Login

 

WHAT RECORDS SHOULD YOU GIVE YOUR ACCOUNTANT?

What To Bring Closeview 3 960

 

For many people it's not obvious what records and information their accountant needs. The tax law is complex and there are literally hundreds of possible documents that may be needed by your accountant. This article will discuss the most important information your accountant must know when it's time to do your taxes.

 

Telepathy Doesn't Exist
Good communication between clients and accountants is essential in order to ensure that your taxes are done right. It is the duty of every client to inform their accountant of all material transactions and information that pertain to the client's tax situation. Similarly, it's impossible for your doctor, dentist, lawyer or any other professional to help you if you don't inform them of all relevant material facts.

 

Too Much Information May Slow Down Your Accountant and Create Errors
If you give your accountant irrelevant or unnecessary information you may slow him down. This can create costly and burdensome inefficiencies for both the client and the accountant.

Dumping useless, irrelevant and distracting information on your accