Monday, April 15, 2013

Tax Day - Whew! Glad it's over!

This was the nature of my desk for the past week.  I just hit "I agree" on electronic filing for both federal and state. Thank goodness that is over!!! 

Yes, I put it off until the last minute this year (usually I'm done in mid-February). Due to a variety of changes in my life in the last three months of 2012, I knew I would owe money so I procrastinated and worried and procrastinated and...well, just not the best use of my time.

I've been doing taxes in some form since I was about 10 years old.  No I wasn't making income at age ten that I had to claim, but my accountant father did taxes on the side every year when I was young. Of course, wanting to be just like him I had to learn to do taxes as soon as I could do basic math.  Beginning at age 10-1/2, he would give me the short forms to do and then check my work. Believe me, nothing ingrains addition, subtraction, multiplication, and division skills like doing taxes over and over again. That was without a calculator!

Sometime in middle-school and early high school I started getting the long forms passed to me--the easy long forms.  Those were the ones with mortgage interest deductions and, in those days, you could also deduct other loan interest including credit cards. On the more complex side, the rules around buying and selling homes and tracking all your upgrades over several years were much more involved.  Not any more unless it's part of your business expenses or you are in the millionaire range.

All of this tax practice prepared me to really track my own income and expenses even when I was young. I began doing my own tax returns when I started working at age 15-1/2 and I have done them ever since. As an adult my life has always included regular employment with W2 forms, independent work as a consultant or project worker with 1099 forms, and for the past 15 years I've also had writing income from both fiction and non-fiction work with 1099 forms.  Like many adults, I have bought and sold homes several times in my adult life, and during our three year hiatus in California we rented our Oregon home. Each time I learned new things about tax code. My husband has been an independent writer and editor our entire marriage, so that has added complexity as well. What is his business, my business, and our business?  The number of forms needed has definitely increased. Thank goodness tax software keeps them all straight.

Each year, around February 1st when I start looking at doing the taxes, I think this is the year I'm going to pay someone else to do the work--this is the year when the complexity is too much to track. But then I get some estimates from people, do some interviews of their knowledge, and realize I'm not ready to do that yet.  It's surprising how many tax people really don't understand the ins and outs of writer's income and expenses.

However, I'm going to be interviewing CPAs this year. All the above complexity, along with being an Indie author with even more tracking and expenses, have made me decide it's time to bite the bullet and pay someone. Why a CPA? Because I want someone for more than doing taxes once a year. I also want a business planning advisor --someone who has ideas on how to work smarter instead of harder.

Next year, I won't begin to worry in February. I won't have to take a week or more off to tear my hair out to find every last deduction and reread tax code fifteen times. Instead, I will sit back with a beer and a contented sigh knowing that I planned ahead. I envision the CPA will already have all of my information because we've met several times during the year for updates. I won't be surprised at what I owe or the refund I will get, because we will know well in advance what my tax situation is. April 15th will be like any other day for me--a day of joyously writing on my next novel.

How about you? Do you do your own taxes or have someone else do them? If you do your own, at what point would it be worth it to pay someone else?

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