option is to buy software that is designed to take him through the process of doing his taxes. This software normally has all of the forms that he will need as well as the ability to file the taxes electronically when finished, sometimes requiring an additional fee from the government and sometimes not, depending on the individual’s bracket. The software asks many different questions where the answers lead to further questions to make sure every area is covered on the individual’s taxes. This software is updated yearly so that all the current forms and tax law questions are covered while the individual goes through the process. This software usually costs about sixty to one hundred dollars, which is normally cheaper than going to an accountant. Accountants take care of more of the process for the individual and usually save the individual time since they do not have to answer irrelevant questions. They can usually just bring all the documentation in to the accountant and the accountant does most of the rest.
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