Tax preparation is a growing profession that provides a vital and appreciated service to society.
However, how do you go about becoming a tax preparer? What kind of credentials are required? What tools do you have at your disposal to help you be more productive? And, on a day-to-day basis, what does a tax preparer do?
What is the role of a tax preparer?
The majority of tax preparers work with standard tax forms, which they create, file, or assist with. Aside from these fundamental services, a tax preparer can also represent a client before the IRS. This covers audits and difficulties with the IRS. The scope of what a tax preparer may accomplish, however, is determined by their credentials and whether or not they have representation privileges.
In a sense, tax preparers are expected to serve two masters: their clients and the Internal Revenue Service. They must help their customers in complying with state and federal tax regulations while also reducing their clients' tax burden. They are employed to serve their customer, but they must also remember their responsibility to the IRS and not breach any laws or assist others in filing a false return.
According to the Internal Revenue Service, more than 80 million taxpayers hire hired experts to prepare and file their tax returns (IRS). 1 If you're one of them, it's critical to get your receipts, forms, and other papers organized well ahead of tax season.
Your preparer may ask you to fill out a questionnaire or gather information directly from you. In any case, a little planning ahead of time will help you breeze through the procedure.
Selecting a Tax Preparer:
If you don't have a tax preparer yet, getting suggestions from friends and advisers (such as a lawyer you know) is a good place to start. Make sure the individual you pick has a preparer tax identification number (PTIN), which indicates that they are qualified to prepare federal tax returns.
Inquire about costs as well, which will vary depending on the intricacy of your return. Use a company that does not take a portion of your return. Tips for picking a preparation may be found on the IRS website, as well as a link to the IRS database of preparers, which you can search by qualifications and location.

Request an Appointment:
You should be able to finish your return sooner if you meet with your preparer as soon as possible (even if you decide to file for an extension). If you expect a refund, you'll get it sooner as well.


If you wait too late to arrange an appointment with a tax preparer, you may lose out on tax-saving options such as making a deductible contribution to an IRA or a health savings account.

Compile your documents:
You should have gotten all of the different tax papers you require from your employer or employers, as well as banks, brokerage companies, and others with whom you do business, by the end of January.
Check that the information on each form matches what you have on file.
The following are examples of some of the most popular forms:
• If you had a job, you should have a W-2 form.
• Dividends (Form 1099-DIV), interest (Form 1099-INT), and nonemployee pay provided to independent contractors are all reported on the different 1099 forms (Form 1099-MISC).
• Brokers aren't obliged to provide Form 1099-B, which records profits and losses on securities transactions, until mid-February, so expect them to arrive later.
• You must fill out Form 1098 to record any mortgage interest you paid.
• If you have specific gambling wins, you'll need to fill out Form W-2G.

Receipts should be rounded up:
Whether you itemize your deductions or take the standard deduction determines how many receipts you'll need. You'll want to go with the option that saves you the most money in taxes, but the only way to be sure is to total up all of your itemized deductions and compare them to the standard deduction.
The standard deduction is $12,550 for single taxpayers and $25,100.17 for married couples filing jointly for the 2021 tax year. The standard deduction is $12,550 for single taxpayers and $25,100.17 for married couples filing jointly for the 2021 tax year.
Look for receipts for medical expenses not covered by insurance or paid by any other health plan (such as a flexible spending account or a health savings account), property taxes, and investment-related expenses, in particular.

All of them are subject to limitations, but if they're significant enough, it could be worthwhile to itemize.
If you itemize your deductions, you'll also need to gather any charitable donation backup you have. Contributions of $250 or more, for example, require a formal acknowledgment from the charity indicating the amount of your gift and that you did not get anything in return (other than maybe a token item). If you don't already have one, contact the organization and ask for one. IRS Publication 1771 has further information on charity deductions.
The more structured your records are, the less time it will take a tax preparer to do your taxes, resulting in cheaper fees.
You must disclose your books and records if you have business revenue and costs to declare on Schedule C. (For example, QuickBooks or any other accounting system you use, expense receipts, and bank and credit card bills). The more structured your records are, the less time it will take a tax preparer to do your taxes, resulting in cheaper fees.

Make a list of your personal details:
You undoubtedly know your own Social Security number, but do you know the numbers for each dependent you claim? You should write them down, as well as any other information your tax preparer is likely to want. If you own a vacation house or a rental property, for example, keep track of the addresses. If you purchased and sold a home in the last year, keep track of the dates you bought and sold it, the price you paid for it, and the money you earned from the sale.

Make a decision on whether or not to file for an extension:
If you need additional time to complete all of these procedures, you can seek a tax return extension until October 15th. To avoid penalties, you must estimate the amount of tax you owe and pay that amount before the normal April 15 date.

Prepare for any refund in advance:
If you're expecting a tax return, you have a few alternatives for handling it.
• You can put some or all of your return toward your taxes for the next year. If you pay anticipated taxes throughout the year, you can use that money to cover the first quarterly amount.
• The government can either mail you a check or direct deposit your return into your checking or savings account.
• You can put some or all of your return into specific types of accounts (IRAs, health savings accounts, and education savings accounts) or use Treasury Direct to purchase US savings bonds.
By completing Form 8888, you can split your return among the direct deposit options.
You must inform your tax preparer of your intentions so that it may be noted on your return.
Look for a copy of the previous year's tax return:
If you employ the same tax preparer as last year, they will most likely have your past data. If you're working with a new tax preparer, the prior year's return may serve as a reminder to the preparer—and to you—of certain issues to keep in mind. For example, consider the following:
Interest and dividends: Your tax return from the previous year should show which banks, mutual funds, or other financial organizations gave you 1099 forms. Make sure you get 1099s from them this year using that list (unless you closed those accounts or sold the investments in the meantime).
Charitable deductions: You may not have gotten any acknowledgment from the organization for modest gifts, but you can still deduct them provided you have a canceled check or other documentation. Check the list of charities you gave to last year to check if you gave to the same ones this year.
Final Thoughts:
Whether you do your taxes yourself or hire someone to do them for you, organizing your documents ahead of time will save you time and money if you use a professional preparer. The earlier you begin, the more easily the procedure should go, and the sooner you'll be done with it for another year.