My dad always did his own tax return. My father-in-law always did his own tax return. They both did their returns by hand and mailed them in. Like father like son. I also do my own Federal and State tax returns, without tax preparation software. However, I do use Excel spreadsheets for entering and doing calculations for each form. Then I fill out each form and mail in my return.
The only time I didn't do my own tax return was during an international assignment in Asia, which resulted in a very complex tax return that the company did for us.
Here's why I like doing my own tax returns:
- I learn how different types of income (wages, social security, dividends, capital gains, rental, IRA distributions) are treated taxwise and how they can affect my tax liability.
- I can adjust certain types of income (capital gains, IRA distributions) to minimize tax liability.
- I can adjust certain types of deductions (charitable contributions, capital gains losses) to minimize tax liability.
- With the adjustments to income and deductions, I can stay below Medicare IRMAA premium increases and stay in a lower 12% (instead of 22%) tax bracket. In addition, staying $251 below the 12% tax bracket limit, dividends and long term capital gains are taxed at 0% for 2025 tax returns.
- With spreadsheets, I can easily change one or more inputs and immediately see the affect on my tax return. I can't do this as easily on tax preparation software.
Doing it by hand on Excel does require more preparation effort, including reviewing the forms and instructions each year.. I also need to update the Excel spreadsheet every year, but usually there are not major changes for the forms that I use. Best of all, I can do a real time estimate of our tax liability during the year and make adjustments to income and deductions before the end of the year.
This is not financial nor tax advice. Please consult a professional advisor.
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