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Organization for Tax Season

Tax-TimeI’m preparing all our tax documents for the accountant, and every year I tweak a little more the “Package” I send him. Instead of collecting hundreds of paper and giving my accountant a giant folder, this is what my wife and I do:

  1. We scan everything the accountant needs, from receipts, to bills, invoices, etc., etc. We don’t like paper, so we make a conscious effort throughout the year to snap a photo or scan everything that could be of use for tax time.
  2. Then we put it in a nicely organized folder structure for guidance. I update this folder structure a little every year, depending on the circumstances, but generally it looks the same.
    • It contains one folder to store the records after the filing the taxes to the IRS.
    • One folder for each corporation you have/own, of which you have some pass-through taxation.
    • Folders for Personal Income, Expenses, Investments, Deductions and Credits
    • Rental Properties Income and Expenses (if any)
    • Tax Year Folder Template
    • You can download a ZIP file with the template folders and files HERE
  3. We zip it and protect it with a very very very strong password that we store in LastPass for every year that goes by.
  4. We delete the folder and only keep the protected zip file (with its respective backups)
  5. Then we send the zip file to the accountant. If is small, we can email it to him, otherwise we put it in a USB Drive and hand it over. Not to worry about leaking the information, the zip is password protected.
  6. We share the password via LastPass sharing feature with him, and he can safely access the zip contents.
  7. After the accountant is finished, we review it, and he files with the IRS.
  8. After filing, we add the filing records to the safe zip file, and ask him to please delete any unsecured unzipped version from his computer. (If you don’t trust your accountant to do this, find a different accountant)
  9. Just as additional precaution for tax documents archival, we change the password of the zip file again with a random secure and long LastPass password, and then we archive the zip file in Long Term Storage for the next 7 years.

Normally this is part of the accountant’s job, isn't it? So, why we do it? Well, needless to say that I don’t cope well with things I don’t understand. I’m a bit of a control freak and I like to absorb everything and anything that touches me in a personal, professional and economic level. Taxes are one of these subjects, and a rather complex one. Every year I’m surprised to see how many people doesn't take full advantage of the tax system we have, and the only reason for this phenomenon is that we don’t understand it because “it’s too complex”, and unfortunately, it’s true.

I’m no tax expert by any stretch (that’s why we have our accountant, and you should have one too), but having this discipline in organization and routine for tax season throughout the year, has helped me comprehend a little better how taxes work.

Every year, our accountant loves us, and our bill is lower when compared to other people, because we organize ourselves well and have everything handy. There is always additional questions and clarifications where we have to have a small chat, but he assures me it’s nothing compared to the rest of his clients.

I hope my accountant will continue to service my tax needs forever, but realistically, it’s not always possible. Having a good understanding of your own taxes, your tax files, and having a good and safe archival strategy for these is paramount to be good friends with the IRS and have peace of mind for years to come.

How do you organize yourself and your family for tax season?



Personal Genetics: Discovering yourself

Today I signed on for a service to analyze my DNA by 23andMe. Basically the way it works is:

  1. You pay for a kit ($499 $99 + $5 a month).
  2. They'll send you the kit containing a lab test tube.
  3. Then you spit into the tube and send it back to them.
  4. They'll take your DNA from the saliva and analyze it (in 6-8 weeks).
  5. You get all sorts of valuable information from your DNA in your 23andMe account.

Information you get from this "genotyping" (that's what the process is called) of your DNA ranges from interesting insight into why are you tall, or bald or chubby, all the way to incredible valuable information about real risk factors to dozens of diseases, and the way your body responds to different drugs and foods.

But wait a second. Why would somebody want to know they have high risk of getting prostate cancer than anybody else? This is a very similar philosophical debate as that one of "Do you want to know exactly the day you are going to die?". I bet many of us will answer "NO" to that question. After all, surprises and the battle for survival is what makes us humans and appreciate life the way we do. But, as the popular saying goes, from Death and Taxes there is no scape. No matter how much or how little you know about the HOW or the WHY, you and every living creature of this earth will have their time.

So, that brings me to the point of reasoning. Here are a couple of good things about having that little edge of knowledge:

  1. It helps you on preventive care -> You can make better lifestyle choices (like exercise, weight control and regulate your diet) if you know you have high chances of developing diabetes.
  2. It helps you narrow down a disease or sickness you've been experiencing -> This is specially true for people dealing with unknown conditions or symptoms that doctors haven't been able to decipher.
  3. It helps your doctor to reach conclusions much faster and easier -> Having your DNA information at hand will reduce unnecessary tests at the clinic and help your physician act more rapidly and accurately based on the valuable risk factor information from your DNA.
  4. It allows you to understand your limitations in life and prepare for what is to come -> Yes, we all have our limits and if you have a genetic mutation that increases your likelihood of developing say... Parkinson's disease; you better be ready to affront what is to come; with family, professional and financial decisions to make sooner rather than later.
  5. It helps you to have a better understanding of yourself -> DNA information is the bible of yourself. No hidden lies, no drama; just what nature intended for you.
  6. It allows you to uncover your ancestral origins -> Just face it, it's cool. Knowing why you are the way you are and no other way; knowing the reason of your existence from your ancestors; map the heritage in your genes... is just cool. It makes me feel a more integral part of the universe.

I should acknowledge though, that this "little piece of information" is not very well received by some people. I would never recommend this service to somebody that is susceptible of depression or misery; it would only create a bigger drama in her/his life. This is for people who can handle information and insight of your life with control, intelligence and moderation, mostly to be preventive about high probable outcomes in your future. This is no magic crystal ball, no oracle; this is proven science.

As I mentioned before, the service is given by a company called "23 and Me" ( for $99 for the initial genotype of your DNA. After that you can pay an additional $5 per month to maintain you account on their website and have the latests scientific breakthroughs about your DNA every month updated on your profile, specifically targeted to your genotype. Most of this continuous research and information comes from "The Human Genome Project", an international organization specifically dedicated to the scientific research of the human genome. With research centers around the world focusing on the mapping, genome annotation and sequencing of the human genome, they certanly have a lot more to discover about humans' most inner secrets: ourselves.