Prepare for the Tax Preparer to Save Money

Tax Day falls on my birthday. This year, I’m giving myself the gift of a tax preparer.

Last year, in the days leading up to The Big Day, I locked myself in the home office. I emerged bleary-eyed from staring at a computer screen and mentally exhausted from climbing my way through an avalanche of paperwork and receipts. I also was hopped up on caffeine and paranoid — did I miss anything? Did I forget to carry a “1”? Was my hair on fire?

Yes, I waited until the last couple of weeks to file my return. I’ll admit it. I hate doing my taxes nowadays, so I avoided it as long as possible.

It wasn’t always this way. When I was a full-time employee, I’d file form 1040EZ as soon as my W-2 arrived. But since becoming a full-time freelancer, taxes and forms have become more complicated. As the 1099s arrived in my mailbox, I tossed them into a folder, putting off the inevitable. “We need to do our taxes,” said my husband. I know, I know, I thought. Next week.

Well, Tax Day/my birthday is a few weeks away. And because of upcoming travel plans, my personal Tax Day is effectively two weeks sooner. I could either stress out about getting my taxes filed (and not just about the deadline, but about being accurate, too), or I could join 49% of you and pay a pro to handle it for me.

Waiving the white flag
According to a,, and MSN Money online poll, 48% of you do your taxes by hand or with software. That was what I’ve done with every return so far. It’s cheap (or even free), and the process is simple if your tax returns aren’t complicated.

But this year I’m going to try hiring a tax preparer. Why the change (besides procrastination and an upcoming trip)? Here are my reasons:

  • I’m probably overpaying. I’m paranoid about being audited. Last year, there were a couple of deductions I might have been able to take, but I wasn’t 100% sure, even after reading up on it on the IRS site. I erred on the side of caution and probably paid too much. (My shiny, new-to-me accountant also will review last year’s taxes, so we’ll see if that was the case.)
  • Audit assistance. If I do get audited, I like the idea that I’ll have an expert on my side. I’ve never had to deal with an IRS audit, but if it’s anything like the time I dealt with a worker’s compensation claim, I know I don’t want to go it alone.
  • The tax preparer might pay for himself. If I am overpaying, it’s possible that the tax preparer will pay for himself by lowering my tax bill. Also, I’d rather work for a few hours writing or editing and hand that cash over to the accountant than toil through tax preparation.
  • Long-term planning. Another confession: I only think about taxes when I have to file. But that’s not wise for long-term planning, so I’ll also consult the accountant about ways to structure my freelance business to save money in the future.

Basically, I want to focus on my business and eliminate the stress of doing taxes myself.

Saving money by saving the tax preparer’s time
I found a tax preparer using these tax tips from Richard Barrington (GRS is still my favorite personal finance resource, even if I am on staff now!). After checking the accountant’s credentials and a free consultation phone call, I set up an appointment.

But my work isn’t done. I could show up with a stack of papers and a shoebox full of receipts, if I want to pay for the time he’ll need to sort through the mess. My tax preparer knows this all too well, which is why he provided a guide to speed up the preparation process — ways to save him time that will save me money. I’ve expanded on that list using other sources, and came up with the following 12 documents, numbers, and data to organize, locate, or calculate before you meet with your tax preparer:

  1. A copy of last year’s tax return, including the state return, if applicable.
  2. Original W-2s, 1099s, 1098s, and K-1s (make copies for your records).
  3. Birth dates for you, your spouse, and your dependents.
  4. Do you want your refund deposited directly into a bank account? Have your bank account routing number and account number.
  5. Do you pay for childcare? Provide the Social Security or Employer Identification Number for all child care providers for Form 2441.
  6. Did you sell shares of stock or a mutual fund? Have the following: Date acquired, number of shares acquired, purchase price, and sales commissions and fees, adjusted by reinvented dividends and stock splits.
  7. Did you invest? Bring a copy of your broker’s year-end tax report that shows interest, dividend earnings, and proceeds from sales of securities. Also bring copies of any booklets they mailed you, which can include information on income from government obligations that can be used to prepare state tax returns.
  8. Did you earn interest at a bank or credit union? List each bank and the amount earned.
  9. Did you donate items, donate money, or give time to a charity? First, check the status of the charity on the IRS database. If you donated items to charity, have the following: name of the charity, city, date of donation, description of items donated, estimated total paid for the items, estimated value of the items. If you made charitable contributions by cash, check, or credit card, you need to tally the total amount contributed. If you volunteered your time to a charitable organization, have a record of your mileage and out-of-pocket expenses.
  10. Did you buy or sell a home in 2011? Bring a copy of the settlement or closing statement.
  11. Do you own a house and pay your property taxes yourself (not thru escrow)? You’ll need to provide the date(s) they were paid.
  12. Do you have rental property or are you self-employed? You’ll need a detailed list of income and expenses. If your 2011 business receipts really are in a shoebox, organize them by category, or use accounting software to do the same thing. Many preparers provide tax organizers to help you gather numbers and documents.

