Tax questions? Finding your own answers

Sometimes you find yourself with a tax question that’s very specific to your situation. Even your usual advisor isn’t quite sure how to answer it. They might tell you it will take some time to research. That time is going to be expensive for some information that may or may not save you money. Before you pony up for an advisor, here are some tips on finding tax answers for yourself!

Since almost everyone is required to pay taxes, it would only seem fair that the IRS should make the rules about how much you might owe freely available. Guess what? They do! There is a staggering amount of clear documentation concerning the tax implications of any financial situation you may find yourself in. If you have an afternoon to spare, it’s surprisingly easy to discover what you’re looking for.

Finding The Right Terms

The first step in answering a tax question is to know what you’re looking for. The IRS has great documentation, but you need the right key terms to find your way. Try searching for your problem along with the terms “IRS”, “Explain”, etc. You’ll often find short, friendly articles like this one that will help you identify the key terms you’ll need to use to find the right form or publication for your issue.

Dig in to Documentation

Once you’ve identified the key terms concerning you issue, search for them along with “IRS”. Chances are, the first few results will each be one of the following from

  • Topic pages — These are a good place to start. If you’re lucky, you might find your answer here, but usually they’re just the beginning of the rabbit hole, with collections of links to the following documents.
  • Forms — These guide you through the calculations of what you owe. Even when the required calculations are complex, you can trust the forms to gently guide you through with simple line-by-line arithmetic. You don’t need to know them all, but, for individual taxes, it’s a good idea to get familiar with form 1040 since all the other forms generally lead back to it.
  • Form instructions — Sometimes you’ll find instructions at the end of a form, other times they are provided separately. For any lines on a form that are unclear or ambiguous, the instructions usually will clear up the confusion. They’re always in order by line number, so you don’t need to read them all, just check them as needed if you get stuck on a particular line.
  • Publications — These are pamphlets (available online in PDF form) that go into great detail to explain the current state of tax laws on almost any given subject. Don’t be daunted by the fact that they’re often 50 or more pages long; just check the table of contents for what you need. You’ll probably only have to read a few paragraphs to find your answer.

As you dig around, keep a pen and paper handy to take notes. It’s also a good idea to pull out a copy of the return you filed last year. If your question can be answered by the results of just one or two lines on a form, you can use your old return to make estimates instead of working through all the calculations from the beginning.

Admittedly, there can be a lot of details to keep track of. However, with some patience and a cup of coffee, not only will you save money — you’ll earn a sense of accomplishment by answering your own question!