It’s a great idea to make yourself into a client that your accountant loves to see. You may help lower your accountant’s stress levels by being a model client, and also make your own tax season easier and less stressful.
What can you do to make sure your accountant is always happy to see you? Here are four simple steps you can take to become your accountant’s favorite client:
Find the Right Accountant
Make sure that your accountant is someone who can help you with the specific tax issues you face. Start with an understanding of the certifications you may encounter.
What is a CPA?
A Certified Public Accountant or CPA must have:
- met the educational requirements,
- passed the Uniform CPA Examination
- met your state’s licensing requirements.
What is an EA?
An Enrolled Agent, or EA is a tax practitioner who is federally licensed to represent taxpayers before the IRS.
CPAs, EAs, and tax attorneys are authorized to practice in front of the IRS. What does that mean? They can help you handle audits or negotiate with tax collectors on your behalf.
Even with the right training and licensing, not every CPA or EA will be the right accountant for you. Ask if your accountant is familiar with the specific tax issues that apply to your situation. For instance, if you’re a snowbird who spends the winter in another state, you will want to make sure your accountant is comfortable handling the tax requirements for both of your states of residence.
We all know the cliché of the taxpayer who shows up to their accountant’s office on April 14 with a shoebox full of crumpled receipts and tax documents. Being that client is sure to send your accountant heading for the hills.
For most taxpayers, a three-folder system will suffice. Create one folder for each of these categories:
Whether you are still working and drawing a paycheck, or retired and living off of your investments, you will have income statements that you will need to bring to your accountant. Having a folder to collect this information will help you keep track of every penny. Adding a cover sheet where you record what you earn as it comes in can help you check the accuracy of official documents, such as Social Security and pension statements.
Expenses and Deductions Folder
Start by creating separate files within this folder to represent each category of expenses or deductions, such as:
- charitable donations
- medical expenses
Doing this kind of organization of your receipts will help ensure that you don’t miss any necessary receipts. It also will help you avoid those head-scratchers when you can’t remember why you saved a specific receipt.
This will be where you save annual statements, such as from your:
- distribution records
- notices of dividends
- capital gains and losses
- tax-deductible contributions to retirement accounts
Be Prepared for the Meeting with Your Accountant
Even the most methodical among us has found papers that aren’t in their proper home. Do not expect your accountant to do your organizing for you. Make sure you come to your meeting with your information as well organized as you can get it. Remember that your accountant is an expert in the tax code, not an organizational guru.
As you review the three folders described above, you’ll want to identify the taxes you’ve paid throughout the year, this could be:
- Regular deductions
- Quarterly or estimated payments
- Real estate and property tax payments
Bring copies of last year’s federal and state tax returns for reference.
Know What Tax Issues May Affect You
Your accountant does not expect you to know every deduction and tax strategy that could apply to you. But, if you are unaware of how your life circumstances may affect your tax liability, it’s tough for your accountant to help you find the best strategies for your situation.
Let’s say you are raising your grandchildren, which could affect your taxes. Your accountant may first assume that you are an empty nester and neglect to check for childcare deductions. If you don’t know going into your accountant’s office that you may be eligible for deductions or credits, then you can’t assume that your accountant will know to ask you about it.
Do a little bit of research before you meet with your accountant—or, ask your accountant to chat with you about your life circumstances long before tax season so you can know which receipts and paperwork to hold onto. Doing so can save you both quite a bit of time and potential tax headaches come April 15.
You and Your Accountant: A Love Story
Treating your accountant like a partner in your tax preparation, rather than as the person you hire to “deal with it,” will go a long way toward making you a favorite client and reducing your own tax season stress.
By doing your homework before you meet, you’ll be better prepared to answer questions and fill in any information gaps that your accountant needs to complete your taxes .
And remember: The right accounting and tax professional can be a personal and financial resource to you all through the year, not only at tax time.