Pooley Accounting - Five Things Your Accountant Needs For Tax Time

We’d all like tax season to go a little smoother. And no one wants that more than your tax preparer. So, why not get a head start this year and help your accountant help you by getting them everything they need exactly when they need it?

Here are the five most important things you can provide for your accountant to make this year’s taxes go quickly and smoothly.

Identification

Let’s start off with something so simple that many people overlook it. Identification is crucial for personal income tax preparation, which includes prepping your personal returns if you own a pass-through entity business like a partnership, LLC, or S-Corporation.

Your accountant is preparing your return on the basis of you being who you say you are, so he or she will want to confirm everything first. If you’re claiming dependents, you’ll need full names, dates of birth, and social security numbers for each, so social security cards are probably the best option here.

Even if you’re using the same accountant as last year, it’s a good idea to come prepared so you don’t have to make return trips to bring missing information.

Income Documentation

Proof of income is next up on our list. If you’re paid regular wages or salary by someone else or your own company, this is typically a W-2. You may also have a variety of 1099 forms for everything from investment income to freelance work. These will arrive in your mailbox around January, so place them all together in a folder so they’re ready to go to the accountant when the time comes.

Expenses Documentation

On the flip side, you’ll also need to prove any expenses, hopefully, to support tax deductions. This includes the various 1098 forms (education expenses, mortgage interest, etc.), as well as any receipts and verification for deductible expenses.

If you’re filing a return related to a business, you’ll have a substantial amount of documentation and it should all line up with expenses you’ve already got recorded in your books. You can reduce the physical bulk of this by using electronic tracking and keeping virtual copies of things like receipts (which can be attached to specific expenses in your accounting software).

If your business took advantage of any government programs like the EIDL or PPP, make sure to include any documentation you received from that, along with proof of how you used those funds. The impact of those programs on your taxes continues to be a bit murky, so your accountant will want all the information they can get for preparing your returns.

Last Year’s Tax Return

Even though you’ve provided income and expense proof and you may have a different situation this year, it’s best to provide your accountant with a copy of your most recent income tax return. This will give them a jumping-off point, make the process go faster, and possibly alert them to a tax situation you otherwise wouldn’t think to mention. Hopefully, they can take your situation from last year and improve on it.

If you’re working with the same accountant as last year, he or she should already have a copy on file, but it doesn’t hurt to ask when you call to set an appointment.

Access To A Clean Bookkeeping File

As a business owner, keeping a clean, current set of books does much more than make your taxes easier. It also helps you monitor the health of your business, make better decisions, and qualify for financing or relief programs when you need them.

One of the best ways to help your accountant help you is to provide the accountant’s access to your bookkeeping file. If you use a cloud-based platform like QuickBooks Online, this is a very easy process. It will allow your accountant to confirm everything as he or she prepares your return without having to reach out to you with every question.

The key here is that you need a clean bookkeeping file. It won’t help the tax preparation process if your books are 6 months behind or filled with mistakes. This will either leave you with inaccurate taxes or paying your accountant to clean up and catch up on your books before preparing the return (assuming they offer this service). If your books are behind or a bit messy, a good place to start is finding a bookkeeper or accountant who offers clean up and catch up services and getting everything in order before you start preparing your taxes.

Conclusion: There’s No Time Like The Present

Now that we know what to provide, the question is when should you give all of this to your accountant? The sooner the better!

I’d recommend reaching out to your accountant first to set an appointment and asking what they want you to bring to that appointment. They may have something to add to this list, depending on your circumstances. Once you know, bring everything you can to the appointment to give your accountant as much time as possible to prepare your return with minimal rush. This is likely to get your returns done faster with fewer extra trips to drop off or fax in items. Last-minute additions can change the big picture and require your accountant to go back and redo completed work. That’s not helpful for anyone.