By Kelly Phillips Erb, Contributor Tax season starts on January 30! To get things started, I asked tax professionals around the country to give me their top tax tips. Here’s some of what they had to say: If you refinanced in 2012, be sure to write off any prior refi costs that you have been writing off over a number of years. – R. Milton Howell, III, CPA, CSEP, CGMA (@DMJTax) Use an accountant! Not the cheapest one either! – David Crosson, Esq. Shoeboxed.com. Get everything scanned so you can give your tax preparer a CD or USB of PDFs and a spreadsheet summary. Beats handing over an actual shoebox. – Christopher Foundas For those claiming dependents or credits such as the EITC, have a folder of documents such as medical records, report cards, or anything else that proves that the dependent lived with you for at least half of the year. I find this the most challenging part of overcoming any exam or audit reconsideration, especially for tax years that are 5 or more years ago. Keep your address current with the IRS by using Form 8822. 11 percent of IRS mail is returned as undeliverable. “Did you hear about that new Obama stimulus credit?” Neither did I. Be wary of claims that are too good to be true, because they often are scams preying on the uninformed. If you have gone through a foreclosure, keep contemporaneous records of the event. Was it a foreclosure? A short sale? Modification? What was the bid price? What was the outstanding principal? Are you insolvent? All of these questions are critical in resolving Cancellation of Debt (COD) issues. To make matters worse, banks often issues a 1099-C with incorrect information. Having a record that is created at the time of the foreclosure will help you resolve the potential COD issue down the road. – Andrew Jack VanSingel, Director of the Low Income Tax Clinic at Prairie State Legal Services in Wheaton, IL Important records to keep: bank statements /cancelled checks, receipts for repairs and improvements to your home or business property, ie show what you pay for. Important records to make: mileage logs for business, charitable and medical travel. – Patti Harriman For tax pros, my advice is to remember to build in the 3.8% NII surtax into your calculations when preparing estimates. – Felix Russo, CPA If anyone needs to track rental property and with a click of a button produce reports with Sch E line #s, check out the Rental Property Organizer at Simp-List.com. Free download. Contains data for a quick evaluation. – Stan McBride Make sure your tax preparers are using Refundo when they print a check for you. www.refundo.com – Emilio J Jimenez Have a check list. Scan pertinent documents you need to share never send originals. Work with a professional that will be patient and speak English not accountant to you. Don’t wait until January or even worse, March to contact your tax preparer. Lay good ground work during the year in your accounting practices and your year end should take no time at all. – Meghan Blair Valero, Bookkeeper/President Fogged In Bookkeeping Nantucket, MA Remember that (if you are eligible) you can still contribute to a Traditional or Roth (or a combination of the two) up until the end of tax season. If your AGI puts you where you can get the Retirement Savers Credit the end result is that up to 50% (again, depending on AGI) of that retirement contribution is credited back to you. This likely will not apply to most who contribute to a 401k since they will have already used that for the maximum credit if eligible, but remember that the spouse may still be eligible even if they did not have earned income. I love to go over the figures on Form 8880 with clients to show them how they can get that immediate return on their retirement contribution. Unfortunately, 1) I don’t think most understand the implications and 2) it does take some planning ahead since those who do qualify for the credit tend to be lower income and tend to not have up to $2000 at their disposal (even though they may get some of it back in a refund). This is especially useful if there is Child Tax Credit that becomes Refundable Child Tax Credit when you add the Retirement Savers Credit. Another tip (but not so original to me) is to move any money you have invested for your child who had earned income into a Roth IRA – any earnings on that subsequently become non-taxable (as long as all the rules are followed, of course!). – Debra Sloan-Shiflett For my best tax tips, check out these prior posts: My Best Tax Advice Ever, Part I: Open Your Mail My Best Tax Advice Ever, Part II: Get Some Help My Best Tax Advice Ever, Part III: Make Friends With a Tax Pro My Best Tax Advice Ever, Part IV: Don’t Lie to Me —
Source: FULL ARTICLE at Forbes Latest