If you use a CPA for your tax preparation and filing, you know the work begins long before you enter their office for your tax appointment. The accuracy of your tax return depends on the data you provide.
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In the event of an audit, clear records can help prove deductions, reducing your stress and potentially saving you money. But what is the best format for submitting records to your tax accountant?
Experts agree that the best tax documents come in the form of digital copies that are always clear and easy to read. “The worst form of filing is a faded receipt,” says Gene Bott, CPA, partner at Kevin O’Leary Tax Hive. “But the photos aren’t far behind either.”
He explains that PDF greatly simplifies tax filing by allowing him to submit multiple pages in an easily accessible format.
Brian Zink, CEO and founder of No Upfront Tax Relief, agrees. “Providing digital copies is often preferred over loose-leaf paper,” he says.
However, if you receive paper copies of your W-2s and 1099s, be sure to keep them so you can cross-reference and make sure you didn’t forget to include any income on your return.
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If you run a business or have self-employed income, complex deductions (such as medical expenses), or capital gains investments, it is important to gather documents before your appointment and make sure all documents are accurate and accounted for.
“We tell our clients that staying organized is the best thing they can do. Labeled files and clear summaries are helpful,” Zink said.
Bote said his favorite clients understand what makes it more difficult to apply and help fix the problem. “I had a client who gave me a summary of all the income and expense items so I could check them off and make sure they were all there. I loved it!” he says.
If you are using a new tax preparer, bring your tax return from the previous year.
“Tax preparers will be looking for problems between your previous tax returns and the data they receive this year. They’ll be looking for missing income or expenses, changes in addresses or dependents, or other indicators that something may be missing or changed,” Bote explains.
Some tax preparers will review prior year returns for free to see if your previous preparer missed any points or deductions that could save you money or provide you with a larger refund.
