13+ Secrets Your Tax Planner Won’t Tell You

Shhh: Tax planners share with us their secrets of the trade.

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1. Never assume something can’t be deducted as a business expense.


Bodybuilders have written off baby oil, a junkyard owner deducted the cost of cat food for the felines she counted on to keep rats away, and an exotic dancer won a case against the IRS that allowed her to write off her breast implants.

2. Just because I’m a CPA doesn’t necessarily mean I know taxes.


Ask about my background, what kind of practice I have, and if I’m familiar with your state’s tax laws.

3. You can go ahead and sign your return without looking it over—


but remember, even though you’re paying me to prepare it, the IRS holds you legally responsible for everything on it.

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4. If you’re afraid of e-filing, consider this:

iStock/gordana jovanovic

Not only will you get your refund faster, but paper returns have a 20 percent error rate, compared with 1 percent for electronic returns. That’s partly because IRS personnel tend to make mistakes when they have to enter your information manually.

5. Want to avoid an audit?


Then be careful when you list your business expenses on the Schedule C form. If your itemized deductions are larger than most people’s at your income level, your return may get a second look. To prevent IRS scrutiny, be modest with your home-office deduction and rental property expenses.

6. Yes, my fees are low.


But that’s because I set up shop in a strip mall or kiosk during tax season and then shut down after April 15. I may be tough to find if the IRS has questions down the line.

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7. You may not need a paid preparer.


If you have a simple return, try an online tax-prep service (such as Express1040, FreeTaxUSA, TaxACT, or TurboTax), which typically lets you prepare and file your federal return for free. Or check out the IRS Free File program—it hooks you up with companies that do your return for free if you meet certain income limitations.

8. Many taxpayers forget to track their noncash donations.


Those garbage bags of stuff you give to Goodwill can add up at tax time. Make sure you get a receipt and note exactly what you donated: “five pairs of women’s pants, three button-down men’s shirts, one child’s puzzle.”  

9. If you’re planning to start a small business:


Do yourself a favor and meet with a tax planner or CPA before you launch. Otherwise, don’t blame me when I deliver a big surprise come April—the news that you owe thousands of dollars.

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10. Last-minute people make us nuts.


If you walk through my door after April 1, I’m going to file an extension for you, period. Which just means you’ll have to wait longer to get your refund.    

11. Don’t pretend you forgot about that extra money you made on the side.


The IRS is probably going to find out about it and send both of us a notice. And then I may choose not to take you on as a client next year.      

12. Please don’t call and ask what I’ll charge to do your taxes.


The answer is always going to be, “It depends.” Do you have a home-based business? Children? Retirement income? Sales of stock? A second home? A Roth conversion? These really affect how complicated your return will be.

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13. How long should you keep your old tax returns?


At least three years, since the IRS has the right to go back that far when it’s auditing past returns. To play it safe, you may want to hang on to them for six years, the amount of time the IRS has if you don’t correctly report all the income that you were supposed to.  

14. Don’t assume that chains like Jackson Hewitt and H&R Block have the best prices.


For preparing simple returns, independents often charge lower fees, and they’ll do some tax planning with you, too.

15. Be wary of refund anticipation checks, or RACs.


They allow your preparer to open a temporary bank account for you where you can have your refund deposited, but they often carry hefty fees. If you want a fast refund, consider a prepaid card instead.

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16. New regulations this year require all paid preparers to have a PTIN.


When I finish your return and I give you an e-File authorization form to sign, make sure my name, signature and Preparer Tax Identification Number (PTIN) are on it.

17. If you do get audited (gulp!), never go it alone.


Hire an accountant, enrolled agent or tax attorney who has experience dealing with the IRS. Sometimes it can be as simple as providing additional documents or filing an amended return, but it’s best to work with a professional who knows what they’re doing.

18. Most of us are professional, honest and are trying to provide the best service possible to our clients-


But if you suspect fraud or that your preparer is acting unethically, you can report him or her to the IRS using Form 14157. CPAs can also be reported to their state board of accountancy or state licensing board.

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19. If I promise you a bigger refund than anyone else -


or say I don’t need to see any receipts, you don’t want me doing your taxes.

20. There’s plenty of free human help out there for low- to moderate-income taxpayers.


The IRS runs the Volunteer Income Tax Assistance Program and the Tax Counseling for the Elderly Program, the AARP offers its Tax-Aide program and many colleges offer help as well. You can even call the IRS if you have questions.

21. The most common mistake on paper returns?


Forgetting to sign it. Yet another reason to e-File.

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22. Don’t hire the first tax preparer you talk to.


Get a few names from friends and family members and interview a few. Find someone you’re comfortable with, because most people stick with the same preparer year after year.

23. Tax day is the same day every year.

iStock/Li Kim Goh

The people that drive me nuts are the ones who call on April 14 and ask if they can come in with their envelope full of receipts. Plan ahead, people!

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