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Tricks of the tax-prep trade

Pros show how they save time and money at tax time.

Consumer Reports Money Adviser: March 2013

No magic needed
Anyone can employ these tactics.

Are you looking for some ways to help smooth the process of preparing and filing your annual tax return? We asked professional tax preparers and publishers of tax software for some advice that might help you fatten your refund.

Focus first on income

If you can’t give all your documents to your tax preparer at once, concentrate on providing your income statements—Forms W-2, 1099, and 1098. They are the basis of the return, notes John Sensiba, a certified public accountant and managing partner of Sensiba San Filippo in Pleasanton, Calif.

If you can’t find a paper statement from an employer or investment company, check the entity’s website. Be aware that your state may now publish Form 1099-G, the state tax refund statement, online only; that’s the case with Connecticut, Missouri, New Jersey, New York, and Pennsylvania. To access that form through your state’s tax authority, go to this directory.

Sort and file

Don’t depend on your tax preparer to open paper statements and organize documents. Many clients do this, Sensiba says, even though it can add hundreds of dollars to hourly tax-prep bills. “One of the hazards of our profession is paper cuts,” he adds.

In addition to keeping paper copies, consider storing your tax documents on a Web-based storage server, or “cloud.” H&R Block, Jackson Hewitt, and TaxACT now sponsor similar free services for clients and nonclients. The companies say they use bank-level security encryption.

H&R Block At Home and TurboTax customers who plan to file the federal and state 1040EZ forms can photograph and upload their W-2s from their smart phones to a company server. The software will automatically populate your tax form. (TurboTax also offers its “SnapTax” for the iPod Touch, and for IRS Form1040A.) With TurboTax and Block, you can file state and federal forms from your smart phone, or finish your taxes online later.

Save work when itemizing

Unless you had a very large unreimbursed medical bill or very expensive long-term-care insurance premiums, don’t bother toting up medical expenses. Your expenses aren’t deductible until they exceed 7.5 percent of your adjusted gross income, or 10 percent of your AGI if you expect to pay the alternative minimum tax.

The same goes for miscellaneous deductions, including tax-prep fees; dues to professional societies; job-search costs in your current profession; business travel; and work supplies. Only the amount that exceeds 2 percent of your AGI is tax-deductible. Check IRS Publication 529, "Miscellaneous Deductions" (PDF).

Consider other deductions

Keep in mind that life changes—yours and those of your family—often yield generous deductions. For example, if you now cover more than half of your mother’s living expenses, you can name her as a dependent even if she doesn’t live with you. Each dependent reduces your taxable income by $3,800 for 2012. Inform your preparer of such changes. “I tell my clients, come with information you’re not sure about and let me tell you no, instead of you telling yourself no,” says Tiffany Washington, a public accountant in Waldorf, Md.

Finally, e-file your tax return early to help prevent theft of your tax refund. But filing early only works if you have all your W-2s, 1099s, and other forms. Otherwise, you’ll have to prepare an amended return. “You may think you’re doing yourself a favor and you’re not,” says Eric Smith, an IRS spokesman.