Pay What You Owe: An Income Tax Preparation Guide


    Did you know that as of October 2020, over 151 million people filed income tax returns? If you are in the middle of filing late taxes or prepping for next year’s tax season we are here to help you with income tax preparation. Instead of making taxes a stressful event that you want to avoid, use our guide for a smooth filing process.

    Keep reading to learn the ins and outs of tax preparation.

    1. Choose a Preparer

    One of the first things you might want to consider is hiring a professional tax preparer. You can ask friends and family for referrals to make your search easier. When you are narrowing down your selection make sure that the person you chose has a PTIN (Preparer Tax Identification Number).

    The PTIN shows that they are authorized to prepare federal income tax returns. When you are looking at your potentials also ask about their fees to give you a better idea if they are within your budget. A reputable professional such as The Asset Advisory Group will be very transparent with what they charge.

    1. Make an Appointment

    Next, you want to make appointments with your list of potential preparers. During your appointment you can see whether or not you like how the preparer is. Do not be afraid to ask how long they have been doing this and what their experience is with your type of tax filing.

    Most preparers offer free consultations where they will also give you advice on how to get the most benefits from your tax preparation.

    1. Gather Your Documents

    Next you will have to gather all of your documents that the preparer tells you about during the initial appointment. You will need things like bank statements, 1099s, 1098, W2’s, etc.

    In some cases, you will also need to gather your receipts. If your preparer will be itemizing your deductions then they will need a copy of the receipts to ensure that you are writing off everything that you are eligible to write off.

    Receipts for medical costs that your insurance does not cover can be written off, or property taxes, and investment-related expenses.

    1. Find Last Year’s Tax Return

    Using last year’s tax returns will help your preparer see important things such as charitable donations, your deductions, and your interests and dividends. For example, that previous return will show which mutual funds, financial institutions, and banks sent you 1099 forms.

    With that list your preparer can make sure that you gathered all of your 1099s again for the new year. Unless you closed accounts or sold some of your investments in between you should have the same 1099 forms.

    Ready to Level Up Your Income Tax Preparation?

    We hope that now that you have our top tips on income tax preparation you are feeling more confident with your own taxes.

    Did this article come in handy today? Browse around the rest of our tax section for our latest tips and tricks.