Survived another tax season...I think

_{Another year of love/hate relationship with TurboTax}

         Doing taxes in the US isn't easy. Americans can thank the complex tax codes and lobbying groups for making that industry-relevant. Thanks to them, the government can't simply tell us how much we owe. We have to play with the IRS in a game of "guess the number between 0 and jail".

         Ever since I returned to crypto in 2018, each year was a learning experience about different aspects of taxes. This year was no exception. It didn't go as smoothly as I would have liked this year, but there were things I felt I did that made tax season more bearable.

Set aside a portion of gains for taxes.

         Preemptively setting aside a portion of the gains helped me out a lot when unanticipated extra tax payments came knocking. One of the horror stories I've read throughout the years was how people made massive gains but didn't leave enough to pay Uncle Sam's dues.

         Most people cannot stand up to an IRS hell-bent on taking them down. If you made $100K in capital gains, I think it's not a bad idea to put away $40K or so just in case. No financial advice, of course. Most of us aren't savvy enough to know the ins and outs of different deductions, so having a buffer is a nice touch. Maybe hire an accountant or something.

Know the tax documents needed for the year.

         One year, I had to amend my taxes because I had forgotten about some of the investments that required me to file K-1 forms. I learned to dislike limited partnerships in the future. Unfortunately, the number of documents only seems to increase over time.

Check-in with an accountant.

         So far, I'm more of a DIY person for taxes. At the same time, I don't shy away from seeking a professional's expertise. If you are filing electronically through services like TurboTax, you have the option to consult an accountant on your work. For example, one helped me put together records for staking rewards. Compiling such records could be important down the road when clearer regulations come into place.

         On the other hand, there were curve balls thrown at me I didn't anticipate.

The advance child tax credit was a Trojan Horse.

         If you are a single parent who rotates with your ex when claiming dependents each year, that tax credit will increase your taxes. It makes sense, but it was a bummer when I had to pay a few extra thousand dollars back to the government this year. The point is, it could very well put you in a compromising position if you had a tight budget.

Staking rewards increase your taxable income.

         The funny thing about this is that they are technically assets. So, if you aren't planning on selling them, you need to find liquidity elsewhere to pay for them. I haven't figured out if I could use the cost basis to harvest some losses in the future, but I will find out when I get there.

         The only thing left for me is to wait and hope Uncle Sam doesn't come after me. I did pay more than I had anticipated, but nothing unaffordable. When it comes to the IRS, everything feels like this clip from Parks and Recreation:

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