Stay Organized Throughout the Year
The best way to set yourself up for success at tax time is to keep your tax documents organized throughout the year. If you prefer to deal with tangible documents, designate a location in your home to accumulate tax documents as you receive them. Create folders for different types of items (for example, “Income Items” and “Deductions”). Throughout the year, as you receive receipts for donating items to charities, put those receipts directly into your “Deductions” folder. Alternatively, if you prefer to deal with electronic documents, scan or take a high-quality picture of each document as you receive it, and save these electronic documents into folders on your computer.
Sort Business Expense Items by Category
If you own your own business reported on Schedule C of your tax return, you will need to provide income and expense information to your CPA. If you provide receipts to your CPA, organize the receipts into separate folders based on the types of expenses. Better yet, provide a spreadsheet to your CPA summarizing all of your business’s income and expense items for the year.
Fill Out the Tax Organizer
If your CPA mails you a tax organizer, be sure to fill it out. A tax organizer is a document that shows your various income and deduction items from the previous tax year and allows you to fill in the dollar values for the current tax filing year. Filling out the tax organizer is a great way to make sure you have provided all of the necessary information to your CPA in order for him or her to complete your tax return. All of the numbers that you input into your tax organizer should have a supporting document which you will need to provide to your CPA as well.
Deal with Errors in a Timely Manner
If you notice an error in one of the tax documents that you receive in the mail, deal with the issue immediately. For example, if you determine that your W-2 has an incorrect social security number on it, contact your employer immediately to have a corrected W-2 issued. Your return will not be able to be filed until a corrected W-2 is received, in order to avoid a matching issue with the IRS.
Inform Your CPA of Any Life Changes
Did you get married or divorced in the past year? Did you have a child? Did your child start college? Let your CPA know if you had a major life change, as this will impact your tax return. Many tax organizers have a page of questions that seek to identify any major life events that have occurred since the previous tax filing. Be sure to fill out this questionnaire and return it to your CPA.
With proper preparation, your annual meeting with your CPA will be a smooth and worry-free experience!