Monday, March 24, 2008

taxes- the power of experience

Time to file my taxes last year (first time doing it myself) - 30 hours
Time to file my taxes this year (despite my situation this year being more complex) - 3 hours

You really should just buy one of the software packages (I got TaxCut because it was cheaper) and do it yourself....it's an educational experience that will help you make better financial decisions in the future.

A few notes:

When you hear a politician talking about taxes, you usually hear federal rates, but state rates matter a lot too. Last year is the last year I will pay a state income tax until I leave Texas (Arizona was taking around 5%)!

Capital gains tip: if your income is below 30k, you pay 5% instead of 15% on capital gains. So if you have stocks with gains and you're about to get a job that will take you above that amount, you might take some gains now and pay the 5% now rather than 15% later.

The structure of the tax code is relatively straightforward, but the number of exceptions and the paperwork involved is mind-boggling

The tax code is heavily skewed to support involvement in real estate

Spending $60 or whatever on the software is so worth it

I still went in to an accountant for a half hour on Saturday to ask questions. $70 may seem like a lot for such a quick amount of time, but it's a wise investment if you can't get an answer off the internet or from the software. The accountant said more and more he doesn't actually fill out forms but just examines the output from the software of his clients.....

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