Smart Strategies to Reduce Your Tax Preparation Costs

Get ready to meet your tax preparer! This checklist will help you prevent additional charges this year.

Filing taxes is essential, but handling everything by yourself isn't required.

If you're thinking about hiring a tax professional, being organized is crucial. The more time they spend sorting out your financial details, the higher your bill will be. Ideally, gather your documents well ahead of the April 15 deadline, as many tax preparers increase their fees as the date approaches.

Follow this guide to ensure you're fully prepared for tax season, making the process easier for both you and your accountant.

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COLLECT IMPORTANT DOCUMENTS

Bring last year's tax return: Your accountant will need key documents to process your return. If this is your first meeting, be sure to have last year's tax return with you. It helps provide a foundation since you may qualify for similar deductions as last year, and it can assist in calculating this year's return.

If you have concerns about older returns, bring those as well. A few years ago, my new accountant discovered I missed claiming moving expenses. He amended my prior return and secured a refund for those expenses.

Your income statements: Expect a W-2 from your employer detailing what you earned and the taxes paid throughout the year. If you worked for multiple employers, you'll receive a W-2 from each. If you're self-employed or freelance, ensure you have your 1099 forms, which should arrive by January 31 for income over a specific threshold.

MORE: Does Your Child Need to File a Tax Return?

Interest and dividend reports: Bring 1099 forms that show interest and dividend income from any financial institutions you've dealt with in the past year. These should be mailed or emailed, or you can access them online. If they're not available at your meeting time, download the year-end statement instead.

Other income: Document any other income sources for the year, such as unemployment benefits, social security, or partnership income (found in a Schedule K-1).

Gains or losses: If you sold any investments last year, bring documentation of your realized gains and losses so your accountant can factor in that income. If you didn't sell anything, this step isn't necessary.

DETERMINE DEDUCTIBLE EXPENSES

Deductions lower the taxable income amount, so the more you can deduct, the less you'll owe. With the new, elevated standard deductions ($12,950 for single filers and married filing separately, $25,900 for married filing jointly, and $19,400 for heads of household), many may find itemizing less appealing. However, if you suspect your itemized deductions exceed the standard limit, collect documentation for the following:

• Mortgage or home interest (Form 1098)
• Property taxes paid
• Expenses related to buying or selling a home
• Medical and dental expenses
• Charitable contributions
• Moving costs
• Student loan interest
• Tuition and fees
• Job-related education costs
• Unreimbursed employment expenses
• Childcare costs
• IRA contributions
• Rental or business-related expenses
• Losses from theft or casualty

MORE: 5 Important Tax Facts About Childcare

HAVE YOUR LOGINS READY

If you forget a document, don't panic. Everything is online, and you can access the information you need. However, knowing your logins and passwords ahead of time will save you time. Getting locked out while your accountant is right there? Not ideal.

Your preparer will also need your banking information to set up direct deposit for your refund or to process payments if you owe. This streamlines the process significantly.

PREPARE YOUR QUESTIONS