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How to choose the right tax accountant

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A quality tax preparing accountant saves you time and money. In today’s post, we look into how you can pick the best accountant for your business or personal tax needs.

Ask For Recommendations

Many of your peers have accountants. Ask them where they go. Why?

Because, like any professional, most accountants have particular niches. They might specialize in helping freelancers with their taxes or focus on sorting the finances of a larger corporation.

Asking your peers is the easiest way to sort through the clutter to find an accountant. Imagine you wanted to find a doctor for your foot pain. You likely want a doctor that specializes in foot pain instead of one that specializes in hands.

It’s no different with accountants. Ask around; the best recommendations come from satisfied customers that have a similar set of needs as your own.

Prioritize Location

You want someone who understands your tax situation and can handle everything you may throw at them.

This is easier if you can communicate with them face to face. Sure, you could work with someone remotely and they might be able to help you figure out your taxes, but especially for freelancers and those in similarly complicated tax situations

Find Out If They’re Qualified 

So how do you find out your potential accountant’s qualifications?

Start by asking for a Preparer Tax Identification Number. Anyone who prepares or assists in preparing federal tax returns for money must have a PTIN. Not only does this help you determine your potential preparer’s qualifications, but also, that number is required in order for the accountant to file your taxes on your behalf.

Now, it isn’t that hard to get a PTIN, so you’ll want to ensure that your potential tax preparer has one of the following qualifications:

  • CPA – Certified Public Accountant

  • Law license

  • Enrolled agent designation

Be sure that your accountant, at a minimum, has a Certified Public Accountant (CPA) license. Even though it is technically not a requirement, the process of getting a CPA license is reasonably strict and requires that your accountant have a bachelor’s degree to even sit for the exam. If you happen to get audited, you’ll need a tax preparer with one of the above qualifications  for them to represent you if you get audited

Beyond the  PTIN number, degrees, and certification, you’ll also want to know how many years of experience they have filing taxes.

If you have a simple return, you require less experience. For those with complicated or unclear tax returns, you’ll want someone who has been navigating the system for longer.

Find Out How Much It’ll Cost You  

The average accountant can cost between $100 and $175 an hour.

That can be a lot for a small business owner or freelancer. There are some things you’ll want to ask about before meeting with an accountant. In 2018, the average fee for preparing a tax return including an itemized Form 1040 with Schedule A and state tax return was $294.

Most of the best accountants charge an hourly rate but will look over your prior year’s taxes for free, or offer you a free consultation to start. Take these offers, as they will help you select the right fit for your tax needs.

Also, note their hourly rate if you get audited. You can expect to pay a qualified accountant $150/ hour to represent you if you’re audited.

Ensure They’ll E-File  

This is simple. Every accountant should be e-filing at this point. The IRS requires any paid preparer to e-file if they do more than 10 returns. If they aren’t e-filing, maybe they’re not as experienced as you would like.

Should you itemize this tax season? Some important things to keep in mind for 2020.

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Should you itemize this tax season? That is a common question for many taxpayers this season. Are you holding off seeing an accountant because you aren’t sure whether or not you will need to itemize?

I’m sorry to tell you, the only way you’ll truly know whether or not you should itemize is to ask a tax professional. But since (good) accountants charge by the hour, you might want to prepare the proper documentation before you step foot into an accountant’s office.

That’s understandable. We’ll help you navigate the big questions of deductions and whether or not you should itemize your tax return for the 2019 tax season. Then we’ll instruct you as to what types of documentation you’ll need to collect if you do decide to itemize.

Should you take the standard deduction? 

For the 2019 tax season, the standard deduction is up to $12,200 for a single person. This means most taxpayers are going to take the standard deduction.

Here is a chart breaking down both the standard deduction for the 2019 tax season (the taxes you’re currently prepping) and the 2020 tax season (next year’s tax return).

Status

2019

2020

Married Filing Jointly

$24,400

$24,800

Head of Household

$18,350

$18,650

Single

$12,200

$12,400

Married Filing Separately

$12,200

$12,400

If you’re wondering what makes this number change year to year, you can blame tax changes (the 2018 Tax Cuts & Jobs Act bumped the standard single person deduction from $6,000 to $12,000) and inflation.  Congress adjusts the amount of the standard deduction to accommodate inflation.

The big boost in the standard deduction means that anywhere between 85 and 95% of taxpayers won’t need to itemize. We’ll help you determine if you’re part of that approximately 13% that the IRS estimates will itemize for the 2019 tax season.

How do you know if you should itemize? 

You’ll have to add it up.

Check your filing status (and the filing status of a spouse or any dependents). Find out what the standard deduction is for your status. Then add up all your expenses and see if you come in under, close to, or over the standard deduction.

A good accountant would help you maximize what you can write off, but you can get a gist of what you’ll need if you prepare ahead of time.

