How to Organize Your Tax Documents for Your Accountant

How to Organize Your Tax Documents for Your Accountant

January 7, 2023 Last Updated on March 8, 2023 by Carolyn

Though this post is directed at US taxpayers, It still should be useful to non-US taxpayers but keep in mind that form references such as 1099’s, Schedule C and US tax rules may not apply. Investment advice published here is of a general nature only as disclosed here.

You have received all your tax slips (w-2’s, 1099’s, etc.), and you have records of your other income and expenses, but now what? How do you organize your tax documents so that your accountant can prepare your taxes with ease?

Hiring a Professional Accountant

This may be a bit biased considering I am a professional accountant but hiring a professional to prepare your income taxes can be a really smart idea.

Not only can it save you a lot of time preparing your taxes in lieu of doing it yourself in Turbo Tax or Tax Act ( many people tell me it takes them 8-10 hours to prepare their own returns) but it can actually save you money and give you peace of mind that you haven’t missed something.

It’s a tax professional’s job to know what deductions you are eligible for and to provide tax planning advice to maximize deductions and minimize income tax liability.

A good accountant will get to know you, your family, and your business so they can spot potential deductions whether it be that your eldest has started university and might have tuition credits or perhaps you have undertaken home renovations and can take advantage of some energy credits. Expect to answer some questions and be perturbed if you’re not asked any!

What Your Tax Preparer Needs to Know

How to Organize Your Tax Documents for Your Accountant?

First of all, be aware that just because you’ve hired an accountant to prepare your taxes doesn’t absolve you of any tax preparation work.

Gone Are the Days of Handing over A Box Full of Receipts

Gone are the days of plunking a shoebox full of receipts on your accountant’s desk and saying “call me if you have any questions”. Do this and you will most surely be shown to the door. Continue reading to find out how to organize your tax documents for your accountant.

Most accountants don’t want to see any receipts at all. What they do want to see is a summary of income by type as well as a summary of deductions by type, followed by another page with a detailed list of those same income and deduction items, whose totals ties into the figures listed on the summary.

Income

I recommend listing out all income reported on forms in this order: W2s, 1099-int, 1099-div, 1099-r, SSA-1099, 1099-B, 1099-G and K-1s. Use 2 columns, one for taxable income, and one for federal tax withheld ( if you have state tax withheld add a 3rd column).

If you have rental income or self-employed income list the income and expenses on a separate page and then just list the property address or business name on your summary and cross-reference to the detailed schedule.

Rental Income and Expenses

You need to separately list income and expenses for each rental property you own.  Income will include all rent received including last month’s rent deposits but not damage and pet deposits.

Expenses that you might have include:

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