Comments on: What’s the Difference Between Tax Exemptions and Tax Deductions?

By: Sarah

Sarah — Tue, 27 Oct 2009 14:02:55 +0000

We use TaxAct. It’s online and very cheap, and we save pdfs of all of the returns. We itemize. It took me about 30 minutes last year and we got our refunds so quickly.

By: Bargain Babe

Bargain Babe — Thu, 22 Oct 2009 19:35:31 +0000

Thanks for the info. I’ll be checking this again when I begin to prepare my taxes. It’s always more complicated that I remember!

By: Financial Samurai

Financial Samurai — Wed, 21 Oct 2009 02:55:37 +0000

Patty, thanks for your thoughts. It really seems like the magical number to earn is $199,999 for single filers.

Best, FS

By: Patty

Patty — Wed, 21 Oct 2009 02:13:03 +0000

@1 Financial Samuria – the number is chosen after it is scored by, example the GAO. The number is selected as the phase out so that it will generate a higher tax for the govt and allows the government to raise tax revenue without changing the tax rates.

I file my own taxes have for years – though I also file about 150 additional returns for my clients.

Nice explanation on the exemptions and deductions.

Lastly, learn what you need to get the lowest tax. Every extra dollar paid to the government that isn’t necessary, is a dollar less wealth you will accumulate.

By: Laura

Laura — Tue, 20 Oct 2009 21:22:10 +0000

I’m surprised by how interesting taxes can be when it’s your money. It’s not my favorite topic, but I’m really reading up on it.

By: Dan

Dan — Tue, 20 Oct 2009 15:22:24 +0000

I do my own. I could probably get away with the 1040-EZ, but you can’t claim student loan interest or Hope/Lifelong/American Opportunity education credits on them.

(And I further like to keep my taxes simple by investing everything I can into a Roth IRA… don’t have to worry about interest income, nor the tax forms for the contributions. I realize that’s not a compelling reason for the Roth, but still…)

By: John DeFlumeri Jr

John DeFlumeri Jr — Tue, 20 Oct 2009 15:12:33 +0000

That’s a helpful explanation.

By: Rosa

Rosa — Tue, 20 Oct 2009 14:51:48 +0000

I’ve been doing my own taxes since I was 12. My mom always did hers, including kind of complex stuff like farm rental income and gain/loss on stocks. She’d set up a card table and have it all laid out for weeks, and one year she looked at me and said “Here, you can add, you do your part.”

Since we’re not married, and my partner makes a lot more money than I do, my taxes are really simple, 1040EZ and a pencil. His are complex and some years he’s gotten hit with the Alternative Minimum Tax. I keep trying to get him to let me set up an Excel sheet so he can try out different options & see what they look like, but he likes his graph paper & pencil, so he does that. I get all the paperwork together (and these days, print out all the online receipts for charitable donations) to make it easier.

By: JamesR

JamesR — Tue, 20 Oct 2009 13:25:28 +0000

We’ve always filed our own taxes.

About 4 years ago, we stopped doing it manually.

My wife is a CPA and her work focuses on tax issues, so she bought a program and uses it for our tax filing now.

As a new employee with the Department of the Treasury, she can’t do others’ tax returns for profit anymore.

As for the deductions you take, be very careful to keep good documentation on how you arrived at them! In the event that you are asked to verify your claims (it happened to us), those records will save your hide.

By: Financial Samurai

Financial Samurai — Tue, 20 Oct 2009 13:00:35 +0000

Very informative post Nickel! Do you think it’s kinda silly that deductions phase out after one makes $166,000 as a single person? How did they come up with that number? Why not $153,000 or $188,000? It seems inconsistent, especially with our US tax policy going up for those making $200,000 or more.

Itemize all the way!