Happy Taxes! – It’s the most wonderful time of the year!
We are approaching that wonderful time of year again! It is a season filled with planning, excitement, hustle, bustle, and anxiousness. This magical time of year only comes once a year, so we have to enjoy it while it is here. Yes, as many of you have guessed, I am referring to the merriment which is tax season.
Yes, I might be one of the few who ACTUALLY looks forward to tax season every year, but let me explain.
Nearly all of us have to submit our taxes by April 15th every year without fail. However, the process of filing does not have to be a stressful one. Let’s discuss the benefits of doing taxes on your own versus having them done for you.
Background
We are starting to hear advertisements for both software to process your taxes on your own as well as bringing everything into a tax professional to have them do it for you. I can provide my experience with taxes over the years, and you can decide for yourself. I have personally never hired someone else to do my taxes. As a finance guy and statistics lover, I would not want to take this “fun” away from myself. It would be like buying a piece of furniture from Ikea when you’re a master carpenter.
Planning
Regardless of what you decide to do, you are still going have to plan for your taxes. This will include compiling income documents such as 1099’s and W-2’s (you may have others if you are a business owner). This will also include items which may contribute to your tax forms such as 1098 for mortgages, 1098-T for tuition, medical expenses, or other tax deductible items. This is already almost half of the battle for completing your taxes. If you have been managing a detailed budget, you should have a pretty good idea of where all of your money has gone through the year. Thus, it shouldn’t be too hard to compile everything needed.
Excitement
Before you have even filed, some of us begin spending the tax return money we are expecting. Keep in mind, this is exactly what we tell you not to do in Finance Free Life with regards to your monthly spending. It shouldn’t be any different with your tax return money. However, in our moment of ignorance, we may opt to have a tax professional complete our taxes for a fee. The thought process I have heard is, “Well, I typically receive a good return when I have (________) complete the taxes. The fee I pay is a small price to pay for a near-guaranteed return.” However, this can quickly flip to DREAD when we find out we now owe money to the government AND the tax professional. EXCITEMENT. DEAD.
Hustle
Although it seems like a long period between when we get our tax return items such as W2’s and when we need to file, it can go faster than you think. This is unfortunately compounded with the natural aptitude for us to procrastinate doing our taxes until the last minute or waiting to send in all of the information until April 14th. In either any circumstance, there is a hustle for us to get it done. Most of this hustle is due to the “chore” mentality many of us view it as.
Bustle
Wherever you are on the spectrum of loving tax season to dreading it entirely, there is likely going to be some business to contend with. If you are like me, and cannot be more on the side of tax season enjoyment (right next to Christmas), then you are going to be gathering all of your information for this wondrous time. However, those who aren’t as happy about the season will likely also be scrambling, because they may not know everything they need to check on for there taxes (cue chaos music).
Anxiousness
IT IS FINALLY HERE! The moment I have been waiting for, which is the calculation answer to show how much I will either pay or get back in taxes. This magical number can provide immense joy or severe irritation. However, the anxiousness leading up to it is relatable to the feelings you got as a kid for Christmas morning. You were either really going to like your gift, or you were going to hate it. In any sense, the final answer provides some definitive closure for the financial year in review.
So, Which One to Choose?
As you can see there are many emotions which go into doing your taxes. You can certainly have a professional perform the arduous task of compiling the documents for you. However, I would challenge you to do them once with some type of software, at least once in your financial journey, unless you are a small business owner. It provides some great insight into how your personal finances work. It also allows you to research things you probably didn’t know before about the IRS and the laws. If you choose to continually choose to have a tax professional do your taxes, how do you know exactly what types of deductions you are getting or missing out on due to decisions you are making throughout the year.