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Oct 22, 2003
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Huntington Beach, CA
Got a week? Do your taxes, spending just about an hour a day on the task


Taxes are like those holiday fruitcakes. One always seems to show up and just sit there. No one wants anything to do with it, except maybe to push it to the back of the buffet table. And the longer it sits, the harder it gets.
Well, Bankrate can't make taxes (or fruitcakes) any more palatable. But we can help you move that unappetizing tax task off your desk. All it takes is breaking the chore down into digestible components.

Here's how you can do your taxes in seven days by spending just about an hour a day on the job:

Day 1

Gather all your income data. It is, after all, called an income tax. Find all your W-2 wage statements, any 1099-MISC forms if you did independent contract work and all the statements detailing just how much your savings and investments earned. If you sold a stock or other property, you'll need that data, too.

Did you hit the lottery? Obviously not the big jackpot or you would've hired someone else to worry about this now! But any amounts you win are taxable.

And if you're enjoying your retirement, you may owe a part of those monthly pension checks to Uncle Sam.

Even if last year was a tough one financially, you may have some tax consequences. If you were out of work for a while and collected unemployment, those payments are taxable, and you should have received a Form 1099-G showing the amount.

Find all these income statements, clip them together and you're done for the day. See you tomorrow!

Day 2

Welcome back. Day Two probably will be the fullest of our tax-filing plan, but it's worth it. Today we start slashing your tax bill.

Pull together all your exemption, deduction and tax credit info. These items will help you whittle down your income to the actual amount that the Internal Revenue Service will tax.

You get to take $3,100 off the top for each person you claim as an exemption on your return. That's generally a pretty easy determination: you, your spouse and any dependents, which generally means your kids. But did you care for a parent, even one who didn't live in your home? You may be able to claim an exemption for that person, too.

Next, there are some expenses that any taxpayer can take without bothering with extra paperwork. These include certain IRA contributions, student loan interest, alimony payments or moving costs. Collect the back-up for these nonitemizing expenses first.

Now check the standard deduction allowed for your filing status. Most taxpayers use this rather than bothering with tracking every expense to itemize. If the standard amount works for you, great! You may be through today in less than an hour.

But if you find itemizing will help cut your taxes, you've got a bit more work to do.

If you're a homeowner, find the mortgage and property tax statement from your lender. In many cases, these amounts alone exceed the standard deduction. Don't forget that you can also deduct any state and local taxes, so you'll need the documentation of these payments.

Philanthropic filers get a break, too. Your qualified cash and property donations can reduce your tax bill. Make sure you have an official receipt for any charitable gifts that were $250 or more.

Next, pull out your medical records for last year to see if your costs total 7.5 percent of your income. If they do, you can use them. If not, don't waste any more time here.

And don't overlook miscellaneous deductions. This amount has to total 2 percent of your income, but there are a lot of expenses you can include here -- unreimbursed employee business expenses, investment costs, even tax preparation fees.

If you're self-employed, track down all receipts and documentation for business-related expenses. This includes the mileage records you kept when using your car for business, the office equipment and supplies you bought and the utility bills you paid to keep the home office lights burning.

Now to the credits. These breaks can help cut your tax bill dollar-for-dollar.

If you didn't make much, you may be eligible for the earned income tax credit. The break could be even larger if you have kids.

Even if you don't qualify for the earned income credit, you may be eligible to take $1,000 per child off your tax bill. If you paid a nursery school to watch them while you worked, part of that cost may cut your taxes. Pull childcare records for the exact amount you spent.

Credits also are available for some educational costs -- yours and your children's. You'll need these details. And there's even a credit to cover some adoption expenses.

Once you've found all this material, stack it next to your income info. You're finally through for the day.

Day 3

Now that you know what you made and how you can reduce it to a more tolerable taxable level, find the forms you'll need to file. The IRS offers three individual tax return forms: the 1040EZ, 1040A and 1040. Each has specific requirements you have to meet to use it.

