YOUR DECISION
Whether you prepare your tax returns yourself or choose to engage the services of an accountant, tax professional, or other tax return preparer is a matter of personal preference.

Many people prepare their returns without professional assistance. They use the instructions and publications provided by the Internal Revenue Service (IRS) for help. However, as the complexity of your tax situation increases, so may the need to call in an expert. In fact, each year about half of the tax returns IRS receives are prepared professionally.

YOUR TAX PROFESSIONAL CAN HELP
Knowing which types of income are taxable and which are not, as well as which expenses are deductible and which are not, lies at the heart of preparing an accurate tax return. The tax law also sometimes requires difficult computations before a number can be entered correctly onto a form or schedule. Again, all this is particularly true if your finances are complex.

If you find yourself in this type of situation, it is reassuring to know your tax professional is there to help. His or her knowledge of the nation’s tax laws can save you time, money and headaches. It can give you confidence that your return has been prepared correctly, showing no more tax than you legally are obligated to pay.

PERSONAL RETURNS
For individual taxpayers, the tax return filed with the Federal government is the Form 1040 or one of its relatives – the 1040A, 1040EZ, 1040-NR, and so on. If you live in a state that imposes an income tax and/or one of the handful of cities or counties that does, returns for these taxes also will need to be prepared.

The starting point for preparing your personal income tax return is your own record of income and expenses. Your record-keeping system may be sophisticated, it may be simple or it may be virtually non-existent. Regardless, you and your tax professional first must refer to your records in order to prepare your income tax return properly.

Sound complicated? Not really. But you can save time and money if you assemble and organize some basic information in advance of your initial meeting with your tax professional. It is important to be thorough and honest as you prepare for this meeting. Remember, your tax professional can work only with the information you provide, and your tax return is ultimately a reflection of your representations. While a good tax professional will always inquire about commonly overlooked sources of income and deductions, it is in your best interest to do a little homework before you get together.

INFORMATION YOU WILL NEED
Depending on your circumstances, your tax professional may need to see a wide variety of financial and related documents. If you have any of the following, you should be sure to bring copies to your first meeting.

Income Record:

• Forms W-2 wage and tax statements
• Forms 1099-R pension, retirement, and annuity statements
• Forms 1099-SSA, Social Security Benefits statements
• Forms 1099-INT interest income statements
• Forms 1099-DIV dividend statements
• Forms 1099-B statement for the sale of securities
• Forms 1099-S statements for the sale of real property
• Forms 1099-MISC statements for other sources of income such as rents, royalties, and independent contractors income
• Forms 1099-G statements for income from state governments such as state income tax refunds, lottery winnings and unemployment compensation
• Alimony received (but not child support)
• Documents showing other sources of income, such as lease agreements, brokerage house statements of tax exempt interest income, gambling income, prizes and awards, etc

• Alimony paid (but not child support)
• Expenses for job-related moves
• IRA, Keogh, SEP and SIMPLE contributions
• Penalties for early withdrawal from savings accounts
• Health insurance premiums you paid
• Medical and dental expenses you paid
• Real estate taxes
• Personal property taxes
• State income taxes
• Home mortgage interest you paid (usually on Form 1098)
• Investment interest you paid (e.g., on a margin account)
• Charitable contributions
• Losses from theft or casualty
• Business expenses reimbursed by your employer
• Professional dues and subscriptions
• Gambling losses (only if you had gambling income)
• Child and dependent care expenses (you must provide the name, address and taxpayer identification number of person or business providing these services)

• Social Security numbers for all dependents
• Records reflecting the amount you paid for any property (stocks, bonds, mutual funds, real estate) sold during the year
• Copy of your previous tax return

ESTIMATED TAXES
Our nation’s tax system requires all taxpayers to meet their tax obligations on a “pay-as-you-go” basis. Most people accomplish this through wage withholding through their employer’s payroll department. Others, such as retirees or self-employed individuals, generally are not subject to employee withholding. They may be required to make quarterly estimated tax payments to the IRS (and perhaps their state).

Sometimes, too, even people who are subject to employee withholding nevertheless may not have enough income tax withheld by their employers. This can happen to high-income dual-worker married couples or to any employee with significant sources of outside income (investments, moonlighting, rents and other royalties, etc). These people either need to make adjustment to their withholding or make quarterly estimated tax payments in order to comply with the tax law. If you think you may be in any of these situations, your tax professional can help. He or she knows how to estimate your income and expenses accurately and ensure you are paying in enough tax “as-you-go” so that you don’t receive a penalty at the end of the year.

BUSINESS RETURNS
Due to the complexity of the law, if you are a sole proprietor, a partner or a stockholder in a closely held business, you are well advised to use the services of a tax professional in preparing your business’s tax returns. Think of your tax professional as your small business’s tax department.

STAY INFORMED - AND STAY IN TOUCH!
One critical aspect of your relationship with your tax professional is keeping him or her informed of circumstances that may affect your tax picture.

If you receive any communication from the IRS or a state or local taxing authority, it is imperative that you contact your tax professional immediately. You should not try to respond to these communications without consulting your tax professional.

Similarly, you are well advised to consult with your tax professional before undertaking any actions, which could affect your tax situation. Proper tax planning occurs before you buy or sell property, accept a new job, make a large charitable contribution, receive a retirement distribution, etc. Often, waiting until afterwards is too late. Once a deal is done, its tax consequences usually are set – and the result can be an unpleasant surprise.

SAVING OLD RETURNS
Once your return is filed, you should keep a copy of it – and the backup documentation (receipts, etc.) – in your personal records. Generally, you need to save these copies for as long as the IRS can audit you. Assuming you file your return, that’s usually three years from the return’s due date. However, if it turns out that you understated your income by 20% or more, the law extends the audit period to six years. So, it is probably a good idea to save a copy of the return and its documentation for six years. On very rare occasions, the IRS may question whether you filed a return from a number of years ago, so some people suggest you permanently save a copy of the return itself, along with the cancelled check if the return showed a balance due.

CONSERVING TIME
Tax professionals refer to the period between January 1st and April 15th as “tax season”. As you can imagine, it’s their busiest time of the year, as well as the most rewarding, as that is when they tend to spend the most time meeting with and helping clients.

Nevertheless, a tax professional’s time is at a premium during tax season. Plan in advance to make the most of your time. The suggestions offered in this pamphlet can help you do just that.