1. Be organized
Make both your life and your preparer’s life easier by maintaining good records of your expenses and other financial matters. For example, sock away in a file or shoe box any receipts you receive throughout the year that may be relevant to your taxes. These might include postage receipts from when you sent off a mailing to clients or a receipt for when you made an energy-efficiency improvement in your home.
Keep track of any miles traveled for work, too — either in a log or with one of many handy apps. After the year ends, total up how much you spent on all relevant categories. Expecting your tax preparer to do so can cost you more, as it will take up more of their time. (You shouldn’t have to provide the preparer with all the receipts, either. You can just give him or her the totals and then keep the receipts in case they’re needed later.)
2. Keep your personal and business affairs separate
Ideally, have separate bank accounts for your personal and business saving and spending. Separate your receipts for business expenses and personal expenses, too. Remember that if you have a home office, it should be a separate place in your home, too — not just a nook in the multipurpose den. The clearer your records are, the more easily (and, typically, more inexpensively) your tax pro can get your taxes done.
3. Alert your tax pro as soon any you receive any notice or letter from the IRS
If the IRS sends you any kind of notice or letter, let your tax professional know about it as soon as possible — and don’t respond to it before you consult with your tax pro. Your pro should have much more experience than you in dealing with such things and can help you respond appropriately. Some pros can even respond for you.
4. Keep in touch with your tax pro
Ideally, you won’t just deal with your tax professional at tax time. Instead, throughout the year, you should alert him or her of any major financial or life events, such as if you get married or divorced, have a child, lose or change a job, become widowed, receive a financial windfall, receive stock options, move, sell or buy a home, retire, and so on.
Let him or her know if you’re thinking of taking on a side job, too. A good pro may have some suggestions or strategies for you that can reduce headaches at tax time. For example, some stocks sold midyear for a big gain may result in an extra big tax hit come April, so some warning can help you plan for that.
5. Know that your tax practitioner is a professional
Enrolled Agents want you to know that they’re professionals. Typically, they know the tax code very well, so when you think that you’re asking them a “quick question,” the answer may actually be more complicated than you think. Your friends may have a quick answer to various tax questions, but tax pros will likely have more informed answers — and may also need to crunch some numbers before being able to give you an answer.
Remember that tax laws change, and your friends may not know the latest rules. (The recent tax reform made some major changes to tax law.) When your tax pro asks you a question, they would like a little more detail, too. Instead of just guessing that a certain expense should be the same as it was last year, it’s best if you actually check your records and offer a rather accurate answer.
You want your tax pro to do a great job for you and save you as much money as possible, but for best results, be a great client, too, providing all needed information in an organized and timely manner.