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The best month. April. And April 15th slash this year, it's April 18th. April is upon us and that means... It's tax time! Welcome to Radical Personal Finance, the show dedicated to providing you with the knowledge, skills, insight and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less.

My name is Joshua Sheets and I am your host and your fellow taxpayer. Today, let me give you some tips on how to do your taxes the easy way. And also try to answer that question of should you hire an accountant or do it yourself? As we begin here, I must confess that I generally don't feel as excited about April as I sounded there in the little intro.

But I do try very hard to be that excited. I often get very grumpy when it comes to the subject of taxes. I get very grumpy. My politics and my political ideology make me very grumpy about paying taxes. I get very grumpy about what the money is used for.

I can't stand the way that, in my opinion, it's wasted and just causes me to feel very grumpy. But I've also found that grumpiness is not generally a pleasant emotion. And since I've chosen to do it, I try to focus on the – meaning I've chosen to live in the United States of America and live where I live.

Well, that comes with the territory. And so I try to approach it with the very most positive mindset that I can. And I try not to be grumpy. Years ago, I remember listening to Jim Rohn tapes and he would talk about how when he started paying taxes, the tax rates were 90 percent.

And his mentor, a man named Earl Shoff, would – coached him to stop complaining about taxes and appreciate the fact that he made money and that the goal is make a lot of money and pay a lot more taxes. I found that type of advice very easy to listen to and much harder to actually feel.

So I do believe that it's good not to be that grumpy and not to be all upset about it. I don't think that just because you try to have a good attitude doesn't mean that you can't wish to see things change or work to see things change. But I do often feel this deep internal tension between trying to have a positive attitude and a general sense of unhappiness when it comes to tax time.

So if that filters into today's show, now you know why. But I'm determined we're going to do this with a positive mindset. I'm going to walk you through this. And the question that I want to answer with today's show is just simply if you were a friend of mine and you were saying, "Joshua, how should I actually do my taxes?

I've never really done taxes before. Should I go and hire an accountant? Should I go to a tax place on the corner? What should I actually do?" That's the question that I'm trying to answer. We're not unfortunately going to be talking about tax strategy because unfortunately for you it's too late.

March or April is not the time to be doing tax strategy. Once you close out the calendar year, once you arrive at January 1, your tax planning is basically done. About the only decision that you can make when you're actually in the process of filing your taxes that's going to make a difference to your tax rate is whether or not you make contributions to certain tax qualified accounts such as an IRA or a Roth IRA, perhaps a health savings account, or if you're self-employed whether you make something like a SEP IRA contribution.

Those decisions can be made and those contributions can be made up until the tax filing date. The deadline, usually April 15. But if you have not done that, but other than that, your choices pretty much close out on January 1. So we can't do a lot of tax planning or tax strategy.

But what I can do is give you some guidance on how to approach just the nut of actually doing your taxes. We got to begin though with the things that are common to all. Many people want to go and hire people to help them with their taxes because they don't know where to start.

I'll tell you where to start and that's with your records. The most important thing that will impact how pleasant or unpleasant your tax filing experience is, is the quality of your financial record keeping. And this will impact it no matter the course of action you choose. If you walk into your accountant's office and you drop down the proverbial shoebox full of receipts, guess what?

You're going to have a big accountant bill and you're not going to have a great tax return because your record keeping system stinks. On the other hand, if you have a good end of the year report that shows your profit and your loss, shows the categories of your income and the categories of your expenses, you can sit down with a manual 1040, you could probably have your taxes done in a half day's work, even if you had to calculate everything manually, even if you were running a business.

It all is a matter of your record keeping. If you're an employee, you're not really going to have much record keeping. If you just simply have a W-2, maybe a couple of W-2 incomes in the household, then even that is negligible. But if you have any kind of side business, the single biggest thing that's going to matter is the quality of your record keeping.

You can approach your record keeping in many different ways. There are many fine accounting systems and pieces of accounting software that you can use that are built for business bookkeeping. There are many fine personal finance systems that you can use that will run your personal household bookkeeping and that you can adapt to run your business.

