You can take steps to relieve the stress of tax day on April 15 by following the ABC’s of tax preparation.
A. Ask questions of your tax return preparer.
The IRS has been raising the bar on qualifications for paid tax return preparers over the last several years. Currently, tax preparers are just required to have a special tax identification number. By the end of 2013, though, they will be required to pass a competency test, tax compliance check and suitability check. They will also have to meet annual continuing education requirements.
What does this mean to you? Greatly improved services and fewer errors on your tax returns. Fortunately, many preparers have already completed these steps. So, the first question you should ask of your tax preparer is: Are you registered with the IRS and have you passed the exam?
Other important questions are:
• How much training have you had for this tax season to understand the tax law changes? Many tax items expired Jan. 1, and some provisions of the Affordable Care Act will affect individuals on their 2013 tax return. Proper planning is essential for these clients.
• Will you guarantee the accuracy of your work? Do you charge to e-file a return? Can I call you if I have questions or the IRS contacts me? Are you available year-round or just until April 15?
B. Bring Your documents.
Forgetting a tax document is one of the most frustrating, yet avoidable, reasons a tax return cannot be completed during the initial appointment. Bring everything you even suspect might be necessary for accurate completion of your tax return, including:
• Required documentation, such as Social Security cards, for each person listed in your tax return.
• Last year’s tax returns, particularly if you are seeing a new tax preparer. They can look for items that are different in this year’s return and make sure both years are accurate. Also, you can deduct state income tax you paid in 2012 for the 2011 tax year. Having your prior year returns will provide that information to your tax preparer.
• Forms such as your W-2, 1098, 1099 or Schedule K-1 provide critical information about income and potential deductions, so bring every form you receive. If you weren’t given a form that you think you should have, bring the documentation for that information, such as records for mortgage interest and real estate taxes. Real estate closing documents also provide important information about potential deductions.
• Bring records for other items of income and expense that are not already reported. This includes jury duty, gambling winnings, unemployment benefits and rental property.
• Did you know that you can deduct an amount for miles driven for charity? Bring that information, as well as your cash and non-cash charitable contribution records.
• Bring details of out-of-pocket medical, investment-related and job-search expenses.
• Information about child-care expenses, such as the provider’s name, address and Tax Identification Number, is required if you want to take advantage of the Child and Dependent Care Credit.
• Finally, if you have higher education expenses, bring that documentation as well.
C. Complete your return early.
The most obvious reason to file your return early is to receive your refund sooner. But, even if you owe money, filing early is a good idea. Remember you can file your return when it is completed and wait until April to send the balance due. Also, you will have plenty of time to hunt down any missing information if you start early.
Finally, your tax professional will be able to devote more time to your return early in the tax season, and your return will be completed while the annual procrastinators are still scrambling.
Cindy Klein is the director for the Premium Office of H&R Block in Savannah and can be reached at 912-355-2643 or firstname.lastname@example.org.