This article originally appeared on the America’s Future Foundation website.
As Destiny’s Child sang in their 2001 album, “Survivor:” It ain’t easy being independent.
For some adults, however, becoming independent from their parents can be more difficult for some than others.
For example, yesterday the Wall Street Journal released an article about how more and more American parents are preparing tax returns for their grown children well into their 40s. And, apparently, these “adult children” won’t be doing their own taxes anytime soon.
According to a study by H&R Block, 66 percent of millennials have no idea when taxes are due this year. Hint: they’re due like, right now.
Preparing taxes is overwhelming, annoying, and just downright stressful. You have to file your taxes every year that you earn an income or else you’ll face severe fines – or worse, jail time.
As an older millennial who loves liberty and can’t stand the idea of taxation, I cringe at the thought of handing over my money to the government, but I’ve learned some tips and tricks that help me make sure I’m not paying one cent more than necessary.
Everyone, even millennials, can file their own taxes. It just takes a little organization and putting on your “independent pants.”
Get the Really Important Stuff First and Mark Your Calendar
Keep a special folder with a copy of your W2, any 1099’s for special projects or contracts you completed throughout the year, and your 1095 (if you have one) to show that you had health insurance for the financial year. If you have no idea how to get your hands on any of these documents, ask your human resources representative. They should be able to get you what you need.
Tax Day is always April 15, unless that particular date is on a weekend. (ED Note: in 2017 the due date is April 17). Make it a New Year’s resolution to mark Tax Day on your calendar, and make your own, internal due date for compiling your information a month beforehand. It’ll save you time and stress.
Always Ask for the Tax Receipt
Whether you donate $5 or $500 to any 501c3, non-profit organization (hint, hint), ask for the tax receipt. This shows the IRS that you made a charitable contribution that can be deducted from your taxes. When I drop bags of clothes off at the women’s shelter or donate to my alma mater online, I take the time to ask for the receipt in-person or print the email receipt immediately. All receipts are stored in their own folder so that I know exactly how much I gave to charity in the financial year AND can organize them by month to make life a little easier.
The Random Stuff Adds Up
Before you file, think about any random purchases that you made for work-related purposes. Because I work from home, I was able to write off my office furniture, travel expenses, and even supplies as business-related expenses. Whenever I go shopping for pens or paper, you guessed it, those receipts go in another special folder. Even if you don’t work from home, you can usually write off any expenses that your employer didn’t reimburse you for.
Make a List of Your Monthly Expenses, Multiply by 12
Making a list of your monthly expenses can not only help you budget better but, when looked at yearly, can help you save on your taxes. Make a list of how much you pay for these expenses: rent/mortgage; utilities like gas, electricity, etc.; cell phone; and internet. If you work from home, congrats, you can write off expenses like your cell phone bill, internet, and electricity as business expenses – even the square footage of your home office. If you rent, you can also write that office space expense off on your taxes.
Now, you have a fairly comprehensive list of everything you’ve spent money on in the financial year. Now what? You could:
Do Your Taxes Yourself
It’s scary, I know, but you can go to the IRS website, hit the “file” button in the upper-left-hand corner, and follow the prompts to get what you need. There are tons of software systems that can help you, too.
Hire an Accountant
I hire an accountant every year. (Hey, at least it’s not my dad.) I organize my paperwork, label everything, and mail it to my accountant’s office. She’ll, in turn, figure out if I owe anything or get a tax refund and provide me with the proper paperwork to sign and mail to the IRS.
Trust me, getting your information in order is the hardest part of filing taxes. Once you take the initiative and develop a system that works for you, filing will become easier every year. Now, if you’ll excuse me, I have some checks to mail to the IRS.