This last year, I've used sponsor of the show, YNAB, You Need a Budget, the You Need a Budget budgeting software system. I've used that all this last year. I started before 2016, but I had a good year, an entire year of perfect records in YNAB. I think that was the first year I had an entire complete year and I wasn't splicing that together with my spreadsheets.

Taxes are pretty simple because I had all of my income there. It was all categorized. I just spit out some reports from my business budget. I had all my expenses allocated there. I adjusted the report slightly to make it simple to put in and I was able just to take that and slide that data over into TurboTax.

That's what I use this year is TurboTax. We'll get to that in just a moment as far as tax programs. The biggest favor that you can do yourself and your accountant is to have excellent record keeping. If your situation is simple as in you have a household and maybe you have a small side business or two or even a primary business, but it's just you and it's relatively small.

You don't have a lot of employees, things like that. In that case, I recommend you just keep a very simple accounting system. All of you, as I have done many times, do a quick ad for YNAB, all of you should be using or should have at least tried the YNAB budgeting software.

It works and does phenomenally well. YNAB is the best budgeting software that I know of for you to use for your personal household because it allows you to adjust your budget and actually do that magic thing that budgets can do of deciding where the money is going to go.

Get a free 34-day trial at RadicalPersonalFinance.com/YNAB. Y-N-A-B stands for you need a budget. Again, RadicalPersonalFinance.com/YNAB. Please sign up through that link and I'll receive a commission when you sign up for your free 34-day trial. You can do that and you can use a system like YNAB or you can use a system like QuickBooks.

QuickBooks is kind of the leading accounting software. It's probably overkill for many of you in your simple side businesses. I like QuickBooks. I don't find it that easy to use. I think that for many people, it's just more of a hassle. If you're in a simple situation, you should be using probably those solutions, YNAB or perhaps Quicken, perhaps Microsoft Money, perhaps even Mint.

You could do this with Mint. Tiller, if you were a spreadsheet kind of person but you're not – if you're a money nerd and you're using Tiller, you probably already figured this out. That works great. If you have a more complex system, you should be using a bookkeeper. If you're a business owner and you have a bigger business than that, you should have a bookkeeper, somebody who's responsible for keeping these records for you.

It's just not a productive use of your time to be spending time in the bookkeeping. You need to keep an eye on it. But the actual reconciling of accounts and things like that, that is best hired out. So hopefully you have good records. If not, you need to construct them.

Now you have good records or you have some records and you're trying to figure out, what do I do? Well, you have a couple of options. The first option is you can do your taxes yourself with some kind of manual system such as downloading a Form 1040 from the internet or going down to the library and using a Form 1040 to do your taxes yourself.

You can do that. And if you have the simplest of situations, I think that actually works pretty well. By simplest of situations, again, you have no businesses. You just have a – you have no businesses. You just have a W-2 income or a couple of W-2 incomes. You can sit down and you can work through a Form 1040 pretty simply.

It's not that big of a deal. You may even be able to qualify and use a 1040 easy, some of you, which makes it pretty simple. In that case, you'll be able to have an option that is completely free and it will be relatively simple and you'll learn something while you're working through the worksheets.

Many people have done this for many years. If your income is below about $64,000 as the cutoff this year, I don't know why you would do it manually except that you just enjoy the process of it because if your income is below $64,000, you can use some of the tax software for free.

There are a bunch of options. The best thing to do is to start on the IRS website and look for the free file options. On the IRS website, they've set up various relationships, business relationships with some of the different tax accounting software packages. For example, there's Free Tax USA.

There is 1040 Now. There's TurboTax. There is Tax Act. There's H&R Blocks Free File. If you meet the qualifications, which are generally your adjusted gross income is under about $60,000 and generally if your age range is, you're younger than 52 years old, you can use their software. I think the software is really frankly, just to get right to it, is my favorite solution.

It's what I have done for many years is just simply use the software systems. The very best thing about the software systems is for somebody who's intimidated by a form like the 1040 with rows of numbers and all these tiny little print, et cetera, it breaks it down into a simple step-by-step approach.

You read a sentence, one question, and you choose from the answers. You click and you go on to the next one. As long as you just simply take your time, read the questions carefully, it's pretty hard to screw up. The only thing that's a hassle, which is why I started with records, is if you don't have the records for the information.

