Tax season just ended, and while some people might consider I am a bit late on writing about this, there is also another way of looking at it. Now is a great time to get the year off to a good start so that next year, you don’t have to go through what you went through this year on your tax returns.
If you want to make your life a whole lot easier and save valuable time, not just during tax season but all year long, I seriously recommend using online tax software if you aren’t doing so already. I also recommend using an online account management solution.
Using a combination of Quicken Online and TurboTax can make financial management and planning, and tax returns, a lot easier. Quicken Online is free, and Turbo Tax is either free, or close to it, depending on circumstances.
What is Quicken Online (now Mint)?
Simply stated, when you set up a free Quicken Online (now Mint) account, you can track all of your financial accounts and transactions through one account and one login. That’s the concept at least – if you have some really obscure bank account in southern New Guinea you might have a problem, but just about any online banking or financial account can be synched with Quicken Online (now Mint). This includes your Paypal accounts, and the like.
Your income and expenditures are then automatically entered recorded in your Quicken (now Mint) account as they occur.
You can then log in to your Quicken (now Mint) account at any time, to see a complete overview of your finances – including your current balances, upcoming payments due, and expenses paid – among other things.
You can also get a pie graph view which shows you where your money goes, over a given period. So, if you really do spend more money on Starbucks than you spend on rent, there’s no escaping it here.
Each transaction is assigned a category, as it occurs – such as auto, bank fees, business, charity, childcare, clothing, dining, education, entertainment, health & fitness, home repair, utilities, travel, rent, mortage … you get the idea.
How does Quicken know what categories your expenses and income should fall under? Well, it will try to guess. But then, you tell it, that’s how. You can also create your own categories and train Quicken how to assign them. And once Quicken gets accustomed to your habits it automates the process (but don’t worry, manual override is still there when necessary).
Okay, well that’s pretty useful. But how does this help you when it comes time to file your taxes?
Online Tax Software
Your Quicken (now Mint) account will essentially tell your Turbo Tax account how much money you have been spending on what, as well as what your income has been, and from what. This makes it much harder for you to cheat on your taxes, which is probably good for you. 🙂 (Disclaimer: joking.)
Turbo Tax itself is an online tax preparation software which essentially walks you through your tax returns. The program will ask you questions in plain English in order to get the information it needs, to help you fill your tax returns out. Instead of squinting your eyes over a bunch of head-achy forms and small print, you can be gracefully guided through your tax returns by this friendly little software, which takes you step by step through a (relatively) simple online tax return.
TurboTax also has some nifty little upgrades for a low price – such as audit defense, currently about $39.00, which ensures that in the event of a tax audit, you will have someone who knows what they are doing to represent you and talk to the IRS on your behalf.
All said, using Quicken Online (now Mint) in combination with Turbo-Tax can save you hours, tens of hours, or maybe hundreds of hours. Depending, I suppose, on how complicated your tax returns are. (Or how much money you have to spend, and how often you spend – or borrow – it.)
Of course you still need to use your head, and some tax situations are more complicated than others. You can’t switch off your mental facilities and just push a button, hoping all will turn out in the end. Well – you can, but I don’t recommend it. So make sure you stay on top of what the software program is doing, how it is figuring out your taxes and why. Make sure you understand the questions it asks, so that you give the proper answers. Make sure the tax returns make sense in the end, and if it doesn’t, figure it out.
Early in the tax year is a great time to plan ahead and get organized, if you aren’t already.