Let's face it, taxes are like birthdays, they keep showing up whether you like them or not. I have teamed up with Christi Ticknor from Robert Ratcliff CPA in Waco to answer all of your tax questions.
J: What receipts are necessary to keep for taxes?
C: You should keep all receipts for your business, including equipment, supplies, meals and entertainment. For personal returns, you should keep receipts for itemized deductions, such as charitable contributions, property taxes, mortgage interest, medical expenses, unreimbursed employee expenses, and any books or supplies for the American Opportunity Credit (college tuition credit).
J: Is it necessary to keep household utility statements for tax purposes?
C: It is only necessary to keep household utility statements for tax purposes if you have a home office.
J: How should donation receipts be identified? Is a donation receipt from a charity acceptable without itemization?
C: All donations must be itemized in order to get credit.
J: What should someone do if a receipt fades between the time of purchase and time to prepare taxes?
C: It is best to keep receipts electronically to prevent fading, or at least make a copy of the receipt. If this has not been done, you can try to get a duplicate copy from the store.
Storing and Organizing Taxes from Previous Years
J: Is it acceptable to scan past tax documents in lieu of keeping the paper copies?
C: Yes. This is actually the best way to store them in the event of an audit.
J: What is the most important thing to have on hand in the event of an audit?
C: A relationship with your CPA. Also, keep the documentation for every deduction.
Working With Your CPA for Current Taxes
J: When is the best time to submit your taxes to your accountant?
C: As early as possible.
J: What should someone expect from their CPA at tax time?
C: Prompt tax preparation, prompt communication, and detailed instructions on what needs to be done.
J: In what way should clients work with their accountant throughout the year to make it easier at tax time?
C: Notify your accountant of any major changes. If it is a business, it is best to have monthly accounting records prepared or reviewed.
J: What does the perfect submission for tax preparation look like?
C: A perfect submission would be organized by category so that we can quickly determine where expenses should be deducted.
J: If you could make one recommendation to individuals to prepare for their taxes, what would it be?
C: Keep all tax documentation organized in one place.
When working with a CPA to complete your taxes, remember that a jumbled mess of papers is going to take longer and therefore cost more in the end. A little organizing on the front end can potentially save you money in the long run.
If you have any questions regarding preparing for 2012 taxes or starting 2013 right, feel free to post comments on the Neat as a Pin Facebook page or email me directly at email@example.com.