Whether you love filing your taxes or push it off as long as possible in fear of what you might find, tax preparation is non-negotiable. Doing all the work yourself, however, is.
If you opt to see a tax pro, go prepared. From gathering key documents to identifying deductible expenses, here's everything you need.
Gather These Important Documents
- Last year’s tax return: To file your tax return, the tax accountant will need some important documents. If it’s your first appointment, make sure to bring last year’s tax return for their reference. This gives them a good place to start from because you may qualify for some of the same deductions or write-offs that you received last year, and the information may help them calculate this year’s return.
If you’re worried there may be some issues with older returns, bring those along as well for the accountant to review. I switched accountants a few years ago and he found that I hadn’t deducted moving expenses the previous year. He amended my previous year’s return and got me a refund for the taxes on my moving expenses.
- Your wages statements: You should receive a W-2 from your employer outlining what you earned and paid in taxes for the year. If you worked for more than one company, you will receive a W-2 from each. If you are self-employed or do freelance work on the side, you should have received 1099 forms by January 31 for income over a certain threshold; bring them to your accountant.
- Interest and dividend income: You will need to bring 1099 forms reporting interest and dividend income for any bank or brokerage firm that you have accounts with now or within the prior year. The institution will mail or email you them, or you can pull them from its website. If the forms aren’t available by the time you meet with your accountant, you can download the year-end statement for the same information.
- Other income: If you received any other income in the year, bring documentation for that income to your accountant. This includes unemployment income, social security income, or income from partnerships (which can be found in a Schedule K-1).
- Gains or losses: If you sold any investments during the year, bring a report of your realized gains and losses so that your accountant can incorporate the additional income. If you didn’t make any sales over the last year, this isn’t necessary.
Identify Deductible Expenses
When you take a deduction, it reduces the amount of income you have to be taxed on. So the more you deduct, the less you pay in taxes. Gathering your deductible expenses and the necessary documentation at the end of the year can take time, but it’s worth it.
Here’s a list of some expenses you may be able to deduct:
- Mortgage or home interest paid (Form 1098)
- Real estate and personal property taxes paid
- Expenses associated with the purchase or sale of a residence
- Medical, eye, and dental expenses
- Charitable contributions
- Moving expenses
- Student loan interest
- Tuition and education fees
- Job-related education expenses
- Unreimbursed employment-related expenses
- Child care expenses
- IRA contributions
- Alimony paid or received
- Income expenses from rentals or other business
- Casualty or theft losses
Have Logins and Passwords Ready
If you forget to bring something, it’s no big deal. Everything is electronic these days and there is a way to pull all the information you need online. But it’ll save you a lot of time if you know your logins and passwords for each of your accounts. (Getting locked out of your bank account as your accountant looks over your shoulder: awkward.)
Your tax preparer will also need your bank information to set up direct deposit for your refund, or an automatic payment if you owe. Either way, no checks have to be written and the whole process is over faster.
Prepare Thoughtful Questions
If you have a qualified tax accountant, they can provide you with a ton of useful information during your meeting. It’s the perfect time to ask questions about minimizing your tax bill, clear up any fuzzy issues, and ask for advice about your money decisions in the coming year. Make sure to maximize this time with such a valuable resource.
Create a System to Make Next Year Easier
If gathering all the documents and information for this year’s meeting was a pain, plan now to make next year easier. What system can you put in place to track your deductible expenses or collect the necessary forms in a more efficient way? I highly recommend tracking deductible expenses each month so that you don’t have to go through a year’s worth of expenses come tax season.
Oh, and Don’t Forget Your ID
The tax preparer will need to confirm your identity with the IRS. This can be done by using your Social Security number and the Social Security numbers of any dependents you claim. If you’re meeting with a new accountant, they might ask for a photo ID to verify that you are who you say you are. It doesn’t hurt to double-check your wallet.
[Editor's note: This was originally published February 10, 2015.]