It’s tax season, which means gathering up all your financial records and documents from the past year. While you could file taxes on your own, most people prefer leaving it to the experts by hiring an accountant. But for your accountant to do their job and maximize your tax return, you need to provide them with some key information.
Having organized and complete documentation enables your accountant to thoroughly review your situation and get you every deduction you’re entitled to. So what exactly should you prepare for your accountant when it comes to doing your taxes? Here’s a checklist of what you need to supply.
Too Long; Didn’t Read
- Your accountant will need the following documents: income statements (W2s, 1099s, etc.), records for additional income, homeowner/rental documents, copies of previous federal and state tax returns if you are a new client (last 2 years).
- Your accountant will need access to your retirement account information as well as bank and investment accounts.
- Your accountant will need the following expenses: education expenses, medical and healthcare expenses, and any other relevant expenses.
Personal Information
Start by compiling basic personal information – your full legal name, current address, SSN, date of birth for you and any dependents. Also provide your marital status and note any change in status if applicable, such as getting married or divorced in the past year.
Income Statements
Next, pull together documentation on all sources of income. This includes your Form W-2 from all employers. If you received unemployment income, provide the 1099-G form. List any SSI benefits, pensions, annuities received. For investments, include information on interest earned, dividends received, and capital gains. Provide documentation on rental property income. Supply any other 1099 forms for freelance work, side jobs, etc.
Records for Additional Income
If you are self-employed, your accountant will need business expenses and other documentation. For rental property owners, pull together records on mortgage interest paid, property tax paid, repairs, maintenance, etc. If you made contributions to an HSA that could be deductible. Additionally, list any alimony paid or received, provide jury duty payment records, and report any gambling income and losses.
Bank and Investment Accounts
Your accountant will also need information on bank and investment accounts. This includes interest earned from savings accounts and CDs reported on 1099-INT forms. Provide investment account statements showing income, purchases/sales of assets, management fees. List any cryptocurrency transactions.
Retirement Account Information
Retirement accounts are another key area. Supply Form 1099-R for any retirement account withdrawals. Note traditional and Roth IRA contributions made last year. Share records of any rollovers or conversions.
Medical and Healthcare Expenses
Healthcare expenses are another category. Provide health insurance documents like Form 1095-A. List HSA or FSA distribution amounts. Make an itemized list of healthcare expenses including provider, date of service, and amount paid. Track mileage driven for medical care. Note any long-term care premiums paid.
Education Expenses
For education expenses, provide Forms 1098-T and 1098-E showing tuition paid and student loan interest paid. Note any education credits or deductions you claimed last year.
Homeowner/Rental Documents
Homeowners or rental property owners should supply mortgage interest statements (Form 1098). Include property tax records. Share records of any home improvements, repairs, operating expenses. Provide rental income and expenses.
Charitable Donations
If you made charitable donations, supply records of monetary and non-cash contributions to eligible charities.
Identity Protection Costs
If you had costs related to identity theft and credit monitoring, provide those records.
Other Deductions and Credits
Consider other deductions and credits like adoption costs, alternative motor vehicle credits, eligibility for Earned Income Credit, estimated tax payments you made, refunds from the prior year applied to taxes owed.
Copies of Previous Returns
Finally, supply your accountant with copies of your federal and state tax returns from the last 2-3 years. Having your prior returns allows them to identify any changes in status and ensure consistency year-over-year.
Having this detailed information ready for your accountant ensures efficient filing and maximum deductions to reduce your tax liability. Be sure to discuss any major life changes over the past year that could impact your taxes – marriage, new child, divorce, retirement, new job, college, home purchase, high medical expenses etc.
Getting Organized for Your Accountant
You don’t want to just hand your accountant a giant disorganized box of receipts and documents. Having your financial records organized makes it easier for them to file your taxes.
Categorize Expenses
Sort deductions into types like mortgage interest, property taxes, charitable donations, business expenses, medical, etc. This helps your accountant quickly identify potential deductions.
Go Digital
Scan or take photos of paper documents and receipts so you have digital copies to share easily. This avoids losing any paper files.
Label Dates
Make sure all documentation shows the date of the transaction. This allows proper matching to tax years.
Track Mileage
Log business or medical mileage for potential deductions. An accountant can only count these expenses if properly documented. There are many apps that will help you track mileage!
Keep Statements
Provide complete monthly statements for better context, rather than individual transaction receipts. Statements give a cleaner overview.
Being organized sets you up for the smoothest tax prep process and maximum return possible. You provide the full details, and let your accountant handle interpreting how to leverage deductions, credits, etc. most advantageously based on the latest tax codes. With full documentation of your income, expenses, and financials from the year, you can be confident you’ll get the optimal tax outcome.
After Your Accountant Files Your Taxes
Once you’ve submitted all your tax documentation, your accountant will finalize the calculations, double check for errors, and file your returns. Be sure to get copies of the final filed federal and state tax returns for your records.
Remember, you are ultimately responsible even when using a tax preparer. Review your returns carefully before signing and submitting to pick up on any inaccurate information. Never sign a blank return!
Keep copies of returns and supporting documents for at least 3 years in case of audit. If you receive any communication from the IRS or state tax authority, notify your accountant immediately. Stay involved, provide requested information quickly, and work cooperatively to resolve any issues.
Leveraging your accountant’s expertise makes tax prep easy and worry-free. Being organized and transparent from the start enables them to maximize deductions legally and strategically. With some preparation on your end upfront, you can sit back confidently as your accountant handles crunch time.
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