Start by finding out if you can itemize these 4 major deductions:

  • Charitable contributions

  • Medical Expenses

  • Mortgage interest

  • State and local taxes (think property and sales tax)

Medical expenses and mortgage interest alone might be high enough to put you over the threshold.  If you haven’t made it over the approximate $12k yet, continue by assessing how much you can deduct from these expenses:

  • Casualty, disaster and theft losses

  • Business expenses

  • Tax preparation fees

  • Investment interest

  • Mileage on a vehicle

  • Home office deductions

This covers a lot of areas where you might commonly receive a deduction.  The business deduction point will be a particularly tricky one if you aren’t strict about your record-keeping.

Remember, you don’ t need to get an exact count, you just need to get a rough idea of what you’ll need. That way you spend less time in the accountant’s office and more time doing what you do best.

Who might want to itemize? 

If you aren’t into adding up all the numbers, here are some categories of person who might want to itemize:

  • You run your own business – You have to spend money to make money, which means you’re making less money than it looks like on paper.

  • You have a high-interest rate on your mortgage.

  • You had a lot of medical expenses in the past year.

  • You pay for your own healthcare out of pocket.

If you’re even questioning whether or not you meet the threshold to itemize, its time to schedule a meeting with an accountant. This post helped you determine whether or not your tax situation might warrant itemizing deductions, now talk to your local tax advisor to find out for certain.

 

Tax Prep Checklist: 6 Types of Documentation to Bring to Your Accountant This Tax Season

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You’ve found the perfect accountant for your taxes. They understand your tax situation, what you need, and are willing to help.  

But what do you need to bring for your appointment? The longer it takes for an accountant to prepare your taxes, the more money it will cost you.

You might as well be prepared and ensure you have every single piece of paperwork and documentation that you need to before you walk into an accountant’s office.    

Here’s a checklist of what you should bring:  

Proper Identification 

To be safe, bring both a valid photo ID and your Social Security card. Your accountant, especially if this is the first time they’re preparing your taxes for you, will need to verify your Social Security number, the spelling of your name, and that the card you bring is in fact you. 

You will also need to bring the Social Security cards/numbers of any dependents you’re claiming and that of your spouse (if you have one).  

Copy of Your Most Recent Tax Return 

Be sure to bring your most recent tax return to the office. This gives your accountant vital information that they’ll need to file your taxes. 

Wage Statements and Income  

There are many ways to make money and only some of them come with accompanying forms. The two most common that you’ll encounter are Form W-2 and a variety of different Form 1099s.  

Check out this complete list of different wage forms you might receive (and therefore should bring to your accountant’s office):

  • Form W-2 (wage and salary income)

  • Form W-2G (gambling winnings)

  • Form 1099-A (foreclosure of a home)

  • Form 1099-B (sales of stock, bonds, or other investments)

  • Form 1099-C (canceled debts)

  • Form 1099-DIV (dividends)

  • Form 1099-G (state tax refunds and unemployment compensation)

  • Form 1099-INT (interest income)

  • Form 1099-K (business or rental income processed by third-party networks)

  • Form 1099-LTC (benefits received from a long-term care policy)

  • Form 1099-MISC (self-employment and other various types of income)

  • Form 1099-OID (original issue discount on bonds)

  • Form 1099-PATR (patronage dividends)

  • Form 1099-Q (distributions from an education savings plan)

  • Form 1099-QA (distributions from an ABLE account)

  • Form 1099-R (distributions from individual retirement accounts, 401(k) plans, and other types of retirement savings plans)

  • Form 1099-S (proceeds from the sale of real estate)

  • Form 1099-SA (distributions from health savings accounts)

  • Form SSA-1099 (Social Security benefits)

  • Form RRB-1099 (Railroad retirement benefits)

  • Schedule K-1 (income from partnerships, S corporations, estates, or trusts)

Additionally, there is a possibility you might have income that won’t be reported on a form. This includes small businesses where a client might pay you $500 for a service. You won’t have signed a form with them, but that doesn’t mean you don’t have to report the income. 

Bring proof of that income when you go to the accountant’s office. 

Real Estate Documents 

Do you own a home or piece of property? There are a lot of deductions you can take if so. You should bring any documentation that includes: 

  • A recent home purchase 

  • A home equity loan  

  • Proof of paid real estate or property taxes  

 

 Proof of Expenses

If you’re planning to itemize your deductions, you need to determine all of your expenses.  

Try to keep it organized but bring everything you think you might need. You’ll want records of: 

  • Receipts 

  • Invoices 

  • Medical bill 

  • Charitable contributions 

  • Expenses related to job-hunting 

  • Mileage logs  

  • Education expenses 

  • Self-employment expenses 

  • Gambling losses 

  • Child care expenses  

  • Moving expenses  

  • Personal property taxes  

  • Real estate tax bills  

  • And more 

Be thorough. It’s better to have more tax documents than less. 

