2008 Taxes, Turbo Tax and Quicken!

I got all our paperwork together and did our taxes. I used Turbo Tax and I am so glad that I did. Obviously, the main motivator for me doing our taxes now was to see whether or not we would get a refund (yay) or have to pay taxes (yuck.) As I mentioned in my earlier posts, we've been very disorganized with our money and so I am trying to face my finances and get everything straightened out. The good thing is that we had all our documents in a file folder. Here are some of the reasons why I'm glad I used Turbo Tax and did the taxes online, rather than trying to figure everything out for myself.

1. Our income situation changed- I had a W-2 from my wages and severance pay, my spouse had a new employer, my husband received jury duty pay, and I had to claim my unemployment benefits. Trying to figure all of this out on my own would have been nightmarish to try and figure out which schedules I needed and what documentation I needed to provide. TurboTax walked me through this step-by-step.
2. We decided to itemize- we did some charitable giving this year and TurboTax has a very cool feature which allows you to get an estimated value of things that you donate. I donated a lot of clothes and books this year, and was able to write that off with documentation to support that. This feature is called Itsdeductable. (More about this later.)
3. I have small children. What does that have to do with anything? Well instead of going to a preparers' office and having my children climb around like monkeys or have to pay for childcare, I was able to prepare my taxes in the middle of the night while they were sleeping.
4. I messed up. Even with all the support they offer, I was tired and not paying attention. I overlooked one of the many forms I needed to submit for income, and had to file and amended return. Turbo Tax didn't charge me again to file, pulled the necessary 1040X IRS form and filled it out, plus recalculated our tax refund.
5. I am broke. Turbotax has a feature (for an added fee) where they will take the cost of filing out from your refund. How convenient is that?
6. They offer a year of Quicken free for people that file (with the version I purchased.)
7. I was able to e-file and should be getting my refund in a few weeks. My refund was less than last year because we made more, but we were smarter about tracking our donations and allowed deductions and our refund is going to be equal to two months of mortgage payments.

So some of you savvy folks might be saying to yourself about number 7, "If you are getting a big refund back, you are just loaning the government money." That's true, but I believe some of the stimulus package or recent tax legislation loosened things up for people like me. My husband had very little withholding this year, and I was actually worried that we would end up owing money. Our state allows you to withhold state and federal earnings from unemployment, which I did. I am thrilled that we are getting some back.

Here are some things that I learned from this:

• Keep a file folder for the current tax year. For example, it's 2009, so you should have a folder with tax information for this year. That way, when next year comes around and you get those W-2s, and 1099s and whatever other funky forms you have to fill out, you will have a place to put them. When you sit down to file it will all be where you need it.
• I am not a tax professional. Now that I am a homeowner, married, and have children, my tax situation is more complex. I need to rely on the help of either a tax professional or software to help me do my taxes.
• Do your taxes early! I saw some post on yahoo that says you are more at risk for an audit if you do your taxes early. I don't know how true that is, but I didn't bother reading the article because I can sleep better at night knowing my taxes are completed and that my refund check is on its way. Additionally, when I have filed late or very close to the deadline, I have had to wait longer to receive a refund.
• Getting rid of your clutter can help you free up space and money. Our refund increased because of our donations this year. A friend of mine gave me a great tip early in 2008. She said, "Whenever I go to donate items to the Salvation Army I have a notebook and any thing I throw into the box I write down in the notebook. Then when I get my receipt for donating, I attach that to my list. I use Itsdeductible on TurboTax after I've made the donation so I know how much I can claim."