How do you file a tax return?

0:00- So we've learned a lot about taxes so far, but there's the most basic question of all, how do you actually file them once you're ready? Well, there's really three different ways you could do it. You could file it yourself. And in the old days, you had to go get a bunch of forms and get your calculator out and get some pencil and paper, or pen, and usually fill in these forms, and then you would have to mail them in.

0:23But now, if you wanna file yourself, there are usually some electronic applications you can use. There's IRS E-file. There's things like TurboTax. Most of the big preparation companies will also have some type of TurboTax equivalent to them. And so those types of things allow you to...

0:43It's a little bit easier. It's actually a lot easier than trying to fill it out yourself. They'll walk you through a series of questionnaires, make sure you have the right data. They'll calculate things, they'll try to optimize some things. And those are for sure very good if you have very simple taxes.

0:57If you have very simple taxes, if you just have a straight-up 1040, the E-File by itself, which is free, is probably the direction that you could go in. Now, if it gets a little bit more complicated, these software tools can support it. I actually still do it myself.

1:12I've tried other options in the past, and I've always found that the hardest part is just getting all your data and all your receipts in one place. And once you do it, some of these self-filing things are actually pretty good. They're also the cheapest option.

1:24They'll sometimes try to upsell you on certain things and have it reviewed in one way or another, but they usually cost in the tens of dollars up to the hundreds of dollars. And there's sometimes some hybrid versions of it where they might get a human reviewer to look at your taxes and make sure they're optimized and things like that.

1:41But that's doing it yourself. The next layer, or maybe more expensive, but also can potentially hold your hand more, is to use a tax preparation service. These are folks like H&R Block. You might see them in a strip mall. There's sometimes more independent ones.

1:58And this is where there's a tax preparation professional who will walk you through it. But to be clear, they're not magical. Even there, you have to have all of your numbers ready, all of your files in order. And as I said, for me, that's always the hardest part.

2:14So, but it's something to think about. Those tend to cost a little bit more than filing it yourself, but you might have some more peace of mind, or they might be able to walk you through some more complicated things in your taxes. Let's say you have a bunch of rental properties, you've done consulting, you have a bunch of stock trades, you have other non-traditional investments, you earned money in multiple states or countries.

2:35That's when your taxes start getting a little bit more complicated. And then the, I guess you could say the most expensive option but also the most advanced and flexible option, is to hire a CPA, that's a certified public accountant, to look at your taxes. And this is usually an independent person who's going to look at your taxes.

2:54You might form a long-term business relationship with them over many years, so they know your situation and your income and what you're trying to optimize around. And that could be a really good option, but it could cost a lot. It could, depending on your income or how complicated your taxes are, it could get into the thousands of dollars.

3:12Not always, but it could get into the thousands of dollars for filing your taxes. But it could be good. Or for a lot of folks, as I said, some of the other two options might make just as much sense.