If you want to get your deductions and credits, it’s imperative that you hand over documentation that proves your expenses. This includes receipts, invoices, medical bills, charitable contributions, IRA contributions, job-hunting expenses, mileage logs, education expenses, self-employment expenses, and more. It’s better to bring too much documentation than too little.

Direct Deposit Authorization Form or a Blank Check 

This ensures that when your accountant e-files on your behalf that they are able to directly deposit any federal or state returns. 

 

That’s it! You’re now ready to save yourself time and money by heading to your accountant’s office completely prepared. Make sure you go to a certified CPA accountant to ensure that your taxes are done properly and that you get the maximum potential return. 

You’ve found the perfect accountant for your taxes. They understand your tax situation, what you need, and are willing to help.  

 

But what do you need to bring for your appointment? The longer it takes for an accountant to prepare your taxes, the more money it will cost you.

 

You might as well be prepared and ensure you have every single piece of paperwork and documentation that you need to before you walk into an accountant’s office.    

 

Here’s a checklist of what you should bring:  

 

Proper Identification 

To be safe, bring both a valid photo ID and your Social Security card. Your accountant, especially if this is the first time they’re preparing your taxes for you, will need to verify your Social Security number, the spelling of your name, and that the card you bring is in fact you. 

 

You will also need to bring the Social Security cards/numbers of any dependents you’re claiming and that of your spouse (if you have one).  

 

Copy of Your Most Recent Tax Return 

Be sure to bring your most recent tax return to the office. This gives your accountant vital information that they’ll need to file your taxes. 

 

Wage Statements and Income  

There are many ways to make money and only some of them come with accompanying forms. The two most common that you’ll encounter are Form W-2 and a variety of different Form 1099s.  

 

Check out this complete list of different wage forms you might receive (and therefore should bring to your accountant’s office):

  • Form W-2 (wage and salary income)

  • Form W-2G (gambling winnings)

  • Form 1099-A (foreclosure of a home)

  • Form 1099-B (sales of stock, bonds, or other investments)

  • Form 1099-C (canceled debts)

  • Form 1099-DIV (dividends)

  • Form 1099-G (state tax refunds and unemployment compensation)

  • Form 1099-INT (interest income)

  • Form 1099-K (business or rental income processed by third-party networks)

  • Form 1099-LTC (benefits received from a long-term care policy)

  • Form 1099-MISC (self-employment and other various types of income)

  • Form 1099-OID (original issue discount on bonds)

  • Form 1099-PATR (patronage dividends)

  • Form 1099-Q (distributions from an education savings plan)

  • Form 1099-QA (distributions from an ABLE account)

  • Form 1099-R (distributions from individual retirement accounts, 401(k) plans, and other types of retirement savings plans)

  • Form 1099-S (proceeds from the sale of real estate)

  • Form 1099-SA (distributions from health savings accounts)

  • Form SSA-1099 (Social Security benefits)

  • Form RRB-1099 (Railroad retirement benefits)

  • Schedule K-1 (income from partnerships, S corporations, estates, or trusts)

Additionally, there is a possibility you might have income that won’t be reported on a form. This includes small businesses where a client might pay you $500 for a service. You won’t have signed a form with them, but that doesn’t mean you don’t have to report the income. 

 

Bring proof of that income when you go to the accountant’s office. 

 

Real Estate Documents 

Do you own a home or piece of property? There are a lot of deductions you can take if so. You should bring any documentation that includes: 

  • A recent home purchase 

  • A home equity loan  

  • Proof of paid real estate or property taxes  

 

 Proof of Expenses

If you’re planning to itemize your deductions, you need to determine all of your expenses.  

 

Try to keep it organized but bring everything you think you might need. You’ll want records of: 

  • Receipts 

  • Invoices 

  • Medical bill 

  • Charitable contributions 

  • Expenses related to job-hunting 

  • Mileage logs  

  • Education expenses 

  • Self-employment expenses 

  • Gambling losses 

  • Child care expenses  

  • Moving expenses  

  • Personal property taxes  

  • Real estate tax bills  

  • And more 

Be thorough. It’s better to have more tax documents than less. 

If you want to get your deductions and credits, it’s imperative that you hand over documentation that proves your expenses. This includes receipts, invoices, medical bills, charitable contributions, IRA contributions, job-hunting expenses, mileage logs, education expenses, self-employment expenses, and more. It’s better to bring too much documentation than too little.

 

Direct Deposit Authorization Form or a Blank Check 

This ensures that when your accountant e-files on your behalf that they are able to directly deposit any federal or state returns. 

 

 

That’s it! You’re now ready to save yourself time and money by heading to your accountant’s office completely prepared. Make sure you go to a certified CPA accountant to ensure that your taxes are done properly and that you get the maximum potential return. 

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.