It’s getting close to tax season. For me that means going through my stack of papers and sorting through them. This year was a busy year for me and my stack was over 30” high. It took me all day to sort through everything and place them into general piles. And I have another day separating those out to specific piles such as medical costs, Medicare costs, Medicare supplement costs, medical insurance costs, co-pays, prescriptions, dental insurance costs, vision insurance costs, surgeries, Miscellaneous medical costs, parking, transportation, Home Care costs, Ambulance rides and that is just one stack. And I have two stacks even larger than my medical bills. Fortunately I have it down to a process and I should spend only another half to full day sorting everything down to specific categories. I also have a lot of electronic bills and invoices I have to print out so I have a copy in case I am audited. Probably an hour or two doing that. After that comes the easy part. I input everything into TurboTax and electronic file everything. This year will be the last year I have to file 2 state returns.

I purchased Turbo Tax already and I hope to get a jump on filing this year as I expect to get a refund.

What are you doing to prepare for tax season?

I dread the day of tax season.  I think I might end up owing uncle sam a decent chunk of change this year.  Have to figure out short-term vs long term investments.  Doesn't help that I sold everything at the beginning of Covid and kept buying and selling after...

I also use TurboTax.  So easy to manage my rental property year-to-year by importing the previous TT file.

I normally wait until at least Feb to file, so any last minute tax code changes are added to the TT program.

During the 2019 tax year filing season, just before COVID, I spent a long time going through boxes of papers and junk.  Everything I didn't need to remain in paper format was reduced to a scanned image on my PC, which is also on my RAID and on my MS Cloud storage (included with our family Office subscription) for easier access.

So much of it was old (ancient) tax returns.  They've been scanned, organized digitally and shredded.

The majority of my tax documents can be downloaded from the various companies' websites:  Mortgage interest paid, Investment income, etc. All my rental property statements are paper, so I scan those.  This way, everything is digital and able to be archived without storing it in paper format.

BTW, if you need a new shredder, I've been wearing out shredders every 2-3 years.  Usually I picked up whatever national brand COSTCO had when I was in the market.  This time, I went with the Amazon Basics model that had rave reviews.  I highly recommend it.  It's 10 times quieter than any shredder I've ever purchased, and when it says it can shred 15 pages at a time, it really can!  All my previous shredders said 12-18 page capacity, but the motor would be struggling to do even half that.  I usually just fed 2-3 sheets to avoid it overheating which took for-f-ing-ever.  Not with the Amazon shredder. 

https://www.amazon.com/gp/product/B01M0FMM70

Even if you don't accumulate stacks of paper to shred, the quieter operation is well worth choosing this one.

Still working perfectly after a year after shredding a dozen boxes of old papers.  I normally have 2 shredders in the inevitable event one breaks in the middle of a shredding session.  I don't think that'll be an issue now, given how strong the motor is.  If memory serves, it took 4 days to get via UPS with free Prime shipping.  Normally, I burn out a motor right when I needed it most -- while I'm shredding.  If I get interrupted, I put shredding on the back burner, and  papers again start to pile up.

Now I have a bunch of storage boxes to use for other things besides papers I will probably never have a need for.

I also use TurboTax.  So easy to manage my rental property year-to-year by importing the previous TT file.

I normally wait until at least Feb to file, so any last minute tax code changes are added to the TT program.

During the 2019 tax year filing season, just before COVID, I spent a long time going through boxes of papers and junk.  Everything I didn't need to remain in paper format was reduced to a scanned image on my PC, which is also on my RAID and on my MS Cloud storage (included with our family Office subscription) for easier access.

So much of it was old (ancient) tax returns.  They've been scanned, organized digitally and shredded.

The majority of my tax documents can be downloaded from the various companies' websites:  Mortgage interest paid, Investment income, etc. All my rental property statements are paper, so I scan those.  This way, everything is digital and able to be archived without storing it in paper format.

BTW, if you need a new shredder, I've been wearing out shredders every 2-3 years.  Usually I picked up whatever national brand COSTCO had when I was in the market.  This time, I went with the Amazon Basics model that had rave reviews.  I highly recommend it.  It's 10 times quieter than any shredder I've ever purchased, and when it says it can shred 15 pages at a time, it really can!  All my previous shredders said 12-18 page capacity, but the motor would be struggling to do even half that.  I usually just fed 2-3 sheets to avoid it overheating which took for-f-ing-ever.  Not with the Amazon shredder. 

https://www.amazon.com/gp/product/B01M0FMM70

Even if you don't accumulate stacks of paper to shred, the quieter operation is well worth choosing this one.

