When I started this post I had just finished my taxes and was feeling pretty good about them. Now with a month having passed since I put this post in draft I still feel as though I made the right choice.
A few years ago I found myself in a weird position tax-wise. I (we since my wife and I file jointly) owed a certain amount of money to the Federal government but were getting a larger amount back from the state. This was mostly a hold over from back when I was being paid by 1099 but since it mostly balanced out I left it as is.
So apparently as you start to make more money each year you also start to owe more in taxes. Go figure. So the federal/state balance started to shift first so that they balanced eachother out and then so that I owed more. Concurrent with that the price of TurboTax has been slowly going up each year to the point where it would cost me nearly $100 to do my taxes this year.
Things needed to change.
Two years ago I adjusted my witholdings but really didn’t know what I was doing. Last year I found a tax witholding calculator on the IRS website and then adjusted a little higher.
I feel I should point out here that conventional wisdom says you should plan your taxes to be as close to on-the-money as possible because no matter how good it feels to get a big tax return you are just using the government as an interest free savings account. If like me you are terrible at saving and your interest would be in the $1-2 range then perhaps that interest lost is worth it to you for the rainy day (or whatever) savings.
Part two of my plan involved ditching TurboTax and filling the tax forms out myself… and then double checking my work against TurboTax. I did Federal by hand and then checked it. I was off a little mostly because of childcare deductions. Then on a whim I checked it against H&R Block. Lo and behold new this year H&R Block is free to file for not only 1040EZ but also 1040+Schedule A which is what we use.
Now H&R Block offers a number of ‘protections’ that you can add to your filing for a price. Audit protection and similar things. Many of these are similar to TurboTax but I much prefer being able to choose them ala carte. I was sort of focused on figuring out how much money I could save so I didn’t get any of them. The only one I actually regret not springing for is selecting for them to remember my taxes for next year but I’m still sort of planning to do them by hand next year… just to prove I can mostly.
The lesson here for me is that it pays to shop around.