It is almost axiomatic that tax season is a hassle. Just when you feel like you understand how things work it seems like something changes that alter how drastically taxes work that it is like learning from scratch. Luckily you are not alone in setting your tax situation in order. There are professionals who earn their keep from staying on top of any changes that occur in the tax laws and are experts in ensuring that your filing goes smoothly.
To ensure that you and your professional tax preparer are on the same page it is helpful to have a broad view of the concepts involved. Knowing what questions to ask is an important step in making sure that everything is being done correctly. Here are the top 7 questions to ask your preparer to help get your taxes out of the way.
What is My Filing Status?
This is a good place to start when getting up to speed on your tax situation. Based on federal law, your filing status refers to which tax return form you are going to use. This is important because the type of form that is used determines what you are paying taxes on. There are five possible forms that you could need to use to file your taxes. Each form represents a different set of circumstances that affect what the government will require of you as far as actually paid taxes go.
Things that determine what form is right for you are usually related to family size and composition. After you ask your tax preparer what your filing status is they will most likely ask you questions about whether you are married, whether you want to file with a spouse, how many children you may have, or even if you wish to claim non-children as people who are dependant on you.
What is My Adjusted Gross Income?
It can be a difficult task to determine exactly how much taxable money was made by an individual in a year. What is more complicated is determining what your adjusted gross income is. Adjusted gross income is one factor that your tax preparer is going to calculate to as part of finding out how much you owe or are owed in taxes. In its simplest form, adjusted gross income of AGI is all the money that has come into your possession minus certain expenses. These certain expenses can include things like interest payments on student loans or contributions to a retirement account.
A reputable accounting firm like Brown Smith Wallace, LLP will be able to look at your receipts and records and be able to determine an accurate AGI. To enable these types of firms to do their job it will be crucial for you to your financial records up to date.
Do I Have Any Exemptions?
A tax exemption is something that reduces the amount of taxes that one pays. This is obviously an important thing to be aware of to ensure that you are keeping as much of your money as possible. The majority of taxpayers are entitled to at least one exemption. This process of applying exceptions is a great example of the moving target of tax law. The governments of both federal and state levels frequently chance what life circumstances or purchases count as an exemption. There are basically two kinds of exemptions: Personal and dependent. If you ask your tax preparer this question and further specify concerning the two types of exemptions possible it will help reduce the amount of taxes that you must pay.
What is Itemizing?
Like exemptions, a tax deduction functions as something that reduces the amount of taxes the government requires of you. Itemizing deductions is essentially a strategy for maximizing your tax savings through the deduction process. It involves listed expenses that otherwise would not be deductible and filing them in a special way. While the concept of keeping more money is appealing to everyone, the strategy of itemizing is not effective in all cases. Your tax preparer will be able to give the costs and benefits associated with itemizing specifically for your situation.
Will I Be Audited?
Audit is an intimidating word. It connotes with punishment and intense investigation. You may have heard this word in connection with taxes. Knowing what is involved can ease potential fears you may have about ‘being audited’. Being audited by the Internal Revenue Service boils down to the government making sure everything is in order when it comes to your taxes. It serves as a double check to what you ultimately file.
The possibility of error is high in completing tax forms, especially when a non-professional attempts it alone. This is one of the reasons that it is wise to consult professionals who do this type of thing for a living. Many accountants or other tax professionals will guarantee their work so that even if the government does decide to double check what you have done you have a form of insurance that you can’t have if you have tried to do it all yourself.
When Do I Need To Have My Taxes Done?
This should be the easiest question for your tax preparer to answer. If you can remember to get in touch with your accountant before the month of April you will be good to go.
How Do My Charitable Donations Affect My Taxes?
Another variable to tax returns is charitable donations. Typically charitable donations can be determined tax-free. Recently certain donation types religious charities no longer qualify for deductions. It will be very important for you to be aware of current tax policy and have a decent record of the organizations that you may have donated to. One big consideration for charitable donations is whether or not you received anything.
The absolute safest course of action when looking to complete taxes in a timely and correct manner is to obtain the services of a reputable and trained professional. Doing so provides mitigation of uncertainty and allows you do not need to go through the process of learning the ins and outs of the very difficult topic that is tax law.