Still working perfectly after a year after shredding a dozen boxes of old papers.  I normally have 2 shredders in the inevitable event one breaks in the middle of a shredding session.  I don't think that'll be an issue now, given how strong the motor is.  If memory serves, it took 4 days to get via UPS with free Prime shipping.  Normally, I burn out a motor right when I needed it most -- while I'm shredding.  If I get interrupted, I put shredding on the back burner, and  papers again start to pile up.

Now I have a bunch of storage boxes to use for other things besides papers I will probably never have a need for.

Thanks for the tip on the shredder. I am in the same boat. I buy whatever Costco was selling when I needed one. And they never shred as many pages as they claim! If I burn my present one out this year I’ll buy the one you recommend. I got to a point for a few years that I just took my boxes to a secure disposal company. Until one year they didn’t send me the verification postcard and when I called them they had no record of my documents. So I went back to shredding myself. I have 2016 tax records to shred this year.

I have 3 rentals to deal with and this year I also did a 1031 exchange. On top of that I had over $30k in medical bills. My wife had two hospital stays and two surgeries and I had one surgery. We purchased Medicare Part D for her which is the drug plan plus Obamacare for me and dental and vision insurance for both of us. Not to mention buying a new home here in AZ and selling my old one in Kapolei and buying a new used car. And of course an expensive move across the Pacific. It sounds pretty stupid that I more than halved my income in order to retire. But that is what I did. We have had a pretty bad year financially but a pretty good year tax wise. We basically sold and donated everything and started over anew. Financially speaking not good. But mental and physical health wise it was the right thing to do.

Poor buggahs lik me mo mo dakine tax headache.

My CPA is great. He gave me a really simple spreadsheet to fill out, and then I hand him the more complicated stuff. Expensive but well worth it.

My CPA is great. He gave me a really simple spreadsheet to fill out, and then I hand him the more complicated stuff. Expensive but well worth it.

I tried a CPA a couple of times. The problem is that I still need to go through all my papers and sort them which is about 80% of the work. And 99% of the hard work. Inputting everything into Turbo Tax is probably as simple as the spreadsheet you fill out. Plus Turbo Tax has the dumb dumb mode for guys like me. It just asks you simple questions and you type in your answers. I stopped using the dumb dumb mode years ago cuz I gradiated.    But seriously, since I am having to do most of the work it was costing me between $800-$1200 for a CPA and even tho I can deduct that fee, it is not worth it to me. Turbo Tax does everything he was doing for me for $70. As a matter of fact, his professional tax preparation software is very similar to Turbo tax.

For all the years I have used Turbo tax I did have one incident where I needed to call their professional tax guys. That year CA changed their tax forms dramatically. And TT was right on it. Except that CA did not provide instructions for one particular line on their income tax form. After filling out my taxes entirely, TT kept coming back with an error because something had to be put in that one line but TT didn’t know what was supposed to go there and there were no instructions as to what was supposed to be put there from CA either. So I called them. They transferred me to a tax lawyer in CA and he was as bewildered as myself and the software was. I spent the good part of an hour on the phone with him. So he asked to call me back. When he did call me back I was on a conference call with him, another lawyer and some lawyer with a title I don’t remember but he was the head of some association of tax professionals in CA. And none of them knew what was supposed to go in there either. But, it turns out that that particular line was not connected to any other lines or values on the form. And even tho it was asking for a number, I could have put in there “Pakalolo” and it would have been fine. So they all agreed what number should be put on that line even tho it didn’t matter and that was it.

CA made their income tax forms so overly complicated even they didn’t know what was supposed to go on that line. The tax guys were all laughing about it because apparently it happens a lot in CA and they love it when it happens because when CA does stuff like that they see more clients every year. That particular year I got my $70 worth and more out of TT.

TT is good stuff and is what I have used for at least 20 years.
As far as CA taxes goes, I am glad to see HP, Tesla and Oracle all leaving for TX and hope many more follow suit.

TT is good stuff and is what I have used for at least 20 years.
As far as CA taxes goes, I am glad to see HP, Tesla and Oracle all leaving for TX and hope many more follow suit.

One of the places my wife and I were considering moving to before we decided to move to AZ was Austin until we realized it had been taken over by the progressives. After that we ran! We loved Austin 25 years ago. Not any more.

My daughter and her baby's daddy were living together their first year in Hawaii Kai in his mother's rental.  They chose to use a professional tax preparer since their situations changed so much.

After more than a year, she finally got her $6,000+ refund from the IRS.

