Tax Returns
Maximize Your Refund and Deductions
First, not all tax returns are the same. How your tax return is prepared makes a difference. The right tax preparer for you depends on what is important to you. Typically, most of us hope to pay the least amount of tax legally. Sounds fair enough.
It’s is important to find a tax preparer who knows the tax law very well and also knows how to be creative legally. They should ask you a lot of questions about your situation in order to understand your circumstances and goals. Have a review process where at least one other person reviews your tax return solely for the purpose of how to reduce your taxes legally.
Basically, your tax preparer needs to know how the tax law applies to your situation. Having other clients in your industry or with similar investments indicates that the tax preparer is likely to be familiar with the tax laws that impact you.
It’s very common, as well as a good business practice for tax preparers to have a staff member prepare your tax return. You want to make sure the other people working on your return have the same level of expertise.
A professional tax preparer who is focused on reducing your taxes will have a built in review process. Usually it involves having another experienced tax preparer review the return solely for the purpose of finding ways to reduce your taxes.
It is a good idea to show the tax preparer you are considering your prior year tax return. Professional tax preparers will be able to give you at least one idea of what you can do to reduce your taxes by looking at your tax return for just a few minutes. If it’s innovation you are after, this is a great question to ask. However, don’t expect the tax preparer to give you all their ideas right then and there, remember, that’s how they earn a living. However, it is possible for them to know if they can save you taxes after spending 30 minutes with you.
Tax preparers that want to reduce your taxes want your tax return information early and will communicate that to you. You can minimize tax return preparation fees if you ask your tax preparer if the prefer tax information in a certain format.
It is also a good practice to have someone other than the tax preparer do your bookkeeping. This is a good way to minimize tax preparation fees. Remember, organize your information. Don’t bring your tax preparer a shoebox full of receipts. A tax preparer that is really focused on keeping your fees down will have forms, spreadsheets and other tools available for you to use to organize your tax return information. Many tax preparers now require clients to input their information online. Accurately entered information can help reduce fees. Keep in mind however information that is entered inaccurately can increase your fees just as easily.
A tax preparer needs to know the tax law very well and how to properly file, clearly understand the IRS’s current red flags and offer an audit defense plan. It is a good idea to ask the tax preparer how many audits they have been through and what caused the audit? In addition, what was the outcome of these audits? Remember, a return can be randomly selected for audit or selected because of a certain activity. So it’s important to understand the outcome of the audits. Was additional tax assessed or were there no changes? Additional tax usually indicates that something was not reported properly.
Be selective with the tax preparer you put your confidence in. Your tax preparer can make all the difference in your world.
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