There's One Thing You Need to Know When Filing Your Taxes
A new study reveals millennials are more concerned about taxes than any other age group. So what has them so worked up?
Of the 80% of millennials with tax fears, 22% are worried they're making a mistake in their filing; slightly fewer are preoccupied over getting the maximum return, according to a survey commissioned by NerdWallet, an online personal finance tool. The study included more than 1,600 U.S. adults, who both filed the year prior and planned to file again in 2016.
One of the inciting reasons millennials are likely more nervous about their taxes than older generations is because less than a third of them consult a tax professional when filing. Meanwhile, 34% of adults aged 18 to 34 are instead talking to friends and family about how to file their taxes. Another 20% seek advice online.
"Millennials have the most concerns about taxes, but unless their friends and family are accountants, turning to loved ones for tax advice is the least reliable source for accurate, up-to-date information," Liz Weston, NerdWallet columnist and personal finance expert, said in a statement.
Not only do they tend to stay away from tax professionals, but when they do hire someone to do their taxes, they don't find out if the preparer is certified in any way — a potentially nerve-racking position.
While the DIY generation is the most digitally savvy — 36% use a software platform like TurboTax to file their taxes — they are more likely than older generations to file their taxes via good old pen and paper.
A significant 17% prefer to send their hand-written tax forms via snail mail, evading the costs of paying a professional or a service. By contrast only 8% of adults over 35 mess around with filling out a paper form.
Tips you need for Tax Day: For simple filing of a single W-2, going with an online tax service like TurboTax is perfectly admissible. Shelling out the extra $40 for audit protection could also allay fears over whether the IRS is coming for you. If your taxes are more complicated, it might be worth hiring an accountant, which can cost around $200 an hour, depending on location and how involved the return is.
But most importantly, millennials should make sure they're consulting a real tax professional if they seek outside help in preparing their taxes. Always ask to see a certified public accountant's credentials. Knowing that your accountant is legitimate can save you time, money and worry over the long haul. A good accountant will make sure you're getting all the deductions you qualify for. And when you get that refund the best idea is to pay off debt. Any excess cash should be funneled into a savings account.