If you have the records for the information, it makes it pretty simple to use. The software packages will guarantee your mathematical accuracy and they'll help to make sure that you don't miss anything. They'll help to make sure that you don't miss filling something in. They'll check for errors and they'll do a pretty good job.

I have never had any complaints with TurboTax and I've used TurboTax for many, many years. I've never had any complaints. They've just done a great job. That is my recommendation, is for most of you to use one of the software programs. If you don't use – ways to do it, try the free version if you make under $60,000 per year.

If you make over that, then there are other options. A listener in the Radical Personal Finance Facebook group just asked about the new Credit Karma tax software system. Credit Karma is the website that I've recommended for using to work on improving your credit score. Credit Karma, C-R-E-D-I-T-K-A-R-M-A.com. What they do is you put your information in there.

They scrape the data from your return and they give you hints and suggestions and an estimate of your credit score. Then what they do is – the way they make their money is they market to you products and services such as a new credit card, a new bank, a new investment account, etc.

that they think will help you to save money or do something. Then they get paid a commission if you click on that. So it's free to use and Credit Karma gets a commission if you use their website. Now just this year, they started offering Credit Karma Tax which is a software system to provide and help you do your taxes.

They offer support for the 1040 and they also will offer support for a 1040 Schedule C which is for sole proprietorship, a Schedule E, partnerships, estates, trusts, S-corporations, C-corporations and Schedule SE, self-employment. So they will offer those three schedules and support for those. They bill their services entirely for free.

So if you're over $64,000, it's worth checking them out. They evidently according to – I've never tried them. I had just checked into them and I just read their FAQs and they have exactly the same business model where they will seek to market to you products, financial products that they think are helpful to you and if you do that, they will be paid a commission.

So the tax software systems are really, really good. If you want to try them, that's fine. They're untested, read some reviews, try it out. It's not going to cost you anything. You're just going to be giving up some of your privacy. Another thing that you can do is what I have done is just buy TurboTax for example at Costco.

That's what I did this year. I bought it on discount at Costco and you buy it every year. It has that year's forms and is updated and it works out. It's cheaper than it was to do it online. So that would be my recommendation. Now do you need an accountant?

This is a hard question to answer because of course it's always it depends. But here's who I think it depends on. If you're a complex business owner and you are filing multiple returns, you're filing partnership returns, corporate returns, you're filing those types of things, I think you would get benefit out of the accountant just simply to lessen some of that work off of yourself.

In general, that's probably good business to farm out to somebody else, to become a real expert with tax is going to take you a significant amount of time and that's time that you're not doing spending building top line revenue, building and making more of a profit. It's also going to take you – you're probably also going to miss a number of simple deductions and unique creative strategies that an accountant could be able to advise you on.

So if you're a business owner, in general, I would probably steer you towards working with an accountant. The challenge is that for individuals, an accountant really can't do much planning for you. If you're a W-2 income earner, an accountant can't really help you all that much with it especially when it comes to returns.

Many accounting practices even from a local accountant simply take the data entry and give that to a junior person and have a junior person do the data entry, do the return and the accountant just takes a quick look at it before it's sent back to you. Much of the time, you're generally not getting much consultation and this is where I want to break down the difference between getting a return versus consultation.

A software program like a TurboTax is excellent for doing your return. It's useless for giving you a consultation, a proactive consultation. It's really not worth anything at all. But an accountant can give you a consultation. So many times, it could be worth it for you to approach it in the context of I'm paying for consultation and advice, not just for the doing of a return.

The challenge is with that, I can't give it a blanket recommendation and here's why. One, most people can't do much. Again, if you are a median income, W2 income earner, you can't – there's not – putting money in your 401(k) is about it. That's about all you got. There's nothing more that you can do.

If you start to get into investment property, if you start to get into business, if your income starts getting higher, then you have options. But for just an average income earner, filing a W2, an accountant can't do anything for you. Most people are just going to take the standard deduction.

You're not even – just the whole hassle of going through and filling out all the itemization is generally a waste of time. It's worth doing it I guess just to see if you qualify. But very few people do. Most people just take the standard deduction and you're done. So there's not a lot of options there.

