Tax filing can be quite intimidating, particularly if this is the first time for you to meet a professional tax preparer. There are many people who do not have any idea what documents they should prepare before their tax preparation appointment, what questions will they be asked, and how much time they will spend at the office. However, there is no need to worry since the whole purpose of investing in tax preparer services is to make your tax filing as smooth and easy as possible.
Tax preparation outsourcing services analyze your financial details, find out deductions and tax credits that you qualify for, prepare both federal and state tax forms, and help to clarify some questions regarding your tax filing.
What Tax Preparer Services Actually Involve During Your Visit
Tax preparation meetings involve much more than just data entry in the software. During your meeting, your preparer will collect necessary data, confirm some documents, ask you questions regarding your financial situation, and make sure that your tax return will satisfy all the IRS requirements.
Depending on your tax situation, you will discuss the following items during your meeting:
- Confirmation of your personal information
- Verification of your income documents
- Deductions and tax credits
- Taxing life events
- Federal and state tax return preparation
- Answering your tax questions
- Reviewing your prepared return
- Filing your return electronically, if you are ready for it
This meeting is also an opportunity for you to ask some questions and better understand your tax return.
Before the Appointment - What to Expect
Preparing in advance for your appointment is one of the best ways to make things easier for your tax preparer and avoid potential delays.
Schedule Your Appointment Well in Advance
Don't wait until the due date to schedule your tax filing appointment. This way, you will have enough time to collect all the necessary paperwork.
Collect Your Tax Paperwork
You might be asked to provide the following documentation by your tax preparer:
- Identification issued by the government
- Social security number or ITIN of all people who are named on the return
- Form W-2
- Form 1099 (if you get freelance pay, interest, dividends, pension payments or other income)
- Mortgage interest statement
- Property tax record
- Student loan interest statement
- Childcare expense information
- Health insurance record
- Charitable donations documentation
- Previous year's tax form
- Bank account information (for direct deposit)
For self-employed individuals, you should bring your business tax documents.
Review Major Life Changes
You will most probably be asked by your preparer whether you have undergone any major changes within the tax year, such as:
- Getting married or divorced
- Having a child or adopting one
- Buying or selling a property
- Starting a new business
- Retiring
- Moving states
- Generating investment income
These changes might influence your filing status, deductions, and tax credits.
Prepare Questions
First-time filers often overlook the possibility of questioning their tax preparer.
Here are some examples of questions to ask:
- What deductions can I take?
- Should I change my tax withholding?
- Can I set up an IRA?
- How can I lower my taxes next year?
- Should I be making estimated tax payments?
Preparing your questions ahead of time will help you to remember everything you wanted to know.
Step by Step: How a Tax Preparer Reviews Your Return
Each tax preparer operates a little differently, however the appointment proceeds in a similar pattern.
Step 1: Confirm Your Identity
The initial step in the appointment is to confirm your identity.
Your preparer may ask for:
- A photo ID
- Social Security cards/ITIN documents
- Contact information
- Filing status
This ensures that your return is being prepared for the right person.
Step 2: Confirm Personal Information
After that, your preparer checks your personal information to ensure that all is in order.
They check for:
- Current address
- Date of birth
- Dependents
- Filing status
- Employment information
Even a simple mistake like a wrong Social Security number will slow down the IRS process.
Step 3: Confirm Income Information
Your preparer thoroughly checks each document related to your income.
These documents are typically:
- W-2 Form
- 1099-NEC Form
- 1099-MISC Form
- 1099-INT Form
- 1099-DIV Form
- SSA-1099 Form
- Forms relating to retirement income
- Documents relating to investments
If there seem to be any missing documents, your preparer will tell you what other information is required from you.
Step 4: Discuss Deductions and Credits
One of the most important aspects of the tax preparer service is to find out deductions and credits that you can apply for.
Some of the issues that your preparer will talk about are:
- Educational costs
- Medical costs
- Childcare expenses
- Retirement plans
- Property
- Work-related expenses
- Energy-efficient improvements to your property
- Charitable contributions
The conversation will help maximize all the legal deductions and ensure that you are not breaking any IRS laws.
Step 5: Discuss Self-Employment or Business Income
In case you are self-employed, own rental property, or have a business, your tax preparer will devote extra time to discussing income and deductions.
He/She may consider:
- P&L statements
- Business income and expenditures
- Vehicles usage report
- Expenses for home office
- Buying of equipment
- Payments to contractors
Proper documentation makes this process much quicker and avoids any further inquiries.
Step 6: Enter Your Information Into Tax Preparation Software
After reviewing your documentation, your tax preparer inputs all your financial data into specialized tax preparation software that is used to compute your tax liability, adhere to the new IRS tax laws, and identify inconsistencies or omissions in the tax form.
