The end of January marks the start of tax season, which means it’s time to start getting your documentation ready! I am a CPA working in public accounting, and I worked doing tax returns for several years before switching to auditing. Here are 5 tips to help you prepare for tax season from my time as a tax accountant!
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A quick note here – since I am a CPA, I will always recommend people get their taxes done by a professional. I know you may just have a few W2s and nothing complicated, and I totally understand doing your own taxes in that situation. However, if you have a more complicated situation, a business, or just have no idea where to start with your taxes, then go to an accountant! They know the laws and regulations and will do a much better job on your return.
1. Keep track of your documents.
The majority of tax documents are mailed out during January. That means your documents will start arriving soon. Make sure to keep track of these. Save them all in one location so you won’t lose or forget about any of them. This will keep you from having to contact all the companies later to get new copies of all those documents when it comes time to do your taxes.
A common misconception I think a lot of people have is that, because tax day is April 15th, they have to wait until March or April to get their taxes done. This isn’t the case! As soon as all your documents come in, take them into your tax preparer. You’ll beat the end of tax season rush and have a quicker turnaround for receiving your refund if you have one coming!
2. Have things organized for your accountant.
I can’t tell you how many tax returns I prepared where the client just grabbed all their documents in a pile and threw them in a box – no organization whatsoever. It takes a lot more time for your accountant to organize all your forms and make sure you’ve provided everything when you do this! Get all your documents together and provide them to your tax preparer in an orderly manner.
You won’t have any idea what order your preparer will want your documents in, but that doesn’t mean you can’t make their job a little easier. Put all the same time of forms together so they’re easy to find. If you have multiple of the same document from the same company, put those together as well. A little organization will save your accountant time, which means you get your return done faster!
3. Actually fill out the organizer.
When you take your tax information to an accountant, you will usually receive a packet to fill out. This is called an organizer, and it helps you make sure you provide all the information and documentation your tax preparer will need to complete your return. Fill this out.
So many people don’t fill these out and just bring their documents into their accountant. While it’s still very possible to do a tax return without the organizer, it really just makes everyone’s life easier. It saves you and your tax preparer time because it’s less likely they’ll have to track you down to have you answer further questions or provide documents you forgot about. Take the time to fill this out and make sure you have all your forms in order.
4. If you have a business, bring all relevant documentation.
If you have a sole proprietorship or single-member LLC form of business, make sure to bring all your business documentation to your accountant along with your personal return! These types of business are done in connection with your personal return, so your accountant won’t be able to complete your return until they can complete the business return as well.
Discuss with your accountant what documentation they will need for your business. In general, this will be all the forms, receipts, and anything else you have to support your business income and expenses. Be sure you are keeping all this documentation throughout the year so your tax preparer is able to help you be in the best tax position possible.
5. Respond quickly if your accountant has any questions or issues.
Even if you fill out the organizer and bring all your organized documents in, sometimes there are still questions or issues that come up. If your tax preparer reaches out to you with questions on your return, make sure you get back to them with the answers in a timely manner!
Doing so enables them to get your return done quicker. This means you get your return done faster, your refund quicker (if you’re getting one), and your preparer will definitely appreciate it!
Using these tips will help you prepare and make your tax season experience go much smoother – and your accountant will thank you! If you need more help getting your finances in order, check out these other articles:
- How to Write Your First Budget
- The Basics of Sinking Funds
- 2020 Budget Planner Setup
- Change Your Finances, Change Your Life