Let’s face it: It’s in your best interest to make your tax preparer’s job easier.
Working effectively with your tax pro can score you a larger tax refund or lower your bill. It can even make your visit to the preparer cost less. “If you come in here with a shopping bag filled with receipts and documents, and they’re not in any real order, you’re probably going to end up paying [me] more,” says Morris Armstrong, an enrolled agent in Cheshire, Connecticut.
In a 2018 survey of enrolled agents, who are federally licensed tax professionals who meet certain educational and professional requirements, 96 percent strongly agreed that clients should notify their tax professional as soon as they receive a letter or notice from the IRS. Sixty-nine percent strongly agreed that “same as last year” is not an acceptable answer when they ask clients a question about their tax situation, and 80 percent strongly agreed that clients should notify them before they start working a side hustle or business.
Read on for more ways to make your tax professional’s life easier and save money in the process.
[See: 7 Most-Missed Tax Deductions and Credits.]
Be organized. One of the best ways to help your tax preparer do his or her job more effectively is to organize your paperwork and track relevant receipts, expenses and paperwork throughout the year.
“If you’re organized and you have all the receipts, then you’re going to get the best return possible,” Armstrong says.
For example, if you need to track the miles you drive to a side hustle or an eligible charity event, consider using a mileage tracking app, such as MileIQ, to make sure you’re providing the most accurate number at tax time, not just estimating it. “I know [your mileage] is not on my ceiling,” Armstrong jokes. “So don’t look at my ceiling when I ask how many miles you drive.”
In addition, if your tax pro has an organizational system he or she prefers you use, such as providing tax documents digitally or filling out a tax worksheet each year, try to use it, experts say. It will make both of your lives easier.
[See: Answers to 7 Burning Tax Questions.]
Hand over letters from the IRS as soon as possible. One habit that frustrates your tax preparer: hoarding or hiding communications you receive from the IRS. “If you receive any correspondence from IRS, notify your CPA right away,” says Melissa Labant, director of tax policy and advocacy for the American Institute of CPAs.
These IRS requests — which may ask for extra documentation or even warn of an audit — are better handled by your tax professional. Plus, how you respond to requests from the IRS may have implications for your state return, says Jeff Gentner, an enrolled agent in Buffalo, New York. It’s best to have a tax professional help you determine the best path forward.
When handing over IRS correspondence, don’t bury it at the bottom of your file, experts say, in case there’s a limited time during which you need to respond. “If your CPA has 20 returns they’re looking at that week and doesn’t pick up your box for another couple of days, you don’t want interest and penalties accruing,” Labant says.
Communicate throughout the year. Your tax preparer may not be the first person you call when your wife discovers she’s pregnant, you decide to retire or your spouse files for divorce. But that tax pro should be on your list of phone calls, even if this major life event happens in the off-season.
“I think it’s better to talk to your CPA throughout the year,” Labant says. Your tax professional may be able to help you make a midyear tweak to your withholding, for example, or prepare you for a larger tax bill at year-end.
The same thing goes if you decide to start a side hustle, such as driving for a ride-hailing app, or launch a side business. Your tax professional would prefer to know about this immediately, so he can help you understand what expenses you’ll need to track, how to best manage and organize your business income and how your new gig may impact your tax bill. “You want to get on the right foot as far as tracking expenses,” Gentner says.
[See: 10 Smart Ways to Spend Your Tax Refund.]
Accept that everyone’s tax situation is different. Your cousin’s neighbor probably doesn’t know more about your tax situation than your tax professional does. “I hate hearing, ‘My buddy John and I have same job, and he got an $8,000 refund. How come I’m only getting $3,000?'” Armstrong says.
You may not know the details of your friend’s financial life that allow him to score a larger tax refund. And your friends likely don’t know more about your tax situation than your tax preparer does.
That said, if you don’t think your tax preparer is getting you the best refund or knows what he’s talking about, it might be time to find a new one. Ideally, you should visit someone who has undergone special training, such as enrolled agent or certified public accountant, and who keeps up with tax law and commits to continuing education.
Understand why “same as last year” is not a good answer. Don’t dismiss your tax preparer’s questions by saying, “Yeah, everything’s the same as last year,” experts say. It’s likely that your financial situation has changed a bit from the previous year. And even small changes might have real tax repercussions, so you still need to provide proper documentation to your tax professional.
Even if not much changed between this year and last, tax law is constantly evolving, so tracking necessary expenses, income and deductions each year is crucial to making your tax pro’s life easier — and lowering your tax bill.
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How to Make Your Tax Professional’s Life Easier originally appeared on usnews.com
