There’s a reason tax time feels so daunting: Most people aren't well-versed in the language of the IRS. This is why it's so important to consult professionals who make it their job to study tax code and law. With that in mind, we spoke with financial consultants and certified public accountants (CPAs) around the country to find out what they want their own clients to know. Heed their expert advice, and when everyone else is sweating the deadline, you’ll already be rolling in your refund.
1. You can call us whenever you have a tax question.
Whether you aren’t sure about what to do with a year-end bonus in January or are thinking about converting your IRA in August, don’t wait until the following April to call your accountant, urges Michael Pierce, the managing director of RSM McGladrey, Inc., a nationwide financial consulting firm. An accountant can advise you on financial matters that may seem unimportant to you but can have a big impact on your bank account. For example, there are countless financial options for your retirement savings, and an accountant can tell you which will offer the biggest return in the long run. Pierce adds that by the time he's preparing a client's return, it's often too late to make a decision that will positively impact their finances.
2. Your paperwork should be ready before your appointment.
If your accountant sends you a tax organizer, don’t ignore it. You don’t necessarily have to concern yourself with the numbers, says Larry Rice, a CPA with Rodman & Rodman, P.C. in Newton, Massachusetts. But definitely review the questions in the organizer and pull any paperwork it calls for. “Just answering those questions may raise an issue that needs addressing,” says Rice. And remember, your accountant doesn’t have time to watch you sift through a pile of papers, says Pierce. So make sure you weed out shopping lists, school fliers and other non-essential papers from your stack of receipts ahead of time. Finally, if you have most—but not all—of your paperwork ready, Rice suggests you go ahead and bring what you have to the appointment. Include a note to indicate what’s missing and send the remaining documents as you receive them. While passing off an incomplete return may feel counterintuitive, doing so gives your accountant time to get a head start.
3. If you need a deadline extension, let us know sooner rather than later.
Don’t make your accountant scramble at the eleventh hour because you're nervous about asking for an extension. Contrary to popular belief, filing for an extension does not mean your return is more likely to be audited. “If you know you won’t have it together before April 15, let your accountant know as soon as possible, so an extension can be prepared ahead of the deadline,” says Rice.
4. Never ask us to fudge your numbers.
If the IRS comes after you, your accountant isn’t liable—you are. By being honest, you can prevent hefty fines in the event of an audit. “I advise my clients to be truthful, even if it means paying more than they anticipated," says Latreeka Williams, a CPA in Montgomery, Alabama, who owns Williams & Company, LLC, an accounting and tax consulting firm. Tax laws are complicated (and always changing), but it’s your accountant’s job to know them inside and out. Thanks to new tax credits introduced annually, a professional can more often than not “find” money on your return, so let your accountant focus on doing what he does best and not have to worry about whether your numbers are legit. “There are plenty of legal ways to reduce and manage your tax liabilities,” says Williams.
5. Take responsibility for your charitable donations.
Giving to charity is great. What’s not so great: Giving your favorite charity cash, then telling your accountant you can't remember whether it was $200 or $300. When you want to make a charitable donation, write a check. When you donate clothes, housewares, furniture or any other goods, ask the organization for an itemized receipt, says Pierce.
6. Stop by for an end-of-year visit.
There may be steps you can take at the end of the year that will save you money on your return come April. “I encourage my customers to meet with me in November or December,” says David M. Hippchen, a CPA in Chester, Virginia. For example, if you visited your accountant at the end of 2010, he may have advised you to use any funds left in a flexible spending health account on over-the-counter medications or items like contact lens solution. In 2011, you’ll only be able to use that money for medical care and prescription drugs, so if you have a bunch of money in there, it’s just going to sit in the account until someone gets sick. Your accountant can also remind you of deductions you may not have used, adds Hippchen.
7. Don’t expect your return to be prepared while you wait.
Most people don’t perform their best when they feel like they’re under a microscope—and that includes your accountant. Laura L. Canales, a CPA in Boise, Idaho, likes to have at least 24 hours to complete a return. “I stew about things and review the return a day later to look for errors,” she says. “I want to make sure I’ve given it all the research that’s needed.”
8. Give us your undivided attention.
Unless you file jointly, show up for your appointment alone. Greg Fey, an enrolled agent with 20/20 Tax Services in Montrose, California, recalls one woman who brought her ex-husband to her tax appointment, then started an argument about who got to claim the kids. Speaking of children, leave yours at home—unless they’re old enough to sit quietly in the waiting room—and have your dog wait in the car.
9. It is never worth it to get behind on your taxes.
Overwhelmed by all the forms and numbers? You’re not alone! Still, ignoring the April 15 deadline is the worst possible option. “People have a tendency to panic when they get behind on tax filings and do nothing because they are paralyzed by fear,” says Victoria Clark, senior manager at Bennett Thrasher PC. An accountant can help you crunch the numbers, make sense of tax laws and file for an extension if she deems it necessary.
10. Just like any other service, you get what you pay for.