This post is part of the TaxAct #DIYtaxes blog tour which empowers you to take ownership of your finances by doing your own taxes. TaxAct provides the tools and guidance to help you confidently file your taxes easy and fast. Do your own taxes today at TaxAct.com. You got this!
It’s no secret that I worked as a small business bookkeeper for different oil & gas companies near Dallas, Texas for over a decade. However, during that time I also launched this blog as a way to pay off debt and eventually quit my job to become self-employed.
Since my tax situation was becoming a bit more complicated I decided I wanted to learn how to file my own taxes. The control freak in me wanted to ensure my taxes were being filed correctly and that I was getting all the credits and deductions I deserved.
So I signed up for the Income Tax Course from H&R Block and never looked back. I learned so quickly and enjoyed specializing in small business taxes so much that H&R Block hired me as a Tax Specialist for the next four years.
I’m so glad I took the time to learn how to prep and file my own taxes as a freelancer, because it saves me hundreds of dollars a year.
Lower tax bill – $79 saved
I’ve spent extra time studying what self-employed individuals, like me, can claim as far as deductions and credits. I know exactly what I qualify for which ultimately helps me lower my tax bill and allow for more tax savings.
In fact, since being self-employed I’ve qualified for a small Saver’s credit of $79 every year that I contribute to my Roth IRA as an incentive for saving for retirement as a sole-proprietor.
As a self-employed freelancer you qualify for many lesser-known tax deductions, such as expenses related to continuing education (you know, all those courses and ebooks you purchase to further your business knowledge), advertising and marketing (business cards, Twitter and Facebook ads) as well as a credit for one-half of paying quarterly taxes.
Spend less on filing fees – $400+ saved
Most tax filing software starts out at a standard rate and then increases as you add in certain forms, deductions and credits based on your financial situation.
I, for example, must file a Form 1040 along with a Schedule C, Schedule B and Schedule D because I have self-employment income, interest earned and investment properties, respectively. This doesn’t include Form SE or other credits for paying self-employment taxes, health insurance and the like.
All in all, I have paid anywhere from $300-600 per year to have someone else file my taxes. But with DIY tax filing software, like TaxAct, you could file your sole-proprietor taxes starting at $37 which means I save an average of over $400+ a year. I’d say those savings are worth spending a bit of extra time learning how to file your own taxes.
Simple and easy process – hours saved
The first mass tax return filings were processed in the 1950s, but thanks to technology we’ve come a long way since then. You can now prep and file your own taxes within a very short period of time and receive a confirmation with 24 hours. I’ve even received a refund within just one week!
Back in the day, you had to call a secure line to let an IRS representative know you were sending an electronic filing and they had to physically plug in the phone line so you could “fax it electronically” to them. #nojoke I’m glad those slow technology days are behind us. HA!
These days you don’t have to rely slow tech or a snobby accountant since everything is much more accessible and easy to understand — just about anyone can do it. It may take a little more time to file your own taxes but the savings could be worth it.
Your choice to DIY or not – priceless
Additionally, you may get to the point where you do a hybrid of DIY tax organization and prepping your own taxes before handing them over to a CPA to file on your behalf.
This is something I’m doing more of now as my financial situation gets more complicated. But the good news is, I can still file my own taxes if I wanted to because I easily understand how to do it.
Even if you have the best accountant or bookkeeper on your team, they’re never going to care about your financial future like you will. Give your finances, and tax prep, the time it deserves and learn how to DIY as much as possible.
Needless to say, I’m thrilled that I can now understand how to file my own self-employed taxes, what deductions and credits I can rightfully claim and ultimately save myself a good chunk of money by organizing and prepping my own taxes.
Don’t forget: this year the tax deadline is April 18th, 2016 so you get a few extra days! Do you DIY your taxes? Why or why not?