So if you're all in that situation, you should just simply use tax software. The other problem is finding an accountant who will actually give you proactive advice. In my experience, I found this to be harder than I think it should be. After trying to work with a few different accountants, I found that many people would just simply do my return for me.

But it was much harder to find someone that would do proactive planning. Now part of that may have been due to my income. I wasn't earning half a million dollars a year and I wasn't willing to pay the fees. But I even tried some of the high-priced – I worked at a couple of high-priced accountants as clients of mine.

I would try to get them to help me. So that brings me now to kind of the final option which would be not so much an independent accountant but more of a tax preparation firm like an H&R Block. I don't have any problem with an H&R Block. I think they do fine work.

I don't see a ton of value for you as listeners going to somebody like that. I think that if you're going to go and work with a tax preparer, look to find a local accountant, perhaps a CPA, perhaps an enrolled agent. But look to find somebody who can provide that real proactive advice.

I think if you're looking at just simply having somebody do it, if you have good records, you're better off going through it, the software yourself because you'll learn more with the software yourself versus having somebody at a large tax preparation firm just do it for you. And if you need advice, go to an accounting firm.

So my least favorite option is one of the large things, the people you see advertising on the corner or a large brand name with loads and loads of accountants in there. They have plenty of business. Lots of people use it. But for you, the discerning radical personal finance listener, I don't see a ton of value there.

I'd rather you work with somebody who could take the time to go and give you advice. Don't forget about the volunteer income tax assistance program, the VITA program from the IRS. The IRS brings in volunteers who will sit down and provide some free basic income tax preparation for you if you make under about $54,000 per year.

Look on the IRS website and you'll find options at irs.gov. You'll find options for the VITA, the volunteer income tax assistance program. And if you're under that situation of under $54,000, I think that would also be a good option. It will save you money. I like to save people money.

Now in closing, here's what I would recommend you do for next year. It's March. If you're finding yourself caught in the grip of madness, of tax madness, recognize the problem and commit yourself to making it different next year. If that means you need to hire a bookkeeper, hire a bookkeeper.

The cost of a good bookkeeper is not going to be very much in terms of the time that it frees you up if you're a business owner, high income owner, the time that it frees you up to be able to pursue other things. And you need to have those good records.

If you have fought for the last year and you weren't maintaining a transaction record of every single one of your transactions kept up to date, it's time to look into hiring a bookkeeper. Don't fool yourself. Stop trying to convince yourself you're going to change. You're obviously not. You haven't changed thus far, so you're obviously not going to change in the future.

Hire somebody. And if that ticks you off because I said you're obviously not going to change, then let that anger cause you to go and change. But you can hire a bookkeeper very, very inexpensively. And take your tax return, however you get it done this year, and then next month give the accountants time to get through, wait till May.

Let them get through April. Let them get through the busyness and the craziness. Middle of May, schedule an appointment with an accountant in your area for a consultation. And take into that meeting your tax return, a couple of previous years' tax returns if you can, and also take in with you your profit and loss statement for your business.

And have them look at those pieces of data and try to give some proactive advice. Because right in the middle of the year, June, May, June of 2017, that's a great time to do tax planning because you got six months left. And that's when you can make a difference.

It's too late for last year, but you're right on time for this next year. Try out a tax program. Remember, you can get it for free using the IRS Free File System. You can get help from a volunteer income tax preparation person. And make sure you have good records.

And next year, your experience can be very different. I know this is short and to the point. If you have questions that have been raised, go ahead and come on by today's show at RadicalPersonalFinance.com. Put those questions in the comments. I'll hang out there in the comments on today's show and do my best to give you some answers on this.

I know this is timely content and the tax deadline is piling up. So come on by and do that. Thank you to several new patrons who have subscribed to the show in the last few days. Huge huge benefit. And I thank you for your patronage. We're up to 267 individual supporters of the show, sending me a total of $1,659 per month in today's world.

That's very very helpful as it allows me to keep you, the listening audience, as my primary focus in the work that I do rather than leaning so heavily on advertisers for all of the revenue from the show. So thank you. If you'd like to support the show, if this has been helpful to you, come to RadicalPersonalFinance.com/patron.

RadicalPersonalFinance.com/patron. This show is part of the Radical Life Media network of podcasts and resources. Find out more at RadicalLifeMedia.com.