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How do you go about preparing your taxes?

Many of us are receiving — or about to receive — W-2 or 1099 forms from our employers for the 2020 tax season. Fortunately, the second half of “Napkin Finance” digests some pretty meaty tax topics into bite-sized (or should I say, napkin-sized) infographics to help make taxes more approachable.

I love the tip about how you can file online for free with the IRS. Several tax-software companies also let you file at no cost.

How are you liking “Napkin Finance”? Drop your comments here! And if you want to catch up on our previous book club threads, here’s our discussion on budgeting and our discussion on saving for retirement.

**Writer at The Penny Hoarder. All opinions expressed are my own and don't necessarily reflect the views of The Penny Hoarder.**


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Last edited by Theodora
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In the past, I used TurboTax which I loved...but then my taxes became a bit more complicated and now I use a professional preparer.  It gives me some peace of mind that she is trying all the angles to get me the greatest return.   

I do recommend TurboTax which I know has only improved since I last used it -- with the added option of getting professional advice.

Last edited by Theodora

Ours are done professionally as well, if there are any problems, they will represent us and that gives peace of mind. This year rather than meeting with customers, they have sent a large return envelope addressed to them, we can either mail in or drop off our documentation and deductions. Also enclosed was a table of how much they will charge based on prep time and complications.

Sadly, I still don't have a copy of the book (my local library is taking longer than I thought it would), but I really like the graphic. We typically get our  taxes prepared for free through the VITA program. Since the IRS isn't accepting returns until Feb. 12th and because of the pandemic, I'm not sure how we'll file this year.

Hey @Demi Candri, good for you for thinking about your taxes already! I'd echo what other members of the group have said. TurboTax, H&R Block, TaxAct etc., have great free filing services. They'll walk you through every step and ask you questions to make sure you're getting every deduction and credit possible. For example, they'll ask you some questions about your education expenses and figure out for you whether qualify for certain credits that could give you a bigger return.

The beauty of all the free filing programs is that they really do make it easy for someone who knows absolutely nothing about taxes. Since you're a college student, your taxes are probably pretty uncomplicated, I think the free version will be perfect for you.

My biggest tip for you is to look over the IRS rules to make sure you can't be claimed by anyone as a dependent for 2020. If you can't be claimed as a dependent for the tax year, you may be able to get $1,800 of stimulus money for the year ($1,200 from the first check and $600 from the second) since you've never filed a tax return.

I'd also urge you not to use any tax prep service that charges you an upfront fee of any kind, even if they promise to get you your refund sooner. (You'll often hear this described as a refund advance.) Your tax situation is most likely simple enough that you don't need to pay anyone to handle. Good luck!

My pet peeve each year is gathering documentation and compiling totals to submit to the folks who do our taxes.  I have a small side business so want to maximize on deductible expenses. I use an excel spread sheet, but does anyone have suggestions or a more efficient tool, app, software or spreadsheet to use? Should I be using QuickBooks?

So I work for a tax prep company. Im not a tax preparer, but I am a supervisor in the national call center and I've trained for every dept we have , giving me a unique view of The Life of a Tax Return.

First I just want to be clear, file free on is not actually filing with the IRS. They direct you to 3rd party software. And if you have monumentally complex returns you won't qualify for the free file.

Second every state is different. Even though we all file the same federal form,each state has decided to make things more or less complicated depending on your opinion. If you are lucky and like me live in a state with no income tax (yay Texas) then you don't need to worry about it. But then there is the other extreme, Ohio and the file federal state county and city returns! So if you relocate get help or get very familiar with your new rules

In the grand scheme of things taxes are not that hard if you are Joe and Susie Public. But if you go higher than that then they get really complicated and I think the irs is making them more so every year.

Most companies have a virtual tax pro program now so you never have to leave the house. Keep in mind if you plan on doing any of refund advance promotion you have to sign in person.

And just to keep everyone from panicking - watch the IRS website. It's pretty user friendly and that is where all the prep comps get their info because as you can imagine the IRS is not too worries about being transparent or correct most days. Tax Season opens Feb 12th. First refunds will be out the first week of march. Fun stuff

I prepare in the following ways:

For real estate: I have a real estate CPA to take care of all the complications there.

For job, stocks, etc. - I'll file myself.

For businesses: I use Xero to keep track of accounting, so I can very easily just import and/or copy & paste all the numbers to TurboTax at the end of the year.

For crypto: This year, it'll get complicated, so I'll write some code to automatically process how much taxes I owe / is owed so that there's no room for human error. I should probably sell this to someone too lol.

For filing: I use TurboTax and incorporate the above, along with my W-2, stocks, etc.

I also have a checklist or TODO list I keep on Asana or ClickUp that I copy/paste each year (since my tax situation is pretty complicated each year) - and as I knock out each of the categories on TurboTax, I check it off on Asana/ClickUp so that I can be 100% confident I completed everything and didn't accidentally forget to file a category.


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