IRS Does Not Seem to be Slowed Down

It is tax time again and there seems to be some fear this year because of all the people being cut from the federal government. A lot of people are worried that Elon Musk and his seemingly gang of 20-year-old thugs is going to slow down tax returns being mailed to honest working Americans. Knowing this, I sat down last week and worked to get my extra complicated taxes filed. It took all week but I submitted them on Saturday afternoon. I then read the fine print and discovered I should expect my return within 21 days.

One of the reasons I have a complicated tax return this year is I cashed out a rather sizeable investment which I promptly reinvested in something with much better returns. The only problem is that I have to pay capital gains on the increase over the past 30-plus years. In doing so, I withheld federal taxes as if you owe more than something like $1,000 you will get hit with penalties. The state of Utah is different in that as long as you pay your taxes by April 15th, there are no penalties. My hope was that I would get enough back on my federal taxes to cover what I owe the state. I am actually getting slightly more back than I owe so I might be able to take my wife out to dinner or something. I did my taxes early enough that receiving the federal return within that 21 days would give me more than enough time to pay my state taxes.

Today I had to log into my bank account for a completely unrelated issue and noticed my balance is larger than expected. I clicked on the details and noticed that my federal tax return is sitting in my account ready to be sent to the state of Utah. It only took 5 days for me to receive my refund! This is the fastest I have ever received a tax return.

Let me return to my second sentence in this post about Elon Musk and his seemingly gang of 20-year-old thugs slowing down tax returns. I think this is one myth that doesn't fly with me. Granted my experience is one in 300-plus million Americans and your experience may vary. However I'd like to believe that the mere threat of dead wood being cut from the federal government has lit a fire under IRS workers and they are working with the speed we haven't seen in decades.

Taxes Made Easier

It is tax time again and I have started working on mine. One benefit of using software like TurboTax to help as you file your taxes every year is the ability to import data. Starting your taxes is a matter of loading information from the previous year and then you don't have to re-enter data that doesn't change very often like your address and dependents. You only need to review it.

This year I have made an effort to do as much auto importing of data as possible. W2 information is readily available and I have used that in the past. This year I have gone one step further and auto imported my stock brokerage data. Once I figured out the secret of having the tax program log into my account, it greatly simplified that section of my taxes. The secret is knowing your account number and reading the directions provided by the tax program to have it log in correctly. Don't worry, you don't have to provide your password.

One area where this failed is when I tried to auto import one of my interest statements sent from a bank. The amount is less than $25 as banks don't really pay much interest any more. I tried several times to find a 24-digit number listed at the bottom of the 1099-INT form only to get an error when I entered it. In the end I gave up and entered the bank name and amount. I should have done that first as the bank name and amount came to less than 24 characters.

I still have a few more nights of working on my taxes as I go through my spending to try and find all of my charitable contributions and possible deductions. As of now that may be a waste of time as the standard deduction is more than my itemized ones. Unfortunately I won't know until I enter all of the numbers. Last year it paid to itemize. If it doesn't this year, I may skip that step next year.

The major lesson I am learning this year is to take advantage of importing as much information as possible. That reduces the probability of typing mistakes and ensures I am not going to be audited, something I have yet to experience and never want to. Hopefully this post encourages you to try something new that helps streamline this painful and annual process.

The Start of Tax Season

This week I sat down and started putting together the information for my taxes. Normally I go through all of my spending for the year and categorize everything I spent. This year I decided to try a different method. I loaded up TurboTax on my computer and started filling in information based off the paperwork I received from my employer, banks, and the government. That allowed me to input all of my income for 2020.

Next I came to deductions. I do a fair amount of donations to charities and last year I had about 8 or 9 different organizations that I made donations to. Part of the reason is I started cleaning out my basement and discovered it is better to donate than to throw away. After all, a charitable donation earns a tax deduction that landfill doesn't provide. The only problem is that all of those charities are listed again for this year and I need to figure out if I donated anything to them.

The first thing I did is go through my checkbook registers for the year to see if I wrote any checks to any charities. Then I asked my wife if she had any receipts for donations we made. Ultimately I had hoped I could eliminate a few of the steps I have used in the past to shorten the amount of time it takes me to gather everything so I can complete my taxes. Unfortunately I can't. I guess all of the steps I have used to file my taxes for the past 30 years came about from running through this process every year. Going through the steps in a different order doesn't really save any time. Oh well. I guess I had better get back to categorizing all of my spending for the year.

Income Tax Time Again

Last night I sat down to start preparing my income tax filing for 2012 as it is that time of year again. Last year I had them done in January. This year the IRS decided to hold off on processing any tax filings before January 31st. I know that Congress could have thrown some last-minute changes at them, but secretly I think they just need an excuse to hold onto my money for a little longer. Every year I get a sizable refund because of all my allowed deductions. I would decrease the amount withheld from my paycheck, but the moment I do that, Congress is going to eliminate all of my deductions and I will get hit with penalties. It is better to receive than to owe.

I have used TurboTax for the past 5 years and so I fired up my old Windows XP computer to begin the process. The computer normally boots into Linux except for the once-a-year task of doing my taxes. Naturally it took ages for the computer to boot. Once it did boot, everything ran so slowly, it was almost unusable. After about 30 minutes of waiting, I decided I would install the Mac version on the Mac-Mini used by my kids. I did an online purchase and immediately downloaded the software. When I went to run TurboTax, it told me my computer was too old. You see, my Mac-Mini uses an Intel Duo, which is only a 32-bit processor. I need an Intel Duo 2, which is a 64-bit processor. Meanwhile the abacus running Windows XP in the basement is a perfectly acceptable computer according to Intuit, the makers of TurboTax.

I have a number of Mac computers perfectly capable of running TurboTax and so I will have to install it on one of them. I wish I had known all of that before wasting an hour of my life last night. You may be wondering why I just don't use the online version of TurboTax as it would have made my life a lot easier. That's easy as I don't trust anyone with my financial data. That is why I use an old computer that only gets turned on once a year. There is no possible chance a hacker can get at that data without physically coming into my house. Yes I am probably a bit paranoid.

Tax Preparation Software

Last week I was able to carve out some time and complete my federal income taxes. As I work in California but live in Utah, I have to file in both states and got them done as well. That makes for a lot of paperwork.

A lot has changed since I first started doing taxes several decades ago. I used to fill them out by hand. Then a little company created a software package to help make the job easier. I continue to use Turbo Tax to this day. It is a great piece of software and I recommend it if you prepare your own taxes.

The beauty of tax software today is that it immediately files your paperwork with the appropriate agencies and dramatically reduces the time it takes to get your return. This is great for someone like me who will be getting money back from the Feds and the state of California. The sooner I get my money, the sooner I can use it to pay the money I owe to Utah. One week after filing, I received my first of two refunds. Now that is fast.