Thank you for this reassurance! Do you think I should download my previous returns from H&R Block for my records? And if I want to go back to H&R Block next year, will it be a problem to import this year's TurboTax return?

Yes, definitely download all your previous returns from H&R Block as PDFs and save them somewhere secure. It's always good practice to have your own copies of all tax documents regardless of which service you used. Going back to H&R Block next year shouldn't be a problem. Most tax software can import PDF returns from other providers, though the process isn't always perfect. You might need to verify some information. But H&R Block should be able to import the basic data from this year's TurboTax return. Worst case scenario, you'd need to enter some information manually, but your account and previous years' data should still be in their system.

Next time try FreeTaxUSA. It's way cheaper than TurboTax or H&R Block and works just as well for most people. I switched 2 years ago and saved like $70.

How much prep work do you still have to do before meeting with your CPA? Do you have to categorize all your expenses or do they do that for you?

I still have to do quite a bit of prep work. I organize all my income documents (W-2s, 1099s, investment statements), categorize my business expenses in a spreadsheet, and summarize any major financial changes from the previous year. For business expenses, I do the initial categorization (office supplies, travel, meals, etc.), but my CPA often reclassifies some items to more advantageous categories I wouldn't have known about. She doesn't do basic bookkeeping - that would cost significantly more. The more organized you are, the less you'll pay because they bill by the hour. The real value comes from their knowledge of the tax code, not data entry work.

I've never heard of Enrolled Agents. What's the difference between them and CPAs? Are they as qualified to handle complex situations?

That's a really good idea I hadn't thought of! Do you know how long the process typically takes when you file a complaint with the insurance commissioner? I'm a bit worried about the timeframe since the IRS only gave me 30 days to respond with the documentation.

In my case, I got a response within about a week after filing the complaint. The insurance commissioner's office contacted the insurance company directly, and suddenly they were able to "find" the documentation they claimed didn't exist. You should mention the 30-day IRS deadline in your complaint - the commissioner's office can often expedite cases that have external deadlines. They can't force the company to create a form that doesn't exist, but they can pressure them to provide acceptable alternative documentation that satisfies the IRS requirements. The state regulators have significant leverage over insurance companies, which is why you'll often see faster results when they get involved.

Yes! I had to submit alternative documentation instead of a 1095-B last year. I sent in my insurance cards, payment receipts, and a letter explaining why I couldn't get the official form. The key was including Form 8275 (Disclosure Statement) where I explained the situation in detail. The IRS accepted everything without any follow-up questions.

Oh wow, I had no idea there were income thresholds that could complicate this further! Thankfully I'm nowhere near $170k with my side gig, but good to know for the future. Are these thresholds adjusted for inflation each year?

Yes, these thresholds are adjusted for inflation annually. For 2023 they increased to $182,100 for single filers and $364,200 for joint filers. For 2024 they're $191,950 for single and $383,900 for joint filers. The whole QBI system is probably one of the most complex parts of the Tax Cuts and Jobs Act. For most small side-hustlers with 1099 income well below these thresholds, the calculation is relatively straightforward as discussed earlier. But it definitely gets much more complicated once you hit those higher income levels!

I think it's intentionally complicated to benefit big corporations with accounting departments. When I finally figured out the right QBI calculation, it saved me almost $700! But I spent like 10 hours researching it. Regular people don't have time for that and just accept whatever TurboTax tells them even if it's wrong. The system is rigged.

Yeah that's a good point about big corporations having an advantage. The 10 hours you spent researching probably cost you more in lost time than you saved! But that's how they get us - make it just complicated enough that we either give up on deductions we deserve or pay someone else to figure it out.

Thank you for the practical advice. When you say "gathering all financial records" - what about for years where we might not have complete records anymore? Especially for the crypto stuff, I don't think she's kept detailed records of trades from years ago.

For missing records, you'll need to reconstruct as much as possible. For traditional income, you can request wage and income transcripts from the IRS that show reported W-2s and 1099s. For bank accounts, most banks provide at least 7 years of statements if you request them. For crypto, this is trickier but not impossible. Major exchanges like Coinbase, Binance, etc. usually maintain your transaction history even from years ago. She should log into all platforms she's used and download complete transaction histories. There are also specialized crypto tax services that can help reconstruct trading histories by analyzing blockchain transactions if you know the wallet addresses. Some of these can even identify trades across multiple platforms and calculate proper cost basis. The key is to make a good faith effort to reconstruct everything. The IRS understands that records might be incomplete, but they'll expect you to make reasonable attempts to recreate them. This is definitely an area where professional help is worth the cost.

This is exactly what happened to my cousin. He moved several times and wasn't filing, so he never got the notices. By the time they finally tracked him down, the penalties and interest had nearly tripled the original amount owed. The IRS doesn't just "forget" about people - they're just working through their backlog.