High-level overview, the preparer "named" my daughter "head of household," in order to get her a bigger deduction.  There are specific criteria you have to meet to be head of household according to the IRS. She failed the "makes the most money compared to others in the household" test.  Simple to know that, since the preparer was doing BOTH their returns!

If my daughter had used TT, she'd have never filed with that "mistake".  After submitting an amended return as "single", she still got the same refund.

Moral of the story:  you might trust your CPA or preparer, but you're ultimately the one who suffers if there's a problem.  TT has a guarantee that their software won't cause problems for you.  If it does, they pay your penalties and interest if the IRS demands you pay that.  You just pay the tax you were obligated for originally.

My daughter and her baby's daddy were living together their first year in Hawaii Kai in his mother's rental.  They chose to use a professional tax preparer since their situations changed so much.

After more than a year, she finally got her $6,000+ refund from the IRS.

High-level overview, the preparer "named" my daughter "head of household," in order to get her a bigger deduction.  There are specific criteria you have to meet to be head of household according to the IRS. She failed the "makes the most money compared to others in the household" test.  Simple to know that, since the preparer was doing BOTH their returns!

If my daughter had used TT, she'd have never filed with that "mistake".  After submitting an amended return as "single", she still got the same refund.

Moral of the story:  you might trust your CPA or preparer, but you're ultimately the one who suffers if there's a problem.  TT has a guarantee that their software won't cause problems for you.  If it does, they pay your penalties and interest if the IRS demands you pay that.  You just pay the tax you were obligated for originally.

The interesting thing about what you said is that the CPA/Preparer is not your friend. The IRS code while onerous is pretty straight forward when it comes to the average Joe’s taxes. It doesn’t take a rocket science to figure out what you can and cannot deduct. And you can figure out pretty easily how to cheat if you want. So if you rely on a CPA/Preparer if they are any good they will deduct everything you are entitled to and not deduct what you are not. But who is to say they don’t do a thorough job or forget something. Or worse they try to deduct something for you that is not allowed thinking they are being creative. I had a friend that claimed that happened to him. The CPA made good on the penalty and interest but still he had to put in the time for the audit and stuff. You are still responsible for mistakes. Once you figure out what you can and cannot deduct the whole process is pretty simple. I keep every little receipt and I take every little deduction I can. It is a good thing the IRS pretty much ignores us little guys that are trying to do their taxes honestly. And they go after guys like Trump. 

A Hawaiian singer was busted for something similar.  His CPA messed up was the claim, but he was the one in court.  He told the judge "your honor, god has blessed me with a great voice and talent.  But not with the know how to do taxes. I don't know how to do things like that.  That is why I hired X to do it for me".  He was in court for not paying enough.  Was like 15 years ago.

I was gonna also look for a CPA, but then like Inspector wrote, he had to fill out the form which is like 80% of the work.  So I just use HR Block and do the extra 20% myself and save hundreds of $$$ and time.  I can do it from home/work and not have to go to the CPA's office. 

And with HR Block, I can just walk into the office's that pop up in tax season and ask questions, or chat with a professional online.

HR block has a bad reputation for not giving their customers a lot of value because most of the people there are retired IRS and they will make you pay the most taxes. Basically an extension of the IRS for people who like to play it safe by overpaying. The extra money you spend on a CPA is worth it if you get a good one, but admittedly there are some shady ones out there and it is best to meet them in person and get their vibe to see if they are willing to talk with you. Avoid if the presentation seems prepackaged and transactional, or too eager to make you happy by taking unnecessary risks. The biggest benefit of good CPAs is they know how to save you money and can help you plan for the next year because they have eyes on the upcoming changes of the tax code. If you plan on growing your business or running it more efficiently a good CPA who can point out holes in your operation is invaluable in my experience.

What are you doing to prepare for tax season?

This year will be simple compared to last year when my dad passed away and my sister and I resolved his estate.  Really easy in that just my sister and I and nothing disputed.  Actually, more of a case of "you take the car, because I don't want it" than otherwise.  But, it did make taxes more "interesting".  Not in a bad way, just lots of paperwork and stuff.  Plus not something one goes through often.

My sister works in a CPA firm, so that helped.  Maybe 4-5 years ago I had something reviewed by the IRS.  It was essentially a paperwork/clerical thing, but that was pretty humbug.  In retrospect it was easy to take care of, the correspondence I got from the IRS was in what I would consider more threatening language.  Call up an agent to discuss case, and they explained it was pretty easy, but don't understand why their letters seem like someone probing you with a microscope up the dik.