Davis & Bellomo

Over the last few weeks, individuals have begun to receive their tax information for the 2011 tax year. This means that it’s almost time to meet with your tax preparer or sit down at the kitchen table and prepare your own return.  For many people, either is analogous to going to the proverbial dentist, but in our opinion, it doesn’t need to be:  Instead, it should be an opportunity to better understand what for many people is their largest annual expense. The following are considerations for reviewing the results for getting ready to meet with your tax professional or for preparing your own return. 

1. Be organized. For those of you who use a paid preparer, you will likely receive a tax organizer of some sort. Most of these organizers will pose questions to make sure that any major changes in life are captured (e.g. marriage or the birth of a child), that any change in your tax situation is considered (e.g. a new business) or that any deductions/credits are taken (e.g. energy credit). Finally, it will give you a roadmap of what was reported on your tax return last year.  
2. Gather your questions for your preparer. There are many things that come to your mind when you receive your tax information or completing your tax organizer. Be sure to write these questions down or email questions to your tax preparer in advance of your meeting. Tax preparers often are great resources of general financial information, so don’t be shy about querying them about other financial matters, as they may know the answer or an appropriate alternate resource.  
3. Review your tax return before you sign the return or the electronic filing authorization. The tax return is your responsibility, and you should understand what is on your return. If there in an item on your tax return that requires additional clarification, ask your preparer.  If there is an unexpected balance due or refund, ask the reasons why, as there may be actions that can be taken to mitigate a balance due or a large refund in the future.  
4. Give your tax situation consideration throughout the year.  Throughout the year, there arise events about which you may need to discuss tax consequences with your preparer.  Examples might be an inheritance, the birth of a child, attending college to further your education or deciding to begin contributing or increasing your contributions to your employer’s 401(k) plan.