Sources: James R. Kay, CPA; Consumer Reports; Generation X Finance;

Whew. It’s still a lot of work, especially if you haven’t been diligent about record-keeping. It took me a few hours to locate everything I need and organize it into a file folder (with colorful paperclips and brightly colored sticky notes — obviously requirements).

I’m feeling prepared for the tax preparer, but I’ll be sure to report back about the experience for those of you on the fence, along with any hot tax tips I might glean. (Hmm…”hot stock tips” sounds exciting while “hot tax tips” falls flat. The IRS has zero sex appeal.)

For me, this year April 17 will just be my birthday. And if you’re still doing your taxes at the eleventh hour, I sympathize. Join me afterward for some cake.

Readers, can you add to this list? What other ways can you prepare and organize to minimize tax preparer fees?

More about...Taxes

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There are 48 comments to "Prepare for the Tax Preparer to Save Money".

  1. Meghan says 28 March 2012 at 05:12

    I’m in the final stages of getting my US permanent resident visa (Green Card). From what I understand, Green Card holders need to file US taxes even when not living in the States. I’m used to just doing my Canadian taxes myself, on paper even. But when I get my Green Card I’ll likely be paying someone to do my taxes, someone who specializes in US-Canada returns. It’s seriously pricey, so any advice on how to save money on tax preparers would help a lot. This list is a good start for my situation.

  2. J Marie says 28 March 2012 at 05:18

    This is a great checklist for preparing your taxes, whether you are doing it yourself or having it done for you. The complexity of your return should determine if you need a professional. If you are putting it off because it is so overwhelming, you should probably get a professional’s advice. I also live in fear of being audited!

  3. More Than A Mom says 28 March 2012 at 05:48

    I have a home business (a home daycare). Groceries took up a whole day to enter at the end of the year. It was awful. I dreaded it and I often forgot how/what I had done the year before. So last year I got smarter and now, at the end of each month, I enter the information so I remember what we spent. This year for tax prep it worked as I didn’t spend nearly as long organizing taxes. It’s an art though figuring out how to make it the most efficient. Definitely not my favourite part of the job.

  4. Tracey+H says 28 March 2012 at 05:52

    My son worked in Oregon for 4 months one summer a few years ago (on a student visa). I’ve done all of our (Canadian) taxes for decades and figured I’d do his US taxes for him, too. After looking at it, I started looking for someone here who could do US returns, but they were expensive (around $400 for a simple return, I think) so I tackled them myself. Once I got familiar with the forms and rules, it wasn’t so bad. Meghan, you might want to give it a shot yourself. If you’re moving to the US, you’ll be filling out US tax forms from now on so why not figure them out now instead of spending a fortune on paying someone (I’m assuming you aren’t self-employed–that’s a completely different story, IMO).

    • Meghan says 28 March 2012 at 06:07


      Thanks! I will look into it myself, and you are right, even H&R Block in Canada charges several hundred dollars for a US tax return. I wouldn’t be working for myself, but my worry is that cross-boarder returns might require extra paperwork that make it more complicated. But I agree, doing it myself is something I plan to look into.

      • Sarabeth says 28 March 2012 at 19:51

        If you need to file both in the US and elsewhere, I would defintely get an accountant’s help. It’s pretty easy to goof up and end up paying twice the taxes you need to, if you don’t know your way around the relevant tax treaties. I’d suspect that many of the border cities are full of accountants who deal with this regularly.

  5. AnneKD says 28 March 2012 at 05:56

    I’m the one in charge of getting tax returns done while my husband handles the budget/spending plan/nitty gritty mindnumbingly boring day to day stuff. We started using an accountant to prepare our tax returns a few years ago, when I had an out-of-state small business. After we moved I found another accountant (who I happen to like better). She sends out a packet via email every year. I keep a 8.5×11″ manila envelope in my desk drawer labeled ‘tax return stuff’- everything from charity receipts to new appliance receipts and anything else that might possibly be of interest to the accountant go in that envelope through the year. That envelope has saved me literally days of searching for little slips of paper in my husband’s home office.

    • PB says 28 March 2012 at 09:34

      That’s what I do, too! I throw absolutely everything tax related into a big envelope and then spend an hour or two in January/February sorting it out. Much easier for me than doing it every month. And then I go to an accountant.

  6. Paul says 28 March 2012 at 05:57

    Until this year I always did my own taxes, but after last year’s debacle, I have decided to pay someone else to do them. In 2010 I retired from the Air Force and moved from Omaha to Alexandria, VA for a job in DC. I had just refinanced my house in Omaha, so I was not about to sell it. I was lucky enough to get someone to rent it in Jan 2011. I also pay a property manager to oversee this rental property. Since I did not rent the house until 2010, last year’s taxes were not that bad, but I still spent a couple weeks working on them, mostly due to my wife’s multiple home businesses. Since I purchased my house in 2008 and took the first time homebuyer tax break for that, I now have to pay back the remainder of the $7500, which is currently at $7000. And my employer thought I was living in DC for some reason, and paid state taxes to DC instead of Virginia for half of 2011. I have to file state taxes in Nebraska because I own property there, DC because of what my employer did, and Virginia because that’s where I actually lived. And to top it off, I quit my job in DC and got a new one in Syracuse, NY in January, so next year will probably be a mess as well. After pulling out what little hair I had left last year, I decided to hire a professional to take care of is this year. The good news is that I have been saving since August to pay back the $7000, so it should not be too horrible when I finally get the bill. My accountant gave me an estimate a couple weeks ago, and it looks like I will owe the Fed about $6000, Virginia about $1600, but I will get back about $2600 from DC. Nebraska should be a wash. BTW, I just purchased a house in NY, so I have that to look forward to next year, and I plan to sell my house in NE next year, which will affect my taxes the following year. I don’t mind having a rental property, but I’d rather it was in the same state I live in.

    • Kristen says 28 March 2012 at 07:14

      My first thought after reading this: “Good GRIEF, Charlie Brown!”

    • Bella says 29 March 2012 at 09:17

      We had a year like that – and I was so glad to have someone I trusted on our side already!

  7. Christine, Random Hangers blog says 28 March 2012 at 06:19

    Our taxes are pretty straightforward, so I’ve done them myself for the past few years with TaxAct. This year, it said I got a refund when I was expecting to pay, so I gave up and took it to H&R Block. An hour later and $200 poorer, it turns out TaxAct/I was right. I was bummed about having to pay someone, but like April said, the piece of mind was worth it.

    Oh, and when I went to H&R, they had a special where they would review for free your last 2 or 3 years of returns to see if you missed anything. Turns out I’ve been doing them right all along, so now I have the confidence moving forward. So perhaps seeing a professional preparer every few years (or whenever you have a life change) is a good idea; you don’t have to do it *every* year.

    • Amanda says 28 March 2012 at 15:19

      Unless you confirm that the preparer at H&R Block is a CPA or EA I do not consider them a professional.

      • Scottie freeman says 10 May 2012 at 11:16

        My preparer failed to list everything alto I had given them to her. when IRS sent me a big bill, I expected my preparers fee back.. should they return it to me?

  8. Dogs or Dollars says 28 March 2012 at 06:28

    We owe a lot of taxes this year. A lot.

    I went to an accountant, just in case. She very happily told me I was quite good at doing my taxes, there was not a thing I missed, and yes indeed I did owe that very large sum of money.

    Why, thank you.

    While the accountant was very nice, and it was great to have a little peace of mind, it just reaffirms that I can do my own dang taxes.


  9. sarah says 28 March 2012 at 06:32

    Those are good tips even if you do them yourself. Knowing what you’ll need can make the process a lot easier.

    This past year my husband and I had 4 different jobs, a sole proprietorship, lived in 2 states with state taxes and 1 city with city taxes (the joys of NYC…), he was a student, we rolled over 401ks, and made IRA withdrawals. Because I researched how all of it would affect our taxes ahead of time I could keep records in a central place and doing my taxes was actually relatively easy (I used turbo tax).

    Since I was concened about withholding enough for my small business, I created a simple spreadsheet with all of the applicable data (w-2 income, taxes withheld, business income, self employment tax, various deductions, and tax owed in the end) from my 2010 return and then made a new column with estimates for 2011. I ended up only being off by a few hundred dollars on my estimate 🙂

    • April Dykman says 28 March 2012 at 10:34

      Can I pay YOU to do my taxes?! 😉

      • Amanda says 28 March 2012 at 15:21

        Not legally.

  10. TB says 28 March 2012 at 07:38

    This post and all the comments reminds me of what I would love most! A flat tax system! No deductions, no finagling with all the crazy things everyone has to… throw out the giant tax book (should really be called a tax tome!) and institute a flat tax rate. The “tax book” would be one page and it would have one line on it. Any income you get, gets taxed X%. For everyone. The end. HR Block and Turbotax would be out of jobs, but the rest of the us would be happy at the simplicity.

    • Bareheadedwoman says 28 March 2012 at 11:27

      where is robin hood when you need him?

    • Bella says 29 March 2012 at 09:21

      And what about all the good people who get paid to stand on the corner in statue of liberty costumes this time of year? They would be out of work too – and my drive wouldn’t be so entertaining!

  11. amber says 28 March 2012 at 07:44

    April, once you have all those documents together, it seems like the form filing is a piece of cake. Gathering the documents for me has always been 70% of the work and I don’t understand why I would pay to have someone else do the ‘fun’ part. (I guess I am also the only one who thinks it is kind of magical how all those tables and formulas correspond to actual dollars?)

    • Bella says 29 March 2012 at 09:28

      We do the same thing April does – our accountant charges by the hour. I spend hours getting all the information together, I understand the return, I understand where our liabilities are and what’s working to our advantage – but I’m a paranoid person – and having a professional put the stuff together and double check my numbers – there is a peace of mind that is easily worth what we pay.

  12. Lonelle Minesinger says 28 March 2012 at 08:10

    April 17th is my bday also!! So, I just wanted to say Happy Early Birthday to both of us!! lol

    (I actually did my own taxes for the first time ever through Turbo Tax!! It wasn’t as hard as I thought, but I don’t have all the extra stuff you listed!!)

    • April Dykman says 28 March 2012 at 10:34

      Happy early birthday to you! 🙂

      • Boston says 28 March 2012 at 13:25

        My birthday, too! 🙂

        So nice to celebrate with you guys and Uncle Sam as he swipes our hard-earned dollars!

    • Bella says 29 March 2012 at 09:33

      OMG – I just realized April that that means your birthday is *in* April… HaHa!
      I guess it’s easy to remember…

  13. CERB says 28 March 2012 at 08:24

    Once our financial lives got complicated with home based businesses, lots of stocks, etc., we hired a professional to do our taxes. We probably should have done it sooner. I think that we were being penny-wise but pound-foolish, not wanting to pay the fee for the preparation, when in reality, he has saved us far more in tax payments.

  14. Laura+Vanderkam says 28 March 2012 at 08:29

    Even if you are paying someone else, different preparers can charge radically different amounts. One way to save money on complicated taxes is to get bids from several different firms. Too late for this year, but after April 15, if you send your return to a few places, they should be able to give you an estimate of what they’d charge you for the project next year.

  15. Barbara says 28 March 2012 at 08:38

    Hubby and I are both smart people who are quite competent to do many things but we still hire a tax professional. We manage our financial records and complete a worksheet for our CPA but it is totally worth the cost to have a professional ensure that we get everything correct. Tax laws are complicated and change a lot and I don’t have the time or the experience to keep up with them.

  16. Laura says 28 March 2012 at 09:10

    Just wanted to comment that filing taxes early (in February or March instead of April) might prevent you from becoming the victim of fraud: . The scammers are betting that they can get a refund out of your taxes before you file. I’m not a fan of waiting till the last minute to file for other reasons, but this one convinces me even more.

  17. chacha1 says 28 March 2012 at 09:57

    I always did my own tax returns before marriage, and after – for a few years we filed married/separate. After DH started his business we starting filing married/joint and used an accountant.

    Our experience with the accountant was so nerve-wracking that after a couple of years I said “No” and started doing them myself again. He was just a sketchy character and I did not trust him.

    And, like someone above said, to me organizing the paperwork is the hard part. Filling out the forms is easy, if you can read and work a calculator.

    Our returns are medium-complexity. One employee, one self-employed. No real estate and no dependents. We don’t file a Schedule A.

    IMO, it is certainly not worth paying someone else to do the work that provides us with the “big picture” about our financial status.

  18. I Am 1 Percent says 28 March 2012 at 10:18

    This is a very good list. I use a tax preparer for the same reasons…my taxes got too complex. With a lot of assets, deductions, rental properties, an s-corp, 1099, etc, it was not worth it for me to figure it out. I’d much rather pay someone to do it right and assist me in case of an audit.

  19. Marianne says 28 March 2012 at 10:45

    I usually do our own taxes but with a few different side income sources now, I was nervous about it this year. Our life insurance agent just informed me that she prepares taxes for her life insurance clients for free! I am more than happy to take her up on her offer! Getting them done next week!

    • Amanda says 28 March 2012 at 15:25

      That doesn’t sound right. Check out her certifications. She should be an EA or CPA.

  20. cc says 28 March 2012 at 12:20

    i am a self-admitted airhead and much prefer if someone else handles all those crazy forms with numbers and calculations that if you mess them up can ruin your life. i’m a freelancer in a big city with lots of weird tax things, and it’s one task i’ll pay my cpa whatever he asks for, year after year. i love you, cpa. thank you for keeping me from harming myself.

  21. PawPrint says 28 March 2012 at 12:35

    I did our taxes for years until one year we had to deal with stock options, DRIPS, a rental house in another state, moving to another state, buying a new house and an inheritance. I looked at the forms, threw up my hands and said I’d rather pay someone else. Our accountant sends his clients a wonderful checklist like yours each year to make it easier to have all the documents.

  22. Jenna, Adaptu Community Manager says 28 March 2012 at 12:39

    Still doing my own taxes, hopefully next year I’ll get some tax prep help.

  23. Victoria Grattan says 28 March 2012 at 13:24

    Great article! My husband and I recently hired someone instead of using HR and Block or doing it online for the same reasons “The What if’s” We saved so much money and it was a flat fee and we got a bigger return than we expected!

  24. More Than A Mom says 28 March 2012 at 13:33

    For those relying on accountants, if audited and found wrong of something, does the individual whose claim the taxes have been filed under still not be held responsible since they have signed the tax form stating everything is accurate?

    • Amanda says 28 March 2012 at 15:27

      It depends on who made the mistake. If all information was not provided to the CPA that’s considered the individual’s mistake. If a form was provided and the CPA forgot to include it in the return it is the CPA’s mistake.

  25. dipo318 says 28 March 2012 at 13:53

    So funny, I just finished off my taxes yesterday and was so happy to see the verification emails that they were received today. YEAH!!!!

    I use turbo tax every year, I did have a little bit of a complicated tax sell and we closed out an investment club partnership this year so it took me longer than usual, but I figured it out.

    I have a low chance of audit according to turbotax, and I got a refund from both the state and feds, even though I have my exemptions up more than normal.

    So I am happy with the results.

  26. Amanda says 28 March 2012 at 15:28

    A note to all those out there who are having trouble with collecting receipts…

    Ask your CPA or EA for a recommendation for a good bookkeeper. Sometimes they hire bookkeepers for the busy tax season so they can easily recommend a competent one.

  27. stellamarina says 28 March 2012 at 16:22

    Several years ago there was a tax prep person in our town who was getting very good returns for all her clients…including our neigbor. Then one day the FBI showed up at our neigbors house asking about this tax prep person. Turned out she was doing illegal stuff to get such good returns for her clients. And no….she was not highly trained and certified.

  28. Brent Pittman says 28 March 2012 at 16:37

    Since my wife and I opened businesses in 2012 we’ve used a tax professional too. Even though I know a lot of the laws, things change every single year. Now, my goal is to pay my quarterly taxes, but this is a whole different confusing issue.

    • cc says 29 March 2012 at 08:00

      so easy! just mark it in your calendar. it helps to have some buddies on the quarterly system too, you can all help remind each other.

  29. Staying out of Debt says 28 March 2012 at 20:56

    I’ve done my taxes myself every year, but I did give Turbo Tax a try and it had the same results as what I had. My situation was some misc. income with a W2 and a sole-proprietor business. But I actually did a paper in High School over taxes and based upon my research, I would much rather do a flat tax then the current situation. I would allow a standard deduction of 14,000 for the poverty line.

  30. Marcia Wilwerding says 02 April 2012 at 18:27

    Please, listen to me. Do not have an accountant do your taxes. Accountants are good at bookkeeping and business accounting. They only do taxes on the side. And, for heaven’s sake, if there is an inheritance involved, please, please, please, go to H&R Block or some other qualified, reputable tax preparer who specializes in your particular case. You don’t want to find out two or three years later (probably after all the money’s gone) that you owe Uncle Sam and your State a whopping sum of back taxes, penalties, and interest. We’re talking a NIGHTMARE. 🙁

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