How the WSJ’s Tax Reporter Prepares Her Own Returns
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Why is it important to wait to file until every T is crossed and I is dotted?
Here's your Money Briefing for Tuesday, February 20th. I'm J.R. Whelan for The Wall Street Journal. The deadline to file taxes this year is April 15th. It's a process that can be filled with questions. Like if you're doing your taxes yourself, do you have to buy tax software? And how can you reduce your tax bill even though it's after the new year? For some answers, we asked our tax reporter Laura Saunders, who started preparing her own returns last week.
If you file early and you're getting a refund, you'll get it sooner. However, I really wouldn't file until everything is done. Every T is crossed, every I is dotted. You don't want to file and then find out you left out a charitable contribution or here comes a notice of more income from somebody else and it's been corrected because the first one was wrong.
Laura will join us after the break.
Wall Street Journal tax reporter Laura Saunders has started the process of filling out her tax returns. She joins me with some important points that people doing their own taxes should watch for.
When should you start preparing your taxes and what are the benefits of filing early?
All right, Laura, April 15th is still about two months away. I haven't started my taxes yet. Why did you start the process now?
Well, I thought it was a good idea to get going and see where we stood. And if you file early and you're getting a refund, you'll get it sooner. However, I really wouldn't file until everything is done, every T is crossed, every I is dotted. You don't want to file and then find out you left out a charitable contribution or here comes a notice of more income from somebody else and it's been corrected because the first one was wrong. So you really want to be confident that your return is correct before you file it. If you file it with a mistake, you can refile it before April 15 without a problem. If you have to refile it after April 15, you have to file an amended return, and that's a more involved process.
Many states require people to file their taxes electronically. If people don't hire a tax accountant, does that mean that they have to buy one of the tax software programs that we see advertised this time of year?
I don't think so. It varies from state to state, but many states have an online form that you can fill in and file electronically with no cost. So I would always look to see if there's one of those.
Now you're using tax software to file your taxes. What are the benefits of using those programs?
The big benefit is you don't have to add and subtract.
It does the math for you?
Yes, I'd probably put myself in jail that way if I had to.
Do you have to buy tax software or can you file free through state or IRS options?
They can take you through a question and answer format that gets the job done. And you don't have to tackle that jungle of language on the return and things like that. That's what they're banking on that you pay them for.
So it sort of translates that federal tax ease?
Yes. Who is my dependent? Is this a qualified dividend? All that kind of thing.
The IRS offers a program where people can file their taxes for free. How does that work?
It's called FreeFile, and it includes a lot of software companies that are not H&R Block or TurboTax, but it has others. And if you make less than a certain amount of money, I think it's about $79,000 a year this year, then you can use their software to file for free federally. You go into the IRS website and you look for a free file and it will take you to the site and you can see who the providers are that you have access to.
It's free. So does it do the math?
Yes. Oh, yes. It's a software program like, say, TurboTax or H&R Block.
So what steps did you take leading up to the day you sat down and began plugging in your info?
Well, I'm very careful, but I don't spend a lot of time on it. If a notice of income comes to me that's being reported to the IRS, I have a little green folder. I put it in the folder. Put letters from charities confirming donations in the folder. I really don't look at this folder before I sit down to do my taxes. Our taxes are relatively simple.
What are the main advantages of using tax-preparation software?
Because I'm an employee. I don't have gig work. I don't own a business. I'm not an investor with exotic investments and things like that.
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Chapters
7 chapters
1
Why is it important to wait to file until every T is crossed and I is dotted?
0:03–1:20
2
When should you start preparing your taxes and what are the benefits of filing early?
1:20–2:51
3
Do you have to buy tax software or can you file free through state or IRS options?
2:51–4:14
4
What are the main advantages of using tax-preparation software?
4:14–6:12
5
How does Laura organize records and what paper-or-digital systems work best?
6:12–6:41
6
What tax moves can you still make after year-end to lower your bill?
6:41–7:19
7
How do extensions, mistakes, and taxpayer responsibility affect filing and payments?
7:19–7:43
Speakers
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