Preparing and filing annual tax returns can be a daunting task if you haven’t done it before. It is not uncommon to have this annual task be on ‘his’ list of responsibilities; so having to face this task the first year after your divorce can have one shaking in your pumps.
You may even find yourself visualizing the IRS contacting you, and orange jumpsuits in your future before you’ve even figured out what forms you need to complete.
Thanks to the many tax preparation software options available this task is not as difficult as it first seems.
Let me explain.
Prior to my divorce, the last time I had prepared my own taxes, it was the one page 1040EZ. So after 13 years I was pretty much clueless on what to do. Now, I have investments, a mortgage, property taxes, etc…
I approached preparing my taxes like most new tasks that I don’t want to do. I ignore it as long as possible. Knowing me very well, my father called in late February that first year to specifically ask me what I was doing about filing my taxes. Lots of time to figure that out was my response.
He didn’t buy it and assured me it was not as scary as I was making it out to be. He instructed me to purchase the tax software and follow the prompts. My fears started tumbling out of my mouth…I don’t know how to deal with the child care expenses, selling the house as part of the divorce, capital gain/loss, etc…
He also suggested that perhaps for the first year I should do my taxes using the software AND have a tax professional, take a look at what I done. It suddenly crossed my mind that I had an accountant friend I could ask.
After purchasing the software, I was pleasantly surprised to discover that it explained (in plain English) exactly what I needed to input. What was really nice is that when I was finished, I had a refund. Yeah!
I then arranged a meeting with my friend, who was pleasantly surprised to find that I had all the papers in one stack at our first meeting and we started going through everything. I had a lot of confidence sitting through that meeting since I was familiar with the papers.
When he finished, we reviewed the final tax forms together. It was nice to go through the forms and be able to understand what made up the numbers I was seeing on the forms and to have a person to ask questions.
He also gave me advice about exemptions I was claiming, at my place of employment, that they were lower than they should be. Overall, I discovered I did a great job with the software.
There was only one area that he had that I didn’t catch. It had to do with selling of my house as part of the divorce settlement. It resulted in an additional refund amount. What I found very ironic was that the refund difference between my calculations and his resulted in paying for his service and a café latte! My friend assured me that moving forward I would able to do the filings on my own with the support of tax software.
Approaching first year of tax filing in this way can give you the confidence and peace of mind that you can do this. In future years, you can save money since the software is less expensive than tax experts.