Saturday, February 9, 2008

Tax Time, Grown-Up Style

So...taxes. We all have to pay them, and finally, this year, 2008, I will be filing my own taxes as a Grown-Up. As someone with an official Big Girl Job and a Big Girl Paycheck (relatively speaking, anyway), I am no longer being claimed as a dependent by my parents. I didn't want to be, and I don't think that technically, I can be, though I can't honestly say that I understand how that all works. That's how I feel about this whole tax situation in general...but I am determined to figure it out. Big Girl Style. This means that I will not be using an accountant - in the past, I just turned in my W-2 forms to my parents who would take them to their accountant. My finances are pretty straightforward (I don't have any dependents or property, I don't own a business, etc.), and plenty of people my age do their own taxes sans-accountant, so I don't see why I shouldn't be able to just do it.

Obviously, taxes aren't due for another ~2 months, but I've always been one to start early, plan ahead, and try to learn as much as possible before making a move. SuperAnalysisKim to the rescue!

In case you're wondering why I am blogging about this, I've decided to document this process for a few reasons:
  1. Documenting/journaling usually helps me to feel more focused and determined. If I am chronicling something for all the world (or 8 loyal readers) to see, I'm more likely to stay on top of it.
  2. It will make it more fun. I enjoy writing, and I think that writing about this process will make it more enjoyable. I'm hoping it will help me to think of it as an exciting challenge rather than as a frustrating experience...or at the very least, I can vent my frustrations somewhere in a creative way.
  3. Maybe some of you readers out there are also filing your own taxes for the first time and will enjoy commiserating or celebrating with me. Maybe you'll have some tips or advice. Who knows?
  4. This blog is called Kim's Kitchen Sink, and in case you've never read my blog before, I basically write about whatever I feel like writing, whenever I feel like writing it. And that's how that works.

Anyway. My first question was...where to begin? I did a simple google search for "how to file taxes" and went to this page, the second on the list of results (directly under the IRS homepage). After reading the super-simple, fully-approachable outline of how the process works, I decided to brave the IRS homepage, which turned out to be way less scary than I had imagined it to be. Thanks, government. It was totally unexpected of you, but it is totally appreciated.

On the aforementioned IRS homepage was this link to something called Free File. I haven't heard anything about it on any of the personal finance blogs I read, but it seems like just the ticket. However, the skeptic in me says it seems too easy. You can only use the service if your gross adjusted income is under $54,000, which mine definitely is, so maybe that's the catch? I don't know. Has anyone out there in the internet-universe used it? Is it as straightforward/easy/fast/free as it looks?

Any thoughts you out there have are more than welcome.


  1. I used the free file before getting married and having an AGI over the limit. It's fairly straightforward like Turbotax and whatnot. It's just free.

  2. I say go for it. If I could, I would.

    In fact, I was all set to do my own this year, but then I discovered my dividends/interest from stock and declared extra income from freelancing, combined with my education expenses and savings account and multiple W2s made it just too hard.

    I am meeting with an accountant Saturday. Kind of a bummer, but I had to. I got all the way through everything and had like five major questions no one knew how to explain. Sigh.

    I console myself with the big fat refund I'll be getting for loaning the government my hard-earned money interest-free.

  3. TurboTax freefile is fine for the fed, but there's only 21 states that allow you to freefile "the free tax alliance" or something like that, so check and see if CA is on there. otherwise you should save money by filing paper, which is a serious pain in the ass. (CO is not part of the freefile alliance, so i did that paper, and i don't know if you read my blog that day, but i was a bit angry.) If you claim your tuition or school loan repayments as expenses you immediately get transferred to the 1040, 1040A filing system, so be advised for State--its not the 1040EZ anymore!

    The math is fairly straightforward (yes, you heard me right, Kristen "i majored in theater because i can't add" Gilmore said it!) if you have to do anything on paper. Turbotax freefile was 100% free for me, and while my refund is not hefty, i also didn't earn enough this year to fill a stripper's bra, even in $2 bills.

    If you're already getting a refund, don't bother declaring your student expenses--they won't give you more back, and there's no way to get your social security back--its already gone to Iraq!

  4. I can't use the 1040EZ, because I plan to deduct the ~$500 I've paid in student loan interest in the last year...

  5. I free-filed last year without any kind of trouble. Is the student loan interest your only deduction? If so, it's probably better to take the standard (unless the interest deduction is a special, stand-alone one--I'm not sure).

    BTW, my cheesecake recipe comes from Marcella Hazan--Essentials of Italian Cooking, I think. It's a very, very easy and forgiving recipe--it does call for a particular liqueur, but I always just throw in whatever's handy, and it's always turned out delicious. More importantly, the dough is a real dough, not a pate brisee, so you can manhandle it to your heart's content without worrying about melting the chunks of butter--one of the reasons I liked it as a beginner. Because this one was a Valentine's Day dessert, I also included shavings of El Rey chocolate. Yum. Anyway, I recommend it--give it a try! You should have that Marcella book anyway, if only for the gift-from-God tomato sauce (the one with the halved-not-diced onions).

  6. As far as I know, my only deduction will be my student loan...Is there a list somewhere that lets you see what potential deductions you're missing out on? Without paying for a service, that is...I've seen a lot of commercials lately for tax-services that help you to not miss out on deductions, but they charge a lot.

  7. Most of the free-file platforms will talk you through stuff like that, but most folks our age don't have a lot of deductions (no big medical bills, no mortgage interest, no dependents, etc.). If all of your deductions together don't add up to the standard deduction (something like $5,300), you'll do better claiming the standard.