This was my second year paying $0 to file my tax return, thanks to Free Fillable Forms (F-Bomb) and some mucking around in the tax code. There’s nothing like telling the big tax preparation services to go F-Bomb themselves. They try to make it look cheap at first, but as soon as you need to file an 8889 for your HSA, BAM, extra cost. Want to file state? BAM, extra cost. I got really tired of this. It used to be a predictable $80-100 down the toilet, just to be asked a million questions that don’t pertain to me.
That’s not to say that filing yourself doesn’t have a price. As always, it comes at the PRICE OF YOUR SOUL! Or really just a lot of time and possibly frustration.
Before discovering Mr. Money Mustache and the other FI bloggers, I really had no idea how taxes truly worked. I’m even ashamed to say that not all too long ago, I thought that you paid taxes based on your tax bracket for every dollar earned, rather than incrementally within the ranges of each bracket. Payroll just smooths this out as a convenience. This is probably the single most common misconception about taxes, and a coworker was just complaining about this the other day. But I digress.
Somewhere in the midst of learning about IRAs, 401(k)s, HSAs, and general tax strategies, I began to realize the value of learning more about the tax code. I would see these references to the different boxes and forms you need to file your taxes and I became…curious. It’s easy to read about the rules, but where does the rubber hit the road? How does it work? Tell me how it works? Moreover, how do you know some of these strategies are legit? Just because some jackass with a blog tells you to do something, doesn’t mean you should do it (…).
After learning about many of the forms and researching which ones I needed and how to fill them out, I did a few dry-runs on paper last year, and then took the plunge. It was, to be honest, miserable, because, while otherwise very cautious, I’m bad at reading strict instructions. I kept failing to include my W-2 in the application, and kept receiving cryptic XML errors from the IRS receiving application. Include your W-2? The hell? Doesn’t your company frickin’ report that to the IRS? But it’s just part of the game. The tax preparation software technically asks you all of this information, but it had never registered to me what that actually meant, how that actually translated to “the return”.
So I checked.
My tax return from the year prior, when I had last used tax preparation software, was literally three sheets of paper. All of those questions, all of those horrible layouts, all of those annoying warning checks and attempts to up-sell. Three sheets of paper, with a handful of numbers.
Mother f*cker! I thought. I should learn how to fill these out, myself!
It’s really not so bad, if you aren’t afraid to do a little research, or if you’re good at following strict instructions. Granted, I also participated in a work-place stock grant program, which just wrecked hell on me. F-you, schedule D! F-you 8949! Also this year I received $15 in “qualified dividends”, which basically puts you on track to go through 500 lines of steps to correctly assess your taxes (okay, okay, it’s like 20, still a pain).
So in economic terms, is it worth the $80-100?
Probably not. It’s easy to screw this stuff up.
But in pride terms? Absolutely.
Besides, you really start to get a feel for how it all works together. I feel that when you take the dark magic out of the equation, it puts you in control and you’re no longer at the mercy of the big software companies. Dirty programmers!
Taxes are a necessary evil in your life. Understanding how they work can only help you.
State was pretty easy, too, though I can’t speak for any other state than Colorado. You just file it online. There’s only so many forms.
Anyway, it looks like a decent haul this year. Funny how that happens even when you’re spot on with your employer withholdings. Oh, well. I’ll be eligible to participate in my company’s 401(k) in the Summer, so it’ll be blitz time to max that out before the end of the year. Don’t know if I’ll make it, but it’s still worth shooting for. Keeping the HSA contributions going, too.
F-Bomb for the win!