With tax season almost upon us, millions of Americans will soon consult with their respective tax professionals to prepare an end of the year return.
While many might ‘know the drill’ when it comes to having their taxes prepared, there are also plenty of first-timers out there who have never worked with a tax professional.
If you fall into this category, or just want tips to make your tax prep experience a more fluid one, this list will help you to get prepared for tax season.
1. Call ahead and retain services early
During the throngs of tax season, many firms are too busy to take another client, so if you need a tax firm’s help, reach out ahead of time.
If you’re considering going to a tax preparation company for the first time, or haven’t used one in a while, you might want to set up an initial consultation to go over your individual tax scenario to get started.
Even if you have a trusted firm that you have been using for years, you shouldn’t rely on the notion that someone from that company will contact you.
Take matters into your own hands, and make the call early to ensure that you’re fitted snugly into a good tax preparer’s schedule. Don’t get left in the dust scrambling to find a tax preparer come March or April.
2. Understand your work status
I recommend that before you even call a tax firm, you put some time into understanding what your specific tax situation is.
By this I mean, figure out whether you’re an employee, a contractor, or the owner of your own business. This may sound rudimentary, but I’ve run into quite a few folks who think they’re employees and turn out to be contractors.
To boil it down quickly, employees generally receive a Form W-2 in the mail at the end of the year, while contractors get a Form 1099. Owners of businesses, even though they are not employees, might not receive a 1099 – they might only have records or receipts of transactions, which they must rely on to calculate their taxes.
Once you understand whether you’re an employee, a contractor, or a business owner, you can confidently give your tax preparer an idea of the job ahead.
3. Understand your tax preparation goals
What do you want to accomplish by having a professional do your taxes?
Are you trying to simplify your life, in the same way you would by hiring a painter or lawn care service?
Or, are you attempting to ward off any potential problems because you have a tax scenario that is more complex?
Or, are you trying to lower your taxes to the lowest, legally-allowable amount through tax planning and preparation?
A lot of the time it’s a combination of all three of these things. Whatever the end game you have in mind, consciously understand ‘why’ you’re going to your tax preparer while remaining realistic.
Share these goals with your tax preparer explicitly. Tax preparation is not a rote series of tasks, so explaining your desired outcome is important.
4. Have questions in mind and ready
Before you meet with your tax professional, do your research and some soul searching to think about what your concerns are.
Generally, if any life-changing event has occurred over the last year, that’s something which could have tax implications. For example, did you get married? Have a baby? Experience a business loss?
If there’s anything at all that you think could affect your taxes, ask your tax preparer about it. In fact, I recommend writing all your questions and comments down on paper, so you don’t forget to bring these topics up. The preparation of these questions will probably not take too long and will help ensure you get your questions addressed.
5. Gather your end-of-the-year tax statements
You know the small sheets of paper with the intricate boxes that have numbers and code letters printed in them?
These are the tax forms that are the most important pieces of information to your tax preparer. These documents directly instruct the preparer how to do your taxes, more than any verbal description can.
One misplaced or forgotten form can be the difference between thousands of dollars to your bottom line, so make sure to gather them before turning to your tax professional.
The most common year’s end tax statements to look out for are:
- Form W-2: Wage and Tax Statement
- Form 1098: Mortgage Interest Statement
- Form 1098-E: Student Loan Interest Statement
- Form 1098-T: Tuition Statement
- Form 1099-MISC: Miscellaneous Income (generally indicates independent contractor’s pay)
- Form 1099-INT: Interest Income
- Form 1099-DIV: Dividends and Distributions
- Form 1099-R: Distributions from Pensions, Annuities, Retirement Plans, IRAs, or Insurance Contracts
- Form SSA-1099: Social Security Benefit Statement
If you receive any of the above forms, or any of the more obscure informational returns, guard them very closely and make sure they get in the hands of your tax pro.
Along with generating a good rapport between you and the preparer, providing tax documents in an organized fashion will most likely save you money in the end. The more time your tax consultant has to spend looking for your tax documents, the larger your total bill generally becomes.
Work with Dino Tax Co this tax season
Looking for a tax preparer in the Kingwood or Houston area to help you this tax season?
We’re still taking clients for the upcoming tax season. Retain our tax preparation services early by calling ahead. Go ahead, give us a call now at 713-397-4678.