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Hi guys, We have had a CPA do our taxes for years - we owned a business for years and then sold it... years ago, then we owned 3 rent houses for a few years and have sold all of them. This CPA has always done a good job, but is quite expensive and our favorite person at the CPA's company has left, and we are thinking our taxes are simple enough that we can do them this year (for 2021).

OK. So, our last rent house was sold in the Spring of 2020. And it is my belief that all the gains and expenses, and depreciation was done and accounted for on our 2020 taxes. Is there some way for me to look at our tax forms last year, and "see" that this is a done deal? I think it would be, but I would just like to make sure. We are under the impression that since the last rent house was sold in 2020, everything would have been accounted for, and this year, there would be no forms whatsoever for our now gone, rental houses. Thanks for any info. I think the "Tax Strategies" board is one of the smartest, as a whole, at the Motley Fool. I appreciate it so much.

Footsox
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So, our last rent house was sold in the Spring of 2020. And it is my belief that all the gains and expenses, and depreciation was done and accounted for on our 2020 taxes. Is there some way for me to look at our tax forms last year, and "see" that this is a done deal? I think it would be, but I would just like to make sure.

Assuming that you no longer have any title to the rental houses and you didn't do any type of seller financing or installment sale, everything should have been on your returns for 2020 and prior years. There's not really a way to 'see' that on your 2020 tax return, though. What you should be able to see is any capital gains (or losses) from the property on Schedule D, any recaptured depreciation on Form 4797 and that your Schedule E lists "fair rental days" for the property that is less than or equal to the number of days that you actually owned the property in 2020.

What you need to understand is that your 2021 return will reflect any and all income you received in 2021. If you're not getting any rental income, you will no longer have to fill out Schedule E to document the rental income. That said, Schedule E is used for other things, too - so you should check your 2020 schedule E to see if there is anything else documented other than the rental house(s). Depending on your other income, like capital gains, dividends, interest, etc. you may still have to fill out more forms (for example: Schedule B, Schedule D, Form 8949, etc.) than just your 1040 and associated schedules.

You may want to seek out help from a free tax prep service, like VITA or Tax Aide.

AJ
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...and we are thinking our taxes are simple enough that we can do them this year (for 2021).

In addition to AJ's comments, it would be interesting to test this, even if not costless. The test would be to drop the dime on your accountant for this "new, simpler" year, and do your own taxes, also. Then compare your forms with your accountant's. If they substantially match, you're likely good to go.

'Course, there's one caveat worth considering, too: 2021 may be its own aberrational year, for political reasons.

Eric Hines
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As others have already said, based on what you've disclosed, everything should be simpler this year. Another way to confirm this is to ask your tax preparer for a copy of the worksheets showing what items will carry forward to 2021 from his tax software. If you don't see depreciation amounts, AMT amounts, or other losses (and I wouldn't expect that you will see them), you should be OK on your own.

Ira
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Thanks everyone. I really appreciate your knowledge. Someone had suggested that I have the CPA do the taxes again this year, and then I do my own taxes also. The problem with that is that he charges $1200. This amount was OK when I had a good sized business and then also rent houses, but now that there is neither one, I swear, he will charge me the same. It ticks me off! I guess because my taxes are reasonably simple, I think I can do them, but also I kind of want to get rid of the big fees. I asked him a question last year, and he sent me a bill for $200 consulting.

Some of you asked about my other tax things for 2021. I have income from social security, income from interest and dividends. I also might have some medical expenses to deduct. And that's it. Sounds simple to me -- no rent houses, no rent house expenses, no business I'm running, no office in the home, warehouse rent, vehicle expenses, etc. I will need to figure out medical... but I don't think we have reached the limit that is deductible (?) The last thing is our stock portfolio - We have bought maybe 6 stocks this year, and we sold about 3 stocks at a small loss. (no day trading or anything) - our stocks just kind of quietly sit there and grow.

So, I am going to forge ahead. I am sure you will see me posting here again, as I get closer to figuring out what I don't know. ha. Thanks.

Footsox
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Footsox, I'm not one of the tax experts who hangs out here, but rather one of the taxpayers who listens to them. My suggestion is to get a copy of TurboTax (what I use) or equivalent and work it out early. TT will probably be available to download some time in December so you could begin playing with numbers. Once you have gone through that I think you will have the confidence you need to skip the accountant. And if you still feel uncomfortable it won't be too late to use the CPA anyway.
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Someone had suggested that I have the CPA do the taxes again this year, and then I do my own taxes also. The problem with that is that he charges $1200.

You might want to check to see if the charge will still be $1200, now that you no longer have the rental homes. Generally, the more complex your return is, the higher the price. Since you return will be less complex, I would expect the price will decrease.

If you decide not to use the CPA, I would still recommend that you seek out VITA or TaxAide if you qualify.

AJ
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Thanks everyone! I appreciate all your help.

Footsox
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