How to prepare and talk to your CPA at tax time

It’s tax season and that means you’re running around the home office looking for documents, receipts, and other pieces of paper that may have fallen behind your desk over the past year.

While it’s not ideal, trust us, tax time doesn’t have to be a hassle. We talked with Potomac Local Supporting Partner Chris Peden, of Peden Accounting Services about how to best prepare for tax season.

Get a five-divider folder

Well, first thing is to gather your documents together. And what I said in the post was you go down to Walmart or Target or store and get a five divider or folder and you just start throwing the documents in there. You have got to have a section there for your income. Another one for any kind of a government document you’re going to get or from the bank.

Say you’re going to get refunds, you’re going to get your mortgage statement, you’re going to get an IRA statement: throw this in there. And then you also want to use the other buckets for, say, things like charitable contributions, because a lot of people are going to need to have documents for those in order to be able to deduct those.

If you own a business

And then if you run a business, you’re going to have your expenses, and you’ll want receipts for those just that when he handed off the account, they can look through it and understand what they’re looking at and how they can deduct it.

Also, if you do have a business, a PNL or a profit loss statement is very helpful to help make sure that everything gets reported and reported correctly. So those are what you’re going to need to get started on your taxes for the year.

For my clients, I have an organizer that I send people so they can just go through and just do a checklist while watching some of the bowl games or a basketball game.

Afterward, we have a conversation, find out about what’s happened to you during the year. Any kind of events that may have triggered something. You sell a house, sell some stocks, you have a kid. Those all things can be lead to other questions that we can have a discussion about and see what else we can do and really be ready just to talk and just have a nice chat with somebody who wants to help you out.

Hey, can we talk?

After the documents are together, we have a conversation and find out about what’s happened to you during the year. Any kind of events that may have triggered something. Did you sell a house? Did you sell some stocks? Did you have a kid? Those all things can be lead to other questions that we can have a discussion about and see what else we can do and really be ready just to talk and just have a nice chat with somebody who wants to help you out.

What should I ask?

I generally start out with this outlook: there’s no such thing as a stupid question. I would rather have you ask me something just out of pure honesty and curiosity, asking something like. “Hey, I don’t know about…” And just ask me about it and I’ll give you the best answer I can.

And sometimes the what’s considered dumb questions are actually very insightful. And those conversations could lead to new findings, like decisions you didn’t know you could make.

Now is a good time

It’s also a good idea to make a simple phone call a call to your CPA and saying, “Hey, can we talk for a little bit before you go absolutely crazy.” And have a nice civil conversation about what needs to happen, and maybe do a little tax planning while we’re there because it’s early in a year.

The sooner you can put plans in place, the less you have to worry about it down the road. It’s best to do this now, while there are still weeks and months before the tax deadline looms.

Strike up up a conversation today with Peden Accounting Services by going to their website, or by calling 703-967-1948. They’re your local tax and accounting firm.