The Best Way to Do Your Own Taxes

When it comes to taxes, you should not have too much trouble taking matters into your own hands, particularly if you don't have a very complicated financial situation. You are a child of the Internet and DIY age, after all, so you probably have trouble seeing the sense in paying somebody else to do what you can get done all by yourself.

Gather all of the tax documents you need, chiefly W-2s, 1099s and other forms from your employers and clients if you work freelance or own your own business. In addition to earned income reporting, be on the lookout for other tax forms such as those detailing interest income and dividends. If you start your taxes prior to receiving all of your forms, you'll just have to stop in the middle or, worse yet, forget to report something after you've filed your return.

Get your records in order. Your financial situation dictates exactly what you'll need. Common piles of paper many people need to sift through include stock and mutual fund trades for capital gain and loss purposes, receipts if you can deduct certain business expenses, proof of charitable donations and medical expenses.

Buy tax software. In most cases, you can download it online or simply use a web-based interface to access the program.

Follow the prompts of your tax software program to populate your return. While these programs often ask the right questions, attempt to catch mistakes and offer money-saving tips and advice, you are still dealing with a computer. If you input wrong numbers, misunderstand your situation or simply forget something, you could end up costing yourself.

File your return online. Most tax software programs offer this option. Many will file your federal return free of charge or for a reduced fee depending upon the level of service you purchase from the company. Most give you the option of purchasing a program for your state. The program asks additional questions and uses information from your federal return to complete the state version before filing, usually for a fee.

Tip

  • If your income is not too high, the IRS offers a free "e-file" option. You can access free tax software that does return-related math for you and checks for accuracy before submitting your federal tax return to the IRS, free of charge. If you make more than the IRS limit, you can still access the most common IRS forms and fill them out at the IRS website with what the IRS calls "basic calculation capability."

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