Your preparer will input data about such items as:
- Personal information
- Filing status
- Income from wages and other sources
- Tax withholding
- Applicable deductions
- Tax credits
- Estimated tax payments
- Contributions to your retirement plan
In case any information seems to be suspicious, your preparer will stop and ask questions instead of making guesses. This way he or she will help to prepare an accurate and error-free tax form.
Step 7: Review Your Tax Form With You
When all the data is inputted, your preparer reviews your tax form together with you.
- While reviewing your form, your preparer usually explains the following to you:
- Your taxable income
- Deductions claimed on your behalf
- Tax credits claimed on your behalf
- Your tax liability
Whether or not you have to pay any additional taxes or receive a refund
It is a great opportunity for you to ask any question related to your tax form, which does not seem familiar to you.
Step 8: Confirm Your Refund or Amount Owed
After analyzing the prepared return, the preparer will inform you about the final outcome.
- In case of a refund, the following issues will be addressed:
- Estimated amount of the refund
- Information on direct deposit
- Processing times for the IRS
- In case you owe taxes, the following issues will be discussed:
- Amount owed
- Deadlines for tax payments to the IRS
- Tax payment methods
- Tax payment plans, if available
Knowing all this information in advance allows you to better budget your finances.
Step 9: Review Before Signing
When your return is about to be filed, you will be asked to review it first.
Spend a little time checking the following information:
- Your name and address
- Social Security number or ITIN
- Your employer
- Income
- Direct deposit bank account
- Filing status
- Dependents
Although your preparer has already filed your tax return, the responsibility still lies with you to review it before signing.
In case you find any errors in your return, let your preparer know.
Step 10: Sign and File Your Return
Upon confirming everything is correct, you will then give permission to your preparer to file your return.
Almost all tax preparation firms file taxes electronically (e-file) – it is faster and safer than mailing paper returns.
Following the process, you will be able to get:
- A copy of your federal return
- A copy of your state return (if there is one)
- Filing confirmation
- Refund payment or payment information
- Tax record instructions
There are many firms offering online access to your tax records all-year-round.
How Tax Preparer Services Handle Questions About Deductions
There are many people who fear that they might be underutilizing the benefits of deductions or taking advantage of tax deductions that are not valid. One of the greatest benefits associated with seeking the assistance of a tax preparation professional is getting your queries clarified regarding what deductions or credits you can claim from your taxes.
The tax preparer would ask various financial questions from you during your appointment. Such questions could include:
- Educational expenses
- Student loan interest
- Mortgage interest
- Property taxes
- Charitable contributions
- Medical expenses
- Contributions towards retirement plans
- Expenses for self-employment
- Child care expenses
- Energy efficient home improvements
If you are a self-employed individual, then your tax preparer might inquire about:
- Office supplies
- Travel expenses of your business
- Advertising expenses
- Membership fees
- Subscriptions to software
- Expenses towards internet and telephone
- Insurance for your business
- Office space expenses (if applicable)
Don't hesitate to ask questions during your tax preparer consultation.
What Happens After Your Return Is Filed
It is not the end of your appointment after you file your return. Some other tasks will follow afterwards.
IRS Acknowledgment
For electronic files, the IRS will usually send an acknowledgment about your return being received by the IRS. Your tax preparer will notify you after receiving the acknowledgment.
Refund Processing
If you are expecting a refund, your return will be processed first before refund issuance. Using direct deposit is the fastest way of getting a refund.
Your tax preparer will teach you how to check on your refund status.
Responding to IRS Notice
Sometimes taxpayers will receive some letters from the IRS asking for more information or changes in your return.
In this case, contact your tax preparer to know how to respond to this notice. They will analyze it for you and help you respond accordingly.
Keep Your Tax Records
After filing, you should keep the copies of:
- Tax Returns
- W-2 forms
- 1099 Forms
- Receipts
Documents supporting your income/expense claims.
How Long a Typical Appointment Takes
One of the most frequently asked questions by new taxpayers is how long a tax-filing appointment generally takes.
This largely depends on the complexity of your tax filing.
For example, a basic filing, which contains just one W-2 form without any deductions, usually takes 30 to 60 minutes.
Filing a more complicated tax return containing self-employment incomes, different investments, rentals and other business-related deductions may take from one to two hours and even longer.
Among the factors determining the duration of an appointment are:
- Amount of sources of income
- Business ownership
- Investments
- Absence of certain documents
- Deductions related questions
- State tax filing
- Amount of dependents
Being well-prepared for the appointment will greatly decrease the time needed to finish your tax-filing.
This includes everything from looking at your documentation and checking your income to making sure that deductions are being taken care of and that your return is being e-filed correctly.
Getting yourself ready and being able to answer the tax preparer's questions during the meeting will definitely get the most out of it. No matter what kind of return you have, whether it is basic or complicated, tax preparer services provided by The Fino Partners can be of great assistance.
