23 Sep 10 Steps To Tax Preparation
By Barbara E. Weltman
The federal government estimates that 60% of individuals use paid preparers to complete and submit their tax returns. If you are one of these people, it’s important to get started right away so you can have a successful tax return experience. Your preparer may take information directly from you or ask you to complete a questionnaire. Either way, you’ll need time to gather and organize the information. Here are 10 steps to take before going to your preparer.
1. Choose a preparer
If you don’t yet have a tax preparer, now’s the time to find one. A great way to find a preparer is to ask friends and advisors (e.g., an attorney you know) to make a referral. (For more, read How To Find The Right Tax Preparer.) Be sure that the person you choose has a Preparer Tax Identification Number (PTIN) showing that he or she is authorized to prepare federal income tax returns. Also inquire about the fees, which likely will depend on the complexity of your return; steer clear of anyone taking a percentage of your refund. The IRS has other tips for choosing a preparer, including a link to a new IRS directory of preparers (you can search according to the qualifications you’re looking for).
2. Schedule an appointment
The sooner you meet with your preparer, the sooner you can begin the process (even if you get an extension, as discussed later). It is especially important to act promptly if you anticipate a refund so you can receive your money promptly. If you wait too long to schedule an appointment, you may not get to see your preparer before April 15, which could mean you won’t be advised of actions that can still lower your 2014 tax bill, such as your eligibility for making deductible contributions to IRAs and health savings accounts for 2014.
3. Gather your information returns
By the end of January (technically February 2, 2015, because January 31, 2015, was a Saturday), you should have received various types of information returns that you need. For each form, verify that the information matches your own records.
Here are some of the most common forms: (Note: This is not a complete list; the IRS has information on the many other types of information returns you may need.
- Form W-2 if you have a job
- Form SSA-1099 if you received Social Security benefits
- Various 1099s to report income such as cancellation of debt (1099-C), dividends (1099-D), interest (1099-INT), and nonemployee compensation paid to independent contractors (1099-MISC). Note: Form 1099-B, which reports gains and losses on securities transactions, is not due to you until February 16, 2015.
- New Form 1095-A to report information from the government Marketplace from which you purchased health coverage
- Various 1098s reporting mortgage interest (1098), student loan interest (1098-E) and tuition payments (1098-T)
- Form W-2Gs for certain gambling winnings
- Schedule K-1s from entities in which you have an ownership interest (e.g., S corporations, partnerships, limited liability companies, trusts or estates). Note: You may not have received them yet; it could be as late as September 15, 2015, so check with the entity.