It may be tempting to use the simplest form, the 1040EZ, if you're eligible. But you should look at the other two anyway. Generally, the longer versions offer more opportunities for tax breaks. For example, the deduction for up to $2,500 in student loan interest can't be claimed by EZ filers.

Once you've made your choice, take a few minutes to read over the form. Here you'll see exactly where you'll put the information you gathered on days one and two, and where the deductions and credits are subtracted. (But don't enter anything yet! We've got to have something to look forward to!)

In addition to your main tax form, you'll get an idea of any additional forms you may need. Where an attachment is required, it will be noted on the individual tax return you file.

For example, if you opted for the long 1040 return, you'll likely need Schedule A (referenced on line 39 of the 1040) to itemize your deductions. You also might want Schedule B (asked for on 1040's line 8 and line 9) if you have a lot of interest or dividend income to report. Self-employed taxpayers will see mention of Schedule C or Schedule C-EZ (line 12 of the 1040), along with the accompanying Schedule SE to pay self-employment taxes, (the 1040's line 30 as a deduction and line 57 as a payment).

For most taxpayers, encountering unfamiliar paperwork is a big aggravation. But by examining the forms beforehand, you'll have a heads-up about what to expect when it comes time -- tomorrow! -- to start filling them in.

Day 4

Now the real fun begins. Today we put pencil to paper to complete your return. Actually, this should be a piece of cake (and one that's preferable to that aging fruit-filled holiday concoction!) because you've already got your income, deduction, exemption and credit information at your fingertips.

You can either work your way through income and deduction data stacks, entering the info at the appropriate tax return lines, or you can start at the beginning of your chosen 1040 and work your way down the return. It's a matter of personal preference, but if you're not overly comfortable in filing your taxes, you're probably better off going with the line-by-line approach.

A tip for entering information: Have the instruction book for your return handy. The 1040 and additional forms are pretty skeletal. The instructions help flesh out your entries, provide worksheets you might need and, in some cases, even let you know that a certain line doesn't apply to your filing situation.

Plus, the instructions are where you'll find the tax tables. You'll need these to see just what your tax bill is.

Day 5

Ignore your taxes. You've made it past the filing halfway mark. You deserve a break!

Take today's tax hour and read a book, take a walk or luxuriate in a bubble bath. Tomorrow and taxes will be here soon enough.

Day 6

OK, back to the filing grindstone. Today, with a fresh eye, double-check your tax form entries.

When people inspect their returns right after they've filled them out, they tend to see what they know should be entered, rather than what is actually on the form. But thanks to yesterday's break, your review today will give you a new perspective.

Simple entry errors, both text and mathematical, are the most common tax-filing mistakes. Make sure you haven't overlooked a deduction or transposed dollar amount.

Don't forget the obvious. Check names -- yours, your spouse's, the kids, any other dependents. Make sure you've entered the Social Security number for each and that the numbers are correct.

Finally, if you're not using computer software or an online program to make your calculations, plug in the adding machine and check your addition and subtraction again.

Day 7

We're in the home stretch. Confident that you've counted all your income, taken all the deductions you can, and entered your information correctly and completely, it's time to wrap up your annual tax filing.

Make one final check of your return to guarantee that all is in order. Then sign it, make yourself a copy and send it on its way.

And what to do with the rest of today's tax-filing hour?

Pour yourself a cold one, kick back and congratulate yourself on conquering your taxes in one relatively hassle-free week!

Feb 11, 2005
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That's good info for people who do their own taxes. Luckily for myself, my dad is a CPA... so I don't do my own taxes.

I think he doesn't trust me to do it, actually. I tried to do it myself this year, and when I'd call to ask a question, it was always responded to with "Just bring it home and I'll do it."

My fed taxes were easy this year since I didn't earn a whole lot and claimed "1" in my exemptions, so I didn't pay out anything. Therefore, obviously, I don't get a fed tax refund.
But I do get a state refund of $66!
Not much, but I am in law school and I earned less than $3000 (I think) last year from my PT job.


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