📑Tips on Taxes📑
On average, it takes the average individual 12.5 hours to file your taxes in U.S.
A WORD FROM THE AUTHOR: Have you done your taxes yet? This isn’t a question that would come up in normal conversation but I wanted to pose the question to you now. Admittedly, I started on filing my taxes this week. See below for the latest updates on tax filings and my thoughts on TurboTax!
As always, I am not a financial advisor. Happy reading!
The Latest U.S. Tax Season Updates
Nobody wants to talk about taxes, but I want to make this topic our most informative yet. We’ll first start out about the latest tax updates, common tax documents, and my thoughts on TurboTax.
Status Updates:
Taxes are due on May 17, 2021 for the 2020 tax year as of the writing of this article
If you haven’t received one of your stimulus payments (and you were eligible), this is the time to file under a rebate
The IRS website provides a litany of services that could help you if you’re curious about your financial situation
Taxes 101 and Common Tax Definitions
Below is a list of forms you could possibly be required during your tax filing. When I was younger, I thought it was so simple because I typically had one W-2 form to file, but I realized this is not how it should be for the financially intelligent. You should have revenue coming from different taxable sources as you continue your financial journey.
Key Investopedia Definitions:
W-2 Form: “A W-2 reports employees' annual wages and the amount of taxes withheld from their paychecks. A W-2 employee is someone whose employer deducts taxes from their paychecks and submits this information to the government”
Form 1099: “While there are many types of 1099 forms, they all serve the same purpose; they are used by taxpayers to provide information to the Internal Revenue Service (IRS) about all of the different types of income they receive throughout the year outside of their regular salary. This type of income is also referred to as income from non-employment-related sources.”
IRS Audit: “Taxpayers need to report all outside income to the IRS in order to avoid an audit. The IRS will personally investigate your financial dealing in order to make sure proper filing and may seek payment.”
You’re more likely to be audited as an individual making $20,000 or less per year than $500,000
If you’re interested in reading about the most common forms, see the Motley Fool link here.
The Pain of Taxes
On average, it takes individuals 12.5 hours to file their taxes in the U.S. How many times could you watch your favorite movie to make up 12.5 hours?
For a service that can be free, it’s difficult to navigate the world of tax filing. Most of my opinions on this topic come from Assan Minaj’s “The Patriot Act” on Netflix. This episode will let you know about how the modern tax system came to be.
For years, politicians have put forth a system to make filing taxes as easy as writing a postcard. No matter which side of the aisle you’re on, we all agree taxes can be easier.
Essentially, large tax filing corporations run this industry. Corporations like Intuit and H&R Block have lobbied in Congress for years to make filing taxes as difficult as possible to make their own service profitable. For instance, TurboTax by Intuit offers a “free edition” that directs you to buy their “deluxe” package because you have student loans or a 1099. This isn’t great for people with multiple forms like I was mentioning above!
If you’re interested about filing your taxes for free, be sure to use the IRS website as your guide. Remember that the process may be confusing but you should be getting the most out of your tax refund. Think of the savings over time as you file!
Have a great week!
-Jordan