If preparing for a visit with your tax advisor leaves you fretting over what to bring with you, then relax! This article will help guide you to complete the task in an organized and efficient manner.  

Following the flow of the income tax return, let’s organize your tax documents and receipts into five categories: income, adjustments to income, deductions, tax credits and tax payments. Collect all W-2’s and Form 1099’s. Write down on a sheet of paper or a tax organizer, for each person in your household, the form received and the payor who issued the form. Include any investment 1099s or Schedule K-1’s received from ownership interests. Do you own a sole-proprietorship business? Provide a summary of your business’s income and expenses for the year along with a list of property and equipment purchased.

If you have adjustments to income such as educator expenses, moving expenses, IRA contributions(Form 5498) or student loan interest deductions (Form 1098-E), list them and attach documentation to your organizing sheet. This is the area of tax preparation where the most omissions occur and if it was not part of your previous year’s tax return, you may not think to include them.

Documenting your tax deductions is the most time-consuming and confusing part of your organizing task. Do you have enough tax deductible expenses to “itemize” your deductions? If not, you will use the “standard deduction” associated with your tax filing status. If your itemized deductions exceed the standard deduction it is likely that you own your home and are paying on a mortgage. The most common itemized deductions are state income taxes or sales tax paid, real estate taxes, mortgage interest paid(Form 1098) and charitable gifts donated during the year.

The biggest time waster for most people is pulling together all your medical and dental expenses. The reason: these expenses are only deductible to the extent they exceed 10% of your adjusted gross income—or 7 ½% if you were born before 1/2/1951. If you have a lot of unreimbursed expenses or your health insurance premiums are paid with “after tax” dollars rather than “pre-tax” dollars, then do spend time here. If not, move on. A similar thing applies to miscellaneous expenses such as unreimbursed job expenses, investment expenses, safe deposit box and tax preparation fees. These only increase your itemized deductions to the extent they exceed two percent of adjusted gross income.

Next we have tax credits and tax payments. Tax credits are awesome! They are better than tax deductions because they reduce your tax liability dollar for dollar and in many cases are refundable to you. Your tax preparer will calculate any tax credits coming your way. The most common are the dependent care credit, child tax credit, earned income credit and education credits. Make sure to list who provided the dependent care along with their tax IDs and include the Form 1098-T from the college your child attended. Tax payments during the year are made up of tax withholdings shown on your W-2s and some 1099s, any refund applied from your prior year’s tax return and estimated tax payments you made during the year. Provide your tax preparer with detail on when those estimated tax payments were made and the amount paid.

We are almost done! If your marital or family status changed during the year then discuss this with your tax advisor. It may affect your filing status, standard deduction and number of exemptions claimed to arrive at taxable income. If you are switching tax firms this tax season, do provide your new tax preparer with copies of previous year’s income tax returns.

Being organized for your visit to your tax advisor will yield more than a properly prepared tax return, it will help your tax professional to be better able to advise you for the year ahead and save you from missed deductions, an incomplete tax return and tax notice “love letters” from the IRS. A properly prepared tax return is the foundation for all financial planning. Much success!