April 15th, America’s worst recurring nightmare every year. However, filing your personal taxes doesn’t need to be scary. Here’s how to file your taxes for FREE!
I was planning on unleashing this article during April, but due to the pandemic, Americans may need some free cash immediately!
This article will only apply to individuals filing simple returns (no corporations, partnerships, or K-1 filers).
If you don’t know what those terms mean, then this article is for you! Taxes suck, but they are a necessary evil for any society to properly function.
Why File Yourself?
PLEASE, PLEASE, PLEASE, I implore you to file your own taxes if all you have is a W-2 job and basic tax situations.
Tax filing services are an absolute rip-off. I’m looking at you H&R Block and Jackson Hewitt.
Most of these comparable businesses will charge you $75-100 for something you can do in 10 minutes.
Their business model is to literally gather as many simple returns as possible and hire cheap labor to crank them out. It’s a really good business model, so props to them!
What You Need
This is the easiest, but most time-consuming part of actually filing your taxes. You’re going to need to gather all the appropriate supporting documentation.
Here is a sample list (not all-inclusive) of the supporting documentation most people will need.
- Previous Tax Return
- Interest or Dividend Income Statement
- Blank Check
- Drivers License
You need your previous year return because there will be questions about your prior year refund or additional taxes owed.
“But, what if I wasn’t legally required to file a return in the previous tax year?”
Well, then you’re good to go, and you won’t need your previous return (because it doesn’t exist)! Hint, the word is legally required!
All the other forms will be mailed to you during January or February from the appropriate institutions.
Dividend and interest forms will probably need to be electronically accessed. I know my dividend forms from Vanguard are sent electronically.
What You Don’t Need
The Tax Foundation wonderfully expresses the recent tax legislation that went into effect in the United States.
“The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made several significant changes to the individual income tax.
These changes include a nearly doubled standard deduction, new limitations on itemized deductions, reduced income tax rates, and reforms to several other provisions.
In all, these changes simplify the individual income tax by eliminating the need for millions of households to itemize their deductions.”
“An itemized deduction is an expenditure on eligible products, services, or contributions that can be subtracted from adjusted gross income (AGI) to reduce your tax bill.
Allowable itemized deductions, sometimes subject to limits, include such expenses as mortgage interest, charitable gifts, and unreimbursed medical expenses.”
So, remember all those times people said do X, Y, and Z because it’s a tax write-off? Well, they weren’t technically lying, but 99% of the time it wasn’t actually a tax write-off!
Unless you gave tens of thousands of dollars to charity, combined with other itemized deductions, those donations were just from the goodness of your heart.
Sorry to break it to you, but that $20 donation to Dance Marathon is most likely not tax-deductible!
Pay Less Taxes
Everyone hates taxes! It’s possible to never pay taxes again. Here are three simple ways to pay less taxes in 2020!
In 2019, employees could contribute $19,000 towards their 401(k) plans, and individuals over the age of 50 can make $6,000 in additional “catch-up contributions”.
On top of individuals being allowed to contribute $19,000 to their Traditional 401(k), the IRS also allows $6,000 a year in IRA contributions ($7,000 in “catch-up contributions).
Using a 25% tax rate, a $6,000 Traditional IRA contribution provides a tax savings of $1,500 ($6,00*.25).
A health savings account (or HSA) is my favorite, and probably the most under-utilized, tax saving tool. The IRS allows $3,500 in HSA contributions for individuals.
Wealthy Diligence has recently partnered with Audible to provide our readers a 30-day free trial with this exclusive link (no strings attached). Reading has fundamentally changed my life, and I want my followers to have a similar experience.
The best advantage of an HSA is that the money is NEVER taxed. Yes, you heard that correctly!
The money is not taxed when contributed, and you do not pay additional taxes when you spend the money on any qualified medical expenses.
Intuit Turbo Tax
There are other free software options available, but I personally believe that Turbo Tax is the most user-friendly.
The software will ask appropriate “Yes/No” questions and guide you through the filing process.
I have used multiple Intuit software products (QuickBooks and ProSeries) in my accounting classes at Northern Iowa.
There’s a reason Intuit is the most trusted accounting software for small businesses. I’m not even paid to say that! They just provide a wonderful product.
Simple personal returns are free. Trust me, I did it myself, and I have helped friends file their returns this tax year. They didn’t pay me though, so I didn’t break any laws!
You can Google “File Taxes For Free TurboTax”, and the following image should be the first result.
Here’s a link though if you can’t find it in Google!
Scroll down the page, and click on the “File For $0” button. Again, there’s an image below if you can’t figure where to look.
Continue clicking through their introductory questions because they want to gather more information about their users.
You will need to create an account, but that’s not a huge deal considering their software is filing your taxes for free!
I am not going to walk you through all the next steps. Just make sure you answer all the questions correctly and input the supporting documentation.
The next step will be to e-file your return. This just means electronic file, rather than print a physical return and mail it.
You’re less likely to have an e-filed return audited. However, this goes without saying, never file false information because you believe the IRS won’t audit you.
There’s an old saying that everything is deductible until you get caught. It’s a good rule to live your life with integrity, even if no one will ever notice
Plus, the fines are punitive to discourage false filing information.
Additionally, e-filed returns pay their tax refunds sooner than mailed returns because there is no time delay.
I would like to have my money sooner, rather than later. Maybe that’s just me though!
Here’s where your blank check comes into play! Just like e-filing, you will receive your refund sooner if it is direct deposited into your bank account!
Again, I would rather have my money sooner than later! The following image is where to find your Routing and Account Number.
How To File Taxes For Free
Hopefully this article was helpful to learn how to file your taxes for free!
I don’t want April 15th to be your worst recurring nightmare every year. Filing your personal taxes doesn’t need to be scary.
Please discuss all unique tax situations with a CPA, and always perform your own due diligence before filing.
New Article Notifications
Investing outside a bank or a credit union is not FDIC insured. All investments are subject to additional risk, which may cause you to lose your money. All information provided here is for informational and entertainment purposes only.
It is not an offer to buy or sell any of the securities or other products talked about within the scope of this article. Wealthy Diligence makes no claim or guarantee for specific investment rates of return.
Please discuss all investments with a CPA, CFA, CFP, or other professional, and always perform your own due diligence before investing.
I may receive compensation for affiliate links clicked or products purchased.