The first time I dealt with my own taxes, it was a grown-up rite of passage worthy of celebration. The ultimate in adulting. I congratulated myself with a bottle of $6 champagne.
And this year, you adult, you will deal with your own taxes, too! And if you’re not married, have no children, have a job and maybe only a little (or no) investment income, your taxes are going to be fairly painless to do on your own.
Leave your parents alone. They are busy. They told me they’re ignoring your texts because they think it’s time you did your taxes without their help.
You probably already have the documents you need.
In January, you received an envelope in the mail that you maybe set aside; perhaps you used it to shield your coffee table from a February home pedicure operation and now there are red smudges all over it.
Today, find the envelope. Open the envelope. Look at the document. If you had a full-time job in 2012, this document is your W-2 earnings statement (if you changed jobs in 2012, you should have received two). If you freelanced at all, you may have received a 1099 form. Or two or five. You’ll need these.
If you’re panicking upon realizing you’ve thrown these important documents away — or your search has come up fruitless — you’re going to be fine. Call the employer that issued the document right now. They’ll likely be able to work with you to get you a digital copy.
You’ll also need records of your investment income, education expenses (or loan info), IRA information and anything applicable to you on this list.
Finally, grab a check with your bank account routing information so your tax refund can get into your hot little hands via direct deposit.
You may not even need to leave your couch.
Choose your weapon. Are you going to do your taxes online – or do you need a bit of extra help? Most online DIY options do a great job of coddling you and walking you through the process, with plenty of help available along the way. If your tax situation is fairly uncomplicated (unmarried, no kids, no mortgage, one job), it shouldn’t take you more than an hour to file your tax return online. Seriously. One episode of Homeland. And Saul will beam with pride!
If your situation is more complex – you’re a freelancer, earning income from multiple sources, you have lots of investment income or you underwent a major life change this year – you’d be in the best hands at a place like H&R Block, where someone will do the heavy lifting for you. Make an appointment, grab your documents and head in; you’ll walk out in an hour or two with your completed return. And yes, this counts as you dealing with your taxes yourself.
Deductions are really pretty simple.
A deduction reduces your taxable income; you’ll either take the standard deduction or itemize.
About 2 out of every 3 returns claim the standard deduction. If you’re filing as single or married filing separately (and your spouse also uses the standard deduction), the 2012 SD is $5,950.
The standard deduction is the bomb because it allows you a deduction even if you have no expenses that qualify for claiming itemized deductions (like real estate taxes), eliminates the need to deal with itemizing deductions, like medical expenses and charitable donations, and lets you avoid keeping meticulous records and receipts of your expenses throughout the year. Which I’m sure you don’t do anyway. So that’s good.
With that said, there are a few “above the line” deductions you very well may qualify for (subtracted before figuring your AGI and before figuring whether you’ll take the standard deduction or itemize your deductions):
Do you have student loans? You may qualify for The Student Loan Interest Deduction if you’re paying back college tuition paid for by loans.
Got a health savings account? If you make an after-tax contribution to a Health Savings Account (HSA), you may claim an HSA Deduction on your individual income tax return as an above-the-line deduction.
Have you moved recently? If you relocated this year and the move is closely related, both in time and place, to the start of work at a new job location and the distance test is met, you may qualify to deduct your moving expenses.
I also need to tell you this: you probably do not qualify for the home office deduction. I applaud you for answering your coworkers’ emails in the wee hours, sent from your very own Macbook next to your very own corkboard, but a desk and a laptop that you occasionally use for work email does not a home office make. Well, not in the eyes of the IRS, anyway. In order to qualify, your home office must be used exclusively for business – and also, claiming the home office deduction is a fairly notorious IRS audit trigger. And now you’re frightened.
If you have a complicated tax situation or you have potential itemized deductions that total more than the standard deduction you’d receive, you may want to see a tax professional to figure out which approach would be best. You can read up on standard vs. itemized deductions here.
And look. You just read a whole thing about taxes. You’ve already made Saul proud.
Featured image via Shutterstock