The 1040-EZ is a junior varsity version of the standard tax
How should you file your federal taxes this year? To some,
this may sound as cheery as asking a condemned man how he'd
like to be executed. But we like to think of ourselves as the
bearers of happy, as well as useful, news.
The Dread 1040
The cheapest and least friendly option is to use the IRS
forms. This is how your grandfather did his taxes. And he
probably complained bitterly about it each April before
mailing them off. The IRS forms have an unparalleled
reputation for being needlessly difficult and intimidating.
Truth be told, the IRS forms actually aren't that bad
especially if your income is mostly from wages (as opposed to
investments or your own business) and if you earned less than
$50,000. In that case, you probably qualify to use the
The 1040-EZ is a junior varsity version of the
standard tax forms. The form is just one page long and is
designed for people whose finances are pretty simple. Filling
out the 1040-EZ will probably take you only a few
You can download the form from the IRS web site (www.irs.gov),
or you can pick up a booklet containing the form and a set of
easy-to-follow instructions at your local library or post
office. This booklet will tell you whether or not you qualify
for the 1040-EZ.
If, however, you were fortunate enough to bring in more than
$50,000 last year, you have to use the standard tax form the
1040, which you can also download from the IRS web site or
pick up at your post office or library.
The more complicated your finances, the more difficult it is
to fill out the form. If you made just $50,001 last year from
your job, you don t have many investments, and you don t have
a lot of complicated deductions, then it s snap. You'll just
have to fill out a few boxes saying whether you're married,
how much money you made, and so on, and then look in a chart
to see how much you owe. But if you ran your own business
(freelance journalism, for instance), gave a lot of money to
charity, or own your own house, then it can get a little
complicated. Nothing you can't understand, of course, but
figuring out which forms to use for which expenses will
probably take a few weekend afternoons.
Several software packages allow you to duck a protracted
struggle with the standard IRS forms. The leading program is
called TurboTax (MacInTax for Macs); it's produced by Intuit,
the makers of the popular Quicken personal finance software.
A CD-ROM containing a no-frills version of the program can be
ordered at the company's web site (www.turbotax.com) for $29.95 (or, for the
same price you download it). The firm also sells several
deluxe versions of the program, containing more sophisticated
features and more detailed help functions.
TurboTax uses the so-called interview format. That is, the
program asks you a set of questions in plain English (e.g.,
Are you married? How much money did you make in wages last
year? Do you own a farm? ). The program then translates your
answers for the IRS forms. All you have to do is assemble the
forms that your employer, bank, and broker send you at the
end of each year, as well as last year s tax forms, and type
in relevant figures as the program asks you for them.
At the end of the interview, TurboTax tells you how much you
owe the IRS (or how much it owes you) and allows you to print
out a set of forms. All you have to do is write out a check
and mail the forms to the IRS. What s more, for an additional
$10 you can transmit this information directly to the IRS
using your computer's modem, thereby saving yourself the
hassle of a trip to the post office. The biggest advantage of
electronic filing, however, is that you'll get your refund in
three weeks, according to the IRS, rather than the customary
Many people have grown very fond of TurboTax. It is, in
fact, very easy to use and quite affordable.
A Personal Accountant
There are a variety of storefront accountancy firms such as
H&R Block that will prepare your taxes at an affordable
cost. Just call your local branch for an appointment (call
early!) and show up with your receipts, bank forms, last
year's tax returns, and paycheck stubs, and they ll do the
Costs vary depending upon how complicated your return is and
the particular outfit you choose. Expect to pay around $100
for an ordinary return. Reputable firms like H&R Block
will tell you up front how much the whole shebang costs;
they'll also guarantee their work, meaning that they'll bear
the cost of any mistakes and shelter you from the infamous
IRS auditors. Whatever method you choose for filing your
taxes, you'll be happy when it s over.