This week is the start of the tax season and the Internal Revenue Service (IRS) announced that it expects to issue refunds within 21 days—nothing new here. But there are complications: the potential for another government shutdown, tax cuts, and the new JOBS Act.
People who are concerned about these new measures could easily lose focus and mess up their returns. This is why organizing your documents in advance is paramount. The earlier you can provide accurate information to your tax preparer, the better.
Being early and ready also pays in the form of savings as doing these preparations yourself can save you hundreds of dollars in preparer fees. According to the National Society of Accountants, the typical state and federal return costs about $188.
To save yourself more time and money, consider these suggestions.
Get Organized
Separate “tax information” envelopes from “tax documents”. Print the tax documents, and before going to the tax preparer, sort paper documents by category.
To help in your document collection, ask your preparer for a tax-organizer worksheet or checklist—that is, a paper or electronic document to fill out in advance. Be aware that gathering your tax documents and filling out the organizer might take a couple of hours the first time you do it.
The checklists don’t necessarily account for everything in your financial life, so check for some commonly overlooked things. Even if you pay a flat fee rather than an hourly charge, there’s a benefit in preparing yourself for the paperwork.
Take for example, state and federal tax returns from the previous year (2017). If you’re scheduled to meet early in the tax season, you may notice that you’re lacking other things for your 2018 taxes like the IRS Form 1099-DIV, which often arrives later. Still, your tax preparer should be able to get started if you provide most of your documents. That’s especially true if your tax situation hasn’t changed much from last year.
If you’re meeting a new preparer, take the last three years’ worth of returns and supporting worksheets. Your tax history is particularly important if you reported investment losses in prior years. You may be able carry over and claim a portion of those losses on subsequent returns.
Documents to Remember
Tax professionals also say clients fail to supply a number of documents, delaying the time it takes to fill out tax forms. Speed things up by taking the following documents with you.
- Supporting paperwork for an IRA donation after tax. Not reporting your contribution could end up paying double in taxes.
- A home-mortgage refinance closing letter.
- Real-estate tax receipts.
- Child care provider taxpayer ID numbers, addresses, and phone numbers.
- Itemized charitable contributions, mortgage interest for loans up to $75,000, and medical expenses.
- Proof of quarterly tax payments.
- Proof of charitable distributions.
If you don’t have all the information you need by early February, follow up with employers, investment firms or any other individuals who may have produced taxable income. Forgetting to report revenue may not be enough for an IRS audit, but it could trigger a warning. Therefore, getting the papers ready now gives you a chance to plan and file ahead.
If you need professional help with your tax preparation, our small business tax professionals can help guide you in the right direction. Contact us today at 818-452-2641 or fill out our contact form to schedule a free consultation.
