Preparing and Filing Your Taxes

It's tax filing season. Here is a roundup of useful resouces for preparing and filing your taxes:

• How to File Taxes For Free: Free File and Free Tax Software (GenXFinance.com)
  Excellent advice on finding ways to avoid paying a preparation and filing charges when you e-file your taxes. In my case, I have used TaxAct.com, which gives you free federal e-filing regarding of income level (I don't qualify for income-limited tax filing products). TaxAct.com does nag you to upgrade, but you can always click "later." As someone who is leery of putting tax data online, I am glad that TaxAct.com offers free download of their tax software that you can install on your computer. No, I don't get a cent from endorsing TaxAct.com, I'm just a long-time satisfied customer. As for my state taxes, I use my state's free e-filing. It's barebones but it works.


• Open Tax Solver
  Open Tax Solver (OTS) is a free program for calculating Tax Form entries and tax-owed or refund-due, such as Federal or State personal income taxes. The complete version of OTS for the 2009 tax year has been released. It contains the updated US 1040 with Schedules A, B, C, and D. It also contains the State Tax form updates for California, New York, Pennsylvania, New Jersey, North Carolina, Massachusetts, Ohio, and Virgina.


• 10 Most Overlooked Tax Deductions (WalletPop.com)
  


• The Audit (Examination) Process - The IRS explains what triggers an audit.


• Paper Records: What to Keep, What to Toss (Kiplinger.com) -- good advice on what paperwork you need to keep, especially for the IRS


• Saving Grace Period for Flex Accounts (Kiplinger.com) -- How to make the most of money left in your flex account.

My 2008 Tax Filing Experiences

April 15th is just round the corner next week and if are a perennial procrastinator, this weekend is probably the best time to file your taxes. I did mine last weekend. Usually I file much earlier, but this year one of my clients took forever to give me a Form 1099 for services rendered. After what happened to Tim Geithner, one couldn't be too vigilant about getting that Form 1099 for filing.

Being the frugal person I am, I have always opted for free tax preparation and filing as far as possible. In the 1990s, that meant doing my own paper form filing. When Taxact.com offered free online tax preparation (but not filing) for standard federal returns, I took the opportunity to do my first online preparation for my 2002 taxes and filed the paper returns by hand. I did my state return the old fashioned way, by pen, calculator and paper.

At that time, Turbotax's free online tax preparation and filing service was limited to low income earners. That changed when the time came for filing my 2006 taxes. Turbotax did a deal with State Farm whereby it offered all Statefarm's customers free online preparation and filing using their deluxe package. Since I bought my homeowner's insurance from State Farm, I took advantage of this deal to do my 2006 and 2007 using Turbotax's online Deluxe option. It was a really great deal because I was able to file both my federal and state income taxes for free in 2006 and 2007. Compared to Taxact, Turbotax's Deluxe version was really a breeze to use. The layout was easy to navigate.

All good things come to an end, and this year Turbotax's offer to State Farm customers is limited to customers of State Farm Bank only. Turbotax is offering their EZ version for free, but since I have to file Schedules C & SE, I am unable to take advantage of their EZ version. As I am not a customer of State Farm Bank (I only have homeowners' insurance through State Farm Insurance), I turned back to Taxact.com, which is now offering free preparation and filing for standard federal returns without any income qualification. That is great news for me.

Going back to Taxact took a while to get used to, since Taxact's layout and menus aren't as user-friendly or intuitive as Turbotax. Nevertheless, I am grateful for the free preparation and filing service for federal tax returns and am looking forward to my $2,417 refund by direct deposit. As for my state return, I was able to take advantage of my state's free online tax filing.

If your return is uncomplicated, take advantage of Turbotax's free EZ service. However, if you, like me, have a more complicated tax return, nothing beats Taxact's free standard federal preparation and filing. It still beats doing the forms by hand. I have never tried H&R Block's Taxcut and am therefore unable to offer you any thoughts about Taxcut.

How did your tax filing go this year?