Accountants typically bill clients based on the amount time they spend preparing the return. The more time spent collecting, sorting and analyzing tax information, the more costly the process becomes. You have more control over ways to reduce tax prep fees than you think. In this blog, we’ll discuss what you can do to make tax preparation easier and ultimately to reduce tax prep fees.
1. Fill out the tax organizer you receive at the beginning of the year.
For example, provide us with your updated driver’s license information. Provide details of quarterly estimates paid. How much did you pay? When did you pay them? Update your direct deposit information if applicable. If you had a source of income in a prior year that you no longer have, leave us a note. Filling out the organizer in its entirety will answer most of our questions. We want to make sure we have a complete picture of income and deductions to ensure accuracy.
Tip: The less we have to call to ask you questions that could have been avoided by filling out your tax organizer, the better. This means less time spent working on your return which in turn will reduce tax prep fees.
2. Keep track of your tax documents throughout the year so that your documents are already organized and ready for tax time.
File your receipts and tax documents in one place throughout the year rather than doing a last-minute scramble when everything has piled up. This makes organizing your documents more manageable and less overwhelming. TaxCaddy is a quick and easy way to do this (more on this in point #5).
3. When it comes to long lists of itemized deductions and expenses, a list with a total at the bottom is preferred compared to a collection of receipts.
If we are having to sort through and add up a lot of receipts, it’s probably costing you in additional fees. Reduce your tax prep bill by totaling up each category of expense.
Tip: Ask your pharmacist to print a list of your prescriptions purchased over the past year.
4. Take your documents out of the mailing envelopes before giving them to us.
If you want to go a step further, remove staples and use paper clips instead. I know this sounds silly, but if your documents are ready to be scanned when we receive them, we can start working on the return quicker. This means you get the completed return back quicker.
Tip: Don’t write anything in pencil because it doesn’t show up as well after being scanned. Your safest bet is blue or black ink.
5. If you would rather submit information electronically, talk to your accountant about the different options.
At Aldridge Borden, we use TaxCaddy. This system makes it very simple to submit tax documents in your client portal. You can submit documents to TaxCaddy in multiple ways including taking a picture on your phone. For more information on TaxCaddy, visit https://www.aldridgeborden.com/how-to-use-taxcaddy/. TaxCaddy is a safer, more organized way of submitting your tax documents electronically. In addition, you’ll have your documents in electronic format for file retention instead of keeping paper documents until it’s time to shred.
Tip: Do not send tax information containing sensitive personal information (i.e. Social Security numbers, account numbers, etc.) via unsecured email. Instead, drop it into TaxCaddy or upload electronically through another secure method.
6. Look through the tax documents from your prior year tax return to ensure you provided all the information that we’ll need for the current year.
If we needed it to prepare last year’s tax return, we’ll most likely need it for the current year.
7. Finally, keep personal documents separate from business documents.
Don’t intermix them together in one folder, but instead, separate them. This helps us quickly identify which documents to use for which return.
In conclusion, we hope this has inspired you to spend a little extra time organizing your tax documents this year. Don’t hesitate to reach out to your tax advisor at Aldridge Borden if you have any questions on how to reduce tax prep fees.
Written by Sara Davis, CPA