It is in your own best interest to organize your tax records, make sure they are complete, and take adequate time out of your day to meet with a tax professional, so the process is as efficient as possible. Time is money. If your return takes additional hours to complete because your records are disorganized or incomplete, or you don't show up on time for your appointments, it stands to reason you may be charged more for your return than someone who is punctual, organized and compliant.
Keep Your Tax Advisor Informed
If you have a client relationship with a firm, it is also important to keep them abreast of any changes throughout the year. For example, they should be notified when you receive a notice from the IRS or state taxing authority, or when you experience a life event that may impact your tax status. If you open up a business and drain your retirement accounts, reach out to your tax professional or financial advisor.
According to a recent survey conducted by the National Association of Enrolled Agents, an advocacy group located in Washington DC, you can consider the tax preparation experience in three distinct areas: organization, communication and professionalism.
Organize Financial Records
- Keep separate bank accounts and charge accounts for your business and personal needs.
- Keep your records and receipts for at least four years in the event your tax return is examined and there is a need for substantiation.
- Use a mileage log or phone app if you are claiming business mileage. You should also keep a mileage log if you are active in charities and drive to many functions and meetings. (For related reading, see: How to Log Mileage for Taxes in 8 Easy Steps.)
Communicate With Tax Professional
- Do not respond to a tax notice without discussing it with your tax professional. they know the language and know how to respond correctly and on point.
- Advise your tax professional about life changes such as a growing family or divorce.
- Talk about that side gig you want and all that it entails. Remember, your tax information is your own business and is very confidential. Your information cannot be shared without your consent and there must be safeguards in place to make sure the tax preparer is taking the proper steps to safeguard it. If you see a wastepaper basket filled with returns or client information, think twice.
Seek Advice From Proper Channels
- Rely on tax advice from a professional, not your BFF or barber.
- Your tax refund is based on your own situation, which may be different from your friends and coworkers even though you may have similar income.
- “It's the same as last year” really does not cut it. Get receipts or records.
Tax time does not have to be worse than going to the dentist. Just be proactive, be organized and be on time.
(For more from this author, see: Don't Overlook These Year-End Tax Deadlines)