Getting the Most Out of Your Tax Pro
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In previous blog post you learned about how to choose a tax adviser. Now a few words about using him or her to greatest effect. Plan on seeing your preparer at least twice a year –once to have your return prepared and once to explore ways to reduce next year’s taxes. A good time for your planning session is May or June, to give you enough time to implement your preparer’s suggestions during the rest of the year. A second planning meeting in early November may be warranted if you are active in the stock market, own a business or rental properties, have income over $100,000, or had unexpectedly large earnings or capital gains during the year. If you fit any of those descriptions, you may want this session for some last-minute tax tips to shave your bill to the IRS and your state.
Just meeting with your tax pro is not enough, however. You need to arrive prepared. If you are dealing with a new preparer, give him or her copies of your last two or three returns. Besides painting a fairly complete picture of your tax situation, your returns may contain valuable information about property you are depreciating and about losses or credits you can carry over into future years.
Be sure your records are complete and up-to-date. You preparer cannot invent numbers to put in your return. Unless you supply accurate information, money you spent on deductible items will be lost. Remember that your income is even more important to the IRS than your deductions. So make sure your professional has copies of all of your Forms W-2 and 1099 when preparing your return.
If you are coming in for tax-planning advice, bring an estimate of your year-to-date income, federal and state tax withholding, and deductible expenses. Also carry along the latest monthly or quarterly statement from each of your investments; a summary of year-to-date capital gains and losses; a record of estimated taxes paid; and a record of deductible pension or savings plan contributions you made.
Write down any questions you have before coming in, such as whether there are any changes in the tax law that affect you or whether you will be subject to the alternative minimum tax (a special tax system with a flat rate levied on some wealthy people to ensure that they pay their fair share of taxes.) Always ask if there is anything you should be doing to save taxes.
Use a tax manual to bone up on any areas of the tax law that affect you. This is especially true when you come in during the filing season, because your busy preparer will have only a limited time to question you. If you do not know that the cost of removing trees killed by southern pine beetles may be deductible, it is unlikely your preparer will uncover it unless you get around to chatting about your landscaping.
Mention changes in your family situation, too. Unless you send your preparer a baby announcement, he or she will not know you have a new exemption to declare. Keep your preparer informed of any marriage, divorce, births, or deaths in your family, children who leave home, and changes of address.
Unless you quake at the thought of an audit, make it clear that you want all the deductions you are entitled to receive. Once your return is prepared, feel free to question any decisions you do not understand or challenge. Ask for a reference to the tax law supporting his or her opinion if you are still unconvinced.
Remember that your preparer is only a phone call away. Seek his or her advice before making any major financial move, such as buying a house or funding your child’s education. Just give your pro enough time to research the tax angles.
Finally, act on your professional’s advice. Don’t ignore it. After all, in the long run, how much you save in taxes is up to you.
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One Response to “Getting the Most Out of Your Tax Pro”
Thanks, being new to the whole paying taxes deal I an unaware at which documents and receipts are must keeps to give to the accountant. Thanks for the tips.
Craig
http://www.budgetpulse.com
By
Craig (Who am I?) on Nov 4, 2008