Sunday, March 29, 2009

Income Tax? It's Easier Than You May Think

Every year about this time, sometimes earlier, sometimes later, I begin to dread the annual ritual of filing my income taxes, state and federal. The very thought is enough to make me find other things to do, or worse yet, to go on an eating binge. I avoided the latter this year, but the dread was still there.

Actually, I've discovered over the years that filling out tax forms is easy, thanks to the computer and Turbo Tax. This is not an advertisement for Turbo Tax; I'm sure other programs do just as well, but that's the one Ive used for some years. I really believe that any educated, computer-savvy person should be able to file his or her own taxes as long as they don't involve complicated transactions. Those with million-dollar portfolios can easily afford the best accountants, so I'm not talking about them.

I guess I made my decision to do my own taxes years ago, when one of my freshman English students wrote about getting a job at a popular tax service despite her lack of training and knowledge. Considering that student's modest reading and writing abilities, I could understand why she didn't last long in the job. More importantly, my fierce sense of independence kicked in. Surely I could do a better job than she did. I went ahead, with my husband's blessings. He always left accounting matters to me.

The very simple federal tax form can be completed for free online, but then there are usually charges for upgraded tax programs, state forms, and e-filing (which I've also done since it became available). As a repeat customer with a need for something just a bit more advanced, I just started filling in my information in Turbo Taxd Deluxe, paid the fees (just under $100, including sales tax), by credit card, and finished in a couple of hours. You can try the program without charge.

The good news is that for the first time in many years, I get a tax refund. Not much has changed; I just overpaid my estimated tax, but I appreciate any bit of good news. I'll pay less in estimated taxes this year. Not having bought or sold any individual stocks, I can't write off any losses, but my mutual funds may eventually recover.

So after a couple hours of work, I've finished my income taxes. Yes, I pay a lot (my pension income is mainly taxable by the feds, and my required minimum withdrawals from my tax-sheltered annuities are definitely taxed.) So far, the state of Illinois does not tax retirement income, but I fear that's about to change.

By this morning, I'd been notified by e-mail that both my federal and state tax forms had been accepted, and my refund will be in my bank account fairly soon. I felt relief; why had I spent so much time dreading all this? Thanks to computers, doing taxes is easy for many of us. Unless you're in a complicated tax situation, don't be afraid. Just pull out your tax information and sit down at the computer.

Copyright 2009 by Marlys Marshall Styne

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