New Client Tax Preparation Checklist

I have new clients ask me what do they need to do to get ready for their tax return preparation. This outline is a good place to start.  It is geared for the individual and small business.  I suggest you highlight the areas that apply to you and check those off.  If you are a small business I need the bookkeeping records.  Either a Quick books file or an excel worksheet.  I don’t need the actual receipts.  Keep those for your records.

Click to Download this New Client Tax Preparation Checklist.


Most people will need:

Personal Information:

This information tells the IRS exactly who’s filing, who is covered in your tax return, and where to deposit your tax refund.

  • Social Security numbers and dates of birth for you, your spouse, your dependents
  • Copies of last year’s tax return for you and your spouse
  • Bank account number and routing number, if depositing your refund directly into your account.

Information about your Income:

  • W-2 forms for you and your spouse
  • 1099-C forms for cancellation of debt
  • 1099-G forms for unemployment income, or state or local tax refunds
  • 1099-MISC forms for you and your spouse (for any independent contractor work)
  • 1099-R, Form 8606 for payments/distributions from IRAs or retirement plans
  • 1099-S forms for income from sale of a property
  • 1099-INT, -DIV, -B, or K-1’s for investment or interest income
  • SSA-1099 for Social Security benefits received
  • Alimony received
  • Business or farming income- profit/loss statement, capital equipment information
  • Rental property income and expenses: profit/loss statement, suspended loss information
  • Prior year installment sale information- Forms 6252, principal and interest collected during the year, SSN and address for payer
  • Miscellaneous income: Jury duty, gambling winnings, Medical Savings Account, scholarships,etc.

Adjustments to your Income:

The following items can help reduce the amount of your income that is taxed, which can increase your tax refund, or lower the amount you owe.

  • Form 1098-E for student loan interest paid(or loan statements for student loans)
  • Form 1098-T for tuition paid(or receipts/canceled checks for tuition paid for post-high school)
  • For teachers: Canceled checks or receipts for expenses paid for classroom supplies, etc.
  • Records of IRA contributions made during the year
  • receipts for any qualifying energy-efficient home improvements(solar, windows, etc.)
  • Records of Medical Savings Accounts (MSA) contributions
  • Self-employed health insurance payment Records
  • Records of moving expenses
  • Alimony paid
  • Keogh, SEP, SIMPLE, and other self-employed pension plans

If you itemize your deductions:

Deductions and Credits:

The government offers a number of deductions and credits to lower the tax burden on individuals, which means more money in your pocket.  You’ll need the following documentation to make sure you get all the deductions and credits you deserve.

  • Child care costs: provider’s name, address, tax ID, and amount paid
  • Education costs: Form 1098-T, education expenses
  • Adoption costs: SSN of child; records of legal, medical, and transportation costs
  • Forms 1098: Mortgage interest, private mortgage insurance (PMI), and points you paid
  • Investment interest expenses
  • Charitable donations: cash amounts, official charity receipts, canceled checks; value of donated property; miles driven and out-of-pocket expenses
  • Medical and dental expense records
  • Casualty and theft losses: amount of damage, insurance reimbursements
  • Records/amounts of other miscellaneous tax deduction: union dues; unreimbursed employee expenses (uniforms, supplies, seminars, continuing education, publication, travel, etc.)
  • Records of home business expenses, home size/office size, home expenses
  • Rental property income/expenses:profit/loss statement, rental property suspended loss information

Taxes you’ve paid:

  • State and local income taxes paid
  • Real estate taxes paid
  • Personal property taxes paid
  • Vehicle license fees based on the value of the vehicle

Other Information:

  • Estimated tax payments made during the year (self-employed)
  • Prior-year refund applied to current year and/or any amount paid with an extension to file
  • Foreign bank account information: location, name of bank, account number, peak value of account during the year

For the Corporation:

The due date for the 1120c & 1120s is March 15th.  I need 30days to look over the books,make adjustments, reconcile payroll, depreciation, etc. and prepare the return. Please call for a quote.

I will need the Quick Books file.  The bank statements need to be reconciled prior to preparing the tax return.  If you need  this service.  Please call for a quote.

For the Partnership:

The due date is April 15th.  The same day as your personal tax return. You will need the K-1 to prepare your individual tax return.  So it needs to be ready by April 1st.  So please have everything here in my office by March 1st. Please call for a quote.


Posted in Articles

Tax Planning Part II: Year end tactics

Tax Planning Part II.

The last quarter of the year is tax planning “season”.  If you think you are going to owe, tax planning can be the answer. (See Tax Planning Part I)

If  you do owe, I see it as “giving your money away”  Most times it could have been prevented.

Here are some tax planning tactics that will help you pay the lowest tax rate.:

1)If you are getting a bonus at year end, ask your employer if you can get it on January 1st of the following year.

2)Contribute the max amount to your Health Savings Account

3)Contribute to a Traditional IRA

4)If you do not have a mortgage or very little mortgage interest paid, it is a good idea to pay your property taxes by 12/31/14

5)If you are a business owner and you think you will owe, think about your auto expenses. It may be to  your benefit to purchase a new/used vehicle and take the actual depreciation.

6)Also, if you are a corporation and see that you will probably owe, think about your payroll.  Pay yourself a bonus!!

7)If you have stock that you are losing money on and have for a few years, now is the time to let it go and get the tax benefits.

8)If you make charitable donations, now is the time to do it.  The non cash contributions are always a good thing.  And if you have a favorite charity and they have a cause you favor, now is the time to help them.

9)If you pay your auto insurance monthly, consider paying every 6 months by 12/31 so you will get the full amount of the deduction.

10)In regards to selling stock, think about how long you have held the stock. Most times, the long term capital gains tax is lower than ordinary tax rate.  So if you hold it more than 1 year, you will get the capital gains rate.

So, if you have questions or concerns about your tax situation, I provide consulting services. If your situation is complicated, it’s  a good idea to prepare an estimated tax return. But now is the time to do it.  Time is of the essence !!

Posted in Articles

Tax Planning Part I: Are you getting a refund or will you owe?

Now that its year end, it’s a good time assess your tax situation. The big question is: Are  you getting a refund or will you owe?

Most people go according to what happened the previous year. However, there maybe changes that occurred during the year that will affect your tax liability.

You may not be aware of these instances.

I have compiled a list here of situations that have come across my desk that will change whether you owe or get a refund. Ask yourself these questions:

1)Did you buy or sell a home?

2)Did you receive a windfall?

3)Did you change jobs?

4)Did you move?

5)Did you receive an inheritance?

6)Did you make a profit in your business?

7)Did you sell a rental property?

8)Did you receive a substantial bonus from your employer?

9)Did you buy or sell stock?

10)Will you receive a 1099Misc-non employee compensation?

11)Did you begin receiving social security?

12)Are you making more money this year?

13)Did you or your spouse change their withholding?

If you answered “yes” to any of these questions, please give me a call. Or if there is anything that you are concerned about with your taxes, please call.

Posted in Articles

How do people get Audited?

How do people end up getting Audited? And what happens when someone gets Audited?

When people get an IRS notice about a tax situation, you are being audited.  Most of the audits are done with notices now.  Most people don’t realize that and don’t take it seriously.  But you should.  It is serious and always has a date attached to it.  So pay attention and call a CPA.

This article pertains to individuals.  It’s a whole another world of how businesses get audited.

People are selected for examination either by computer or by manual identification. IRS uses a mathematical technique called  the Discriminate Function (DIF)system. Each  return is given a score.  Those with the highest score are audited.

But before they are, it must be manually screened by an examiner.  First to see if it is warranted for an exam. Then to determine the severity of the issues.

Its then determined if it can be handled by mail or needs to be done in house.  Usually those that are done in house either require a judgment call or evidence of receipts.  It just can’t be handled by mail.

There are certain standards that examiners must follow in determining if a tax return should be audited.

1)All large, unusual or questionable items must be considered.

****I had a client audited once because she was able to deduct a large amount of medical deductions. This is very unusual because most people cannot take medical.

2)Inquiries are made on unreported income.  Either a W-2 or 1099 was not picked  up on your tax return. Or there was 1099 from  your investment firm that did not get reported.

****I get people all the time who get notices because they have cashed in some stock and did not report it.  Keep in mind IRS gets a copy from your employer or investment broker of this activity.  When it does not match up to the tax return.  Its cause for an audit.

3)Sometimes someone will get a notice because of an error in the calculations. I get people who have tried to do it themselves.  Even with a tax accounting software, the questions get confusing and something gets reported in the wrong place.

4)Warning:  do not EVER send in a hand written tax return.  It’s a big red flag!

5)Those with higher income do get audited more often. In 2010, 71% of those audited had adjusted gross income between $100,000 and $200,000.  1.92% with those with income ranging from $200,000 to $500,00 AGI were audited.

Higher income individuals are being targeted. Especially over $500,000.  I saw it this past year with a couple of clients.  I had one that got hit by more than one new law that IRS implemented targeted at higher income people.

If you do receive a tax notice, try to stay calm.  Read it after you have calmed down and can think clearly.

Its standard procedure for the taxpayer to have 30days to dispute the claim.  If you call them they will usually give you more time.  Especially if the CPA calls.

I usually sit with the client and help them determine what IRS is asking for. Why are they proposing changes.  What are they asking for.

Most of the time, a corrected return needs to be prepared.  I offer this service to the client.  Then  the taxpayer will need a response to the letter. I also offer this service.

It’s rare that a taxpayer needs to file an amended return.  They just want to know about the changes.

What are your chances of being audited? For 2009, 142,823,105 returns were filed.  Of that number 1,581,394 were audited.  That’s about 1.1%.  Of those audited, 30% claimed the earned income credit.

So in conclusion, if you get an IRS notice, hire a professional. It’s usually complicated and warrants an experienced individual to handle the situation.

Posted in Articles
Evelyn Edwards, CPA in Austin Texas