We asked CPAs and enrolled agents—individuals qualified by the IRS to prepare federal tax returns—what sends them round the bend and boosts their fees.
“If you bring in the shoe box, your tax fees will escalate,” says enrolled agent Karla Dennis. That's because the time it takes her and her staff to sort through the mess translates into a higher tax-prep fee.
So its best not to drive your tax preparer crazy, here's what not to do:
- Schedule your first meeting for early April: Getting a first appointment late in the season creates stress and adds to the risk of mistakes and overlooked tax savings. If you have issues to discuss with your accountant besides your 2011 return—say, tax planning for coming years—you'll need to schedule more time, which is easier to do early in the season.
- Pile on those receipts: Your tax preparer is not an auditor, so you don't have to show him or her all your receipts for business expenses, charitable contributions, and other deductible costs. Instead, bring to your appointment a list of those items organized by category (for example, home office, rental property, charity, etc.).
- Do nothing in advance: You will pay extra if your preparer has to make copies, sort papers, and check for duplicates and missing items. Open any envelopes with the words “tax information” or “tax documents” before your appointment, and sort the contents by category. If you have several income documents, group them into subcategories: W-2s and 1099s, for instance. "Some preparers actually may give you a discount if your material is well organized," says Tobie Stanger, a senior editor at Consumer Reports Money Adviser.
- Don't bother with cost basis: If you can't find the cost basis of investments you sold last year, assigning the task to your preparer can cost hundreds of dollars extra. Cost basis is the purchase price of the securities plus transaction costs such as commissions or transfer fees. You are required to pay capital-gains tax on the difference between the cost basis and your selling price, so the higher the cost basis, the less tax you'll owe. Your broker or financial adviser should send you a 1099-B form summarizing all your sales. But if you have no original receipts or if you received the investment as a gift, you'll have to find the purchase information to determine the cost basis.
- Don't look back on your financial year: Preparers say their clients often find new deductions or old deductible expenses just by combing through their day planners, appointment calendars, and check registers. You might remember, for example, driving to the next county to help a charity rebuild a house. That mileage for charitable purposes is deductible, at 14 cents per mile. Rather than waiting until your appointment, put comments and questions in an e-mail and send in advance. Your tax preparer can identify what’s relevant and request more information, if necessary, before your visit.