Taxes
I finally took the leap and did my own taxes this year. I know that’s actually not a big feat for many of you. A lot of people file their own taxes every year. I’ve been fortunate enough to have friends and family help me file in years past, but I’ve toyed with the idea of filing myself for a few years now. It always seemed safer to have a certified professional do it for me. What do I know about the rules for taxation? But, I noticed that not much changes on my taxes every year, so I wanted to see if I could understand it for myself.
TurboTax is a common tool people use to complete and files their taxes, but I felt opposed to using their services because they lobby the US government to prevent them from making it easier for us to file. According to ChatGPT, “Intuit has spent millions of dollars lobbying against efforts to create a free, government-run tax filing system, which could compete with its paid tax preparation services.” So, I decided to try FreeTaxUSA.com, which was recommended on a TikTok video I saw on my feed recently. It’s an almost free (state returns cost $14.99 while federal is free) online filing service.
My experience was great; the website was clean and intuitive. And, I really did appreciate taking a closer look at all of my tax documents this year (W2’s, 1099’s, etc.). It helped me conceptualize all of my income in a more thoughtful way, instead of sending my documents for someone else to input. I had a closer look at my income, federal and state taxes, disability pay for maternity leave, etc. And, I felt like I had to do all of the normal leg work that I would have had to do with an accountant. However, I do believe that when people have more complicated assets and/or income, it can be challenging to file on their own, so I understand why hiring a professional is still preferred in some scenarios.
The most difficult part was gathering all of my documents from the various financial institution, etc. But, they were all pretty straightforward:
W2’s: income from work (Cisco Systems) and the company that handled my maternity leave last year (Sedgwick)
1099-INT: interest paid through my HYSA (high-yield savings account)
1099-DIV: dividends paid through my ESPP (employee stock purchasing program) and index/mutual funds and ETFs via Vanguard, Charles Schwab accounts
I learned that there is no documentation needed for my 401(k) or IRA accounts until I take a disbursement (when I retire or if I take an early disbursement). These disbursements would then be documented in a 1099-R form and may be subject to taxes and fees, depending on the type of account and when the disbursement was taken.
People who have their own business must have many more considerations when it comes to reporting their income and expenses and making deductions. That’s an area I would definitely like to learn more about. There’s another woman I follow on TikTok / YouTube (The Moneynista) who talks about tax strategies you can implement to keep more of your money, but it only seems to be applicable if you own your own business and can claim more expenses. She explains it in this way: you cannot keep the money, either the government takes it or you spend it on your business. Definitely an interesting topic that I would like to learn how to implement in the future.
For now, I’m glad I took the time this year to file my own taxes. It wasn’t as daunting as I thought it would be, and I learned a little bit along the way. I plan to continue learning more about tax strategies and share that information in the future. I think it’s an interesting field that people can learn to take advantage of with the right education and guidance.
