Federal tax return: How to prepare for the preparer

Organizing just a bit can save you money

Published: January 13, 2015 03:00 PM

If you’re among the 60 percent of Americans who hire a tax pro to prepare your federal and state tax returns, take these steps to limit fees, save on taxes, and speed your refund:

  • Schedule your appointment for February at the latest. “Don’t wait to get all your materials together,” says Troy Lewis, a certified public accountant in Draper, Utah. “Make the appointment and get the process started early.”
  • Complete the “organizer” forms provided by your preparer. You can also find them online by searching for “tax organizer.” The forms might jog your memory about tax-related transactions. They also allow preparers to quickly identify savings opportunities.
  • Sort tax documents. Your preparer might charge extra to open and organize your tax-related mail. Categorize by type: income, interest, dividends, capital gains and losses, charitable contributions, and miscellaneousdeductible expenses.
  • Provide details. Preparers say that taxpayers often forget to bring the closing letter from a refinanced home mortgage, real-estate tax receipts when those taxes aren’t paid through escrow, a new baby’s Social Security number, taxpayer ID numbers, addresses and phone numbers of child-care providers, and a summary of business mileage for unreimbursed employee business expenses (in 2014, it was 56 cents per mile).
  •  Identify the cost basis. If you sold investments in 2014, you’ll need to show your preparer the basis, that is, the purchase price of the securities plus transaction costs such as commissions or transfer fees. Brokerages must provide basis information for stocks purchased in 2011 or later. For older holdings, it might be cheaper to do that yourself. A service such as the one at netbasis.com ($25 for a single online transaction) might help.

—Tobie Stanger

Consumer Reports Income Tax Guide helps you save the most on your federal and state returns.

Editor's Note:

 This article also appeared in the February 2015 issue of Consumer Reports magazine.  

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