Why Doing Your Own Taxes is Beneficial

by Kevin on February 18, 2010

When I was growing up and working at the local movie theater my parents would take my meager tax information to their tax preparer. I never had to participate. My W-2 would come in the mail, go in the folder of tax info, and before I knew it my massive $20 refund was at the door.

Even while I was in college and working at the computer lab as part of the work-study program, my W-2 information was sent home and my parents took care of it.

It wasn’t until I entered the real world, got a real job, and had a single bedroom apartment that I paid for on my own that the idea of doing my own taxes even crossed my mind. I hadn’t needed to think about my taxes up to that point.

But I was in the real world now and it felt kind of immature to send my taxes back home so Mom and Dad could take care of them for me.

It was time to become a real adult with those amazing guarantees: taxes and death. (Woohoo!)

File Your Own Taxes

I really feel that filing your own taxes is an important step in anyone’s life. And not just because it means you are suddenly making enough money to have to pay taxes!

You Learn How the Federal Income Tax System Works

When you are doing your own taxes — that is, inputting the information yourself without any assistance — you learn how the tax system works. It doesn’t matter if you are using paper forms (God help you!) or using an online program or using boxed software you bought at a store.

The simple practice of going through the process line by line will educate you on how our tax system works.

I think that education is very important.

You See Which Deductions and Credits Saved You Money

As I go through my taxes with online software (similar to TurboTax) I get to see exactly what saved me a lot of money.

I get to learn that educator’s get a $250 deduction for qualified teaching expenses. That’s useful to me since my wife is a music teacher. Unfortunately we feel the deduction should be much higher!

I get to see how our mortgage interest brought our taxes down a bit… although I would much rather not have to pay the interest in the first place. (Why pay $1 in interest to save 25 cents in taxes?)

You Learn How Much of Your Income is Lost to Taxes

Some may find it depressing. When you look at the numbers it can be disheartening to see a large chunk of your income go to the government.

The flip side of the coin is this: at least you had enough income to justify the government acquiring some of it. (Yes, I know this isn’t much comfort.)

Doing Your Own Taxes is a Healthy Exercise

Nonetheless I feel this process is very healthy.

I’ve learned to track my income, expenses, and deductions much more closely. If in the future I decide to switch to letting an accountant do my taxes the organization of my files should come in handy.

Am I missing some important deductions? I’m not sure.

Am I making massive mistakes that will cost me thousands in penalties from the IRS? I sure hope not.

But I’ve learned a lot more about the tax system, how to file my taxes, and what the process looks like than I would if I had just handed over a packet of receipts to an accountant.

This post was featured in the Carnival of Personal Finance.

Do you file your own taxes, or do you let someone else file them for you? Leave a comment.

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