Why use My1040?
Comply and save
My1040 saves you money by helping you comply with the tax laws.
The tax laws are complicated, and it is easy to make mistakes. You can save money by avoiding these mistakes.
Some taxpayers report less tax than they owe. That can be expensive. In 2015, individuals paid $12 billion in penalties to the IRS. The taxpayers also paid interest and, perhaps, fees to advisors. They would have saved money by reporting the correct tax on their returns.
Other taxpayers report too much tax. How much tax? No one knows for sure. We do know a couple of things:
In 2002, a federal agency (the GAO) estimated that 2.2 million taxpayers overpaid almost $1 billion when they claimed the standard deduction instead of the itemized deductions.
In 2015, the IRS audited less than 1 percent of individuals and families. Still, the IRS found about 40,000 taxpayers who overpaid their taxes by more than $1 billion.
We believe that many taxpayers overpay their taxes and, sometimes, by a lot.
How can this be? Tax preparers often guarantee a "maximum refund." We don't doubt the quality of tax software or the expertise of most tax preparers. But, even the best software and most qualified preparers can miss tax benefits when taxpayers do not keep good records. Without good records, it's easy to make mistakes.
Simplify your taxes
To pay the correct amount of tax, you must do three things:
Learn a little bit about the rules. You do not need to be an expert, but you must have a general understanding of the tax benefits that are available to you. This is true even if you use a tax preparer.
Track your expenses. You must track the payments that you make and that may qualify for a tax credit or deduction.
Keep good records. You must keep good records that you can rely on when you prepare your tax return. You also need the records if the IRS audits your return.
These things can be somewhat complicated or very complicated depending on your situation.
My1040 is here to help. My1040 makes it easier for you to learn a little bit about the rules, track your expenses and keep good records. "Easier" does not necessarily mean "easy." Sometimes, it is just not possible to make taxes easy. But even then, My1040 simplifies the tax reporting process. Here's how:
Learn a little bit about the rules. You will see icons (? and LEARN MORE) throughout My1040. If you click on an icon, a summary of a rule pops up. If you want to learn more, the icon directs you to an IRS publication. The IRS publications explain the tax rules in plain English. There are many IRS publications, and it can be difficult to find the right one. My1040 finds it for you.
Track your expenses. My1040 identifies categories of expenses that may qualify for a tax credit or deduction. When you set up My1040, you select the categories that are relevant to you. (You can always change your selections.) You can then track your expenses with a couple of clicks and entries.
Keep good records. My1040 creates reports that list your expenses for each category. You can also take a picture of each receipt so that you can easily save and access your receipts.
My1040 also simplifies your taxes by keeping all your records in one place. My1040 can track all your personal and business expenses, including miles. You can also customize My1040 to track anything else that you want to track.
Simple and free
We work hard to keep My1040 as simple as possible.
Why is simple good? My1040 is easy to use, and it works well in part because it is simple. Also, we limit our costs by keeping My1040 simple. As a result, we can offer My1040 as a free service.
Yes, My1040 is a free service. We charge no fee. There are no ads, premium services or things to buy. Unlike other apps, we don't sell your data or use your data to sell you something else.
We provide My1040 as a free service for two reasons:
We are volunteers with VITA programs (free tax prep programs) and LITC programs (free tax advice programs). We believe in making our tax system work better for everyone.
We want to keep My1040 as simple as possible. Charging fees, placing ads or selling products complicate things.
In our case, "free" does not mean "poor quality." Our team has decades of experience in the tax laws and software development with VITA and LITC programs and companies such as Ernst & Young and Microsoft.
Because My1040 is simple and free, it is important to understand what My1040 does not do:
My1040 does not provide legal or accounting advice. You should consult a qualified professional if you need legal or accounting advice.
Protect YOUR data
My1040 does not collect or back up your data. My1040 saves your data (including your receipts) on your device.
This is important:
You do not have to worry that we collect data about you, your finances, your trips or your business activities.
You should protect and back up your data, just like any other data saved on your device.
Taxpayers at all income levels can benefit from My1040. Here are a few examples:
Taxpayers with low or moderate income
The taxpayers may claim tax benefits that are not available to high-income taxpayers. One example is the tax credit for college expenses. Each year, the credit can save up to $2,500 per student in the household.
The taxpayers include many of the 50 million (or so) self-employed workers, including the freelancers who work in the gig economy. It is important for these taxpayers to track business expenses. They typically receive a Form 1099 that reports income. The Form 1099 does not report expenses. It’s up to the taxpayers to track expenses, which reduce both income taxes and self-employment taxes.
The taxpayers may file their tax returns for free at a VITA site. (Learn about VITA here.) VITA sites can be busy. It helps the VITA volunteers when taxpayers come prepared with complete and organized records.
Taxpayers with moderate or high income
The taxpayers may shelter income by contributing to education or health care savings accounts. They must track the related expenses to support the tax-free treatment of distributions.
The taxpayers may make frequent charitable gifts. The gifts should be tracked to provide the maximum tax benefits.
More than 11 million taxpayers own rental properties. To reduce their taxes, these taxpayers should track the expenses that relate to the rental properties: maintenance, management, utilities, taxes, etc.
The taxpayers may pay for the services of a tax preparer. My1040 provides a convenient way to share data electronically with a tax preparer.
We hope to have the most impact with low- and moderate-income taxpayers, in particular taxpayers who work as independent contractors ("freelancers").
My1040 is based on our experience with VITA customers and volunteers. VITA sites have seen a growing need for tax assistance among freelancers, such as (for example) drivers for Uber and Lyft. These taxpayers typically receive a Form 1099 that reports their income. The taxpayers are, however, responsible for tracking and documenting their expenses. This is critical. Failure to track and document expenses lead to higher taxes, both self-employment taxes and income taxes. My1040 streamline the tracking process so that freelancers do not overpay their taxes.
How does My1040 work?
My1040 is an Android application that you can download on Google Play.
There is a short set up. You answer a few questions and select the categories of expenses that are relevant to you:
Gifts to charities
Child or dependent care expenses
Work (self-employed) expenses
Health care expenses
You can modify your selections later at any time.
You can also add "custom categories." A custom category can be a type of expense that is not listed above. A custom category can also be something other than an expense or even something unrelated to taxes. For example, you can track the tax forms (W2s, 1099s) that you receive, the tips that you earn, the hours that you work on a project, the money that you give to your kids, etc.
Pay and collect
By using My1040, you will learn about the expenses that may reduce your taxes. When you pay a qualifying expense, you should collect a receipt. The receipt is the proof that you paid the expense. Also, if you don't collect receipts, it is easy to forget about expenses. You may then be paying too much tax.
You enter your expenses into My1040 with a few key strokes. You can do this at any time and anywhere. You don't need to be connected to the internet or a wireless network.
You can save a receipt by taking a picture of the receipt. Make sure that the picture is clear enough so that you can read the key information from the receipt (date, amount, type of product or service).
Some users prefer to keep paper receipts. That's certainly OK. In that case, just enter the data into My1040 without the receipts.
A word of caution… You can enter your expenses whenever it is convenient. However, if you wait too long, you may loose a receipt or forget about an expense. It's a best practice to enter your expenses soon after you pay them.
At any time, you can request a report that lists and sums your expenses with the information that you entered and the file names for the matching receipts.
My1040 sends the report in a CSV file to any email address that you enter. You can read, open, sort, format or edit the report using Google Sheets or Microsoft Excel.
BACK UP !
My1040 saves your data and receipts on your device. Click on the "File Manager" tool, and look for the "My1040" folder. That's where you data is saved. Your receipts are saved in the same place where you pictures are saved.
No one but you has access to your data or receipts. It is critical that you back up your data and receipts. Otherwise, you will lose your data and receipts if you lose your device.
What's the easiest way to back up? Every device is different. You should review your owner's manual. Your device may automatically back up to a cloud account. You may also back up to your home computer by using a USB connector to copy data from your device to the computer. Some devices are also configured for SD cards and/or USB drives on which you can back up your data and receipts.
It can be difficult to restore data from a backup file. To keep things simple, consider the following:
Periodically email yourself a report with all your entries. The report can serve as your data backup. It takes only a few seconds to send a report.
Set up your device to back up your photos to a photo gallery application like Google Photo. This will automatically back up your receipts in your photo gallery application.
Prepare and file
If you prepare your own tax return, use the reports to figure out the expenses that qualify for a tax credit or a tax deduction. My1040 links to helpful IRS publications that explain the requirements.
If you rely on a tax preparer, share the reports with your preparer. The preparer will calculate your tax benefits. The preparer may want to see receipts. You can retrieve the receipts on your device and email them if necessary.
We recommend that you keep your receipts for six years after you file your tax return. This is a general rule. For more specific guidance, click here: IRS Record Keeping Requirements.
Few people keep their device for six years. Again, make sure that you back up your receipts.
It's never too early to plan for next year. Should you update your categories of expenses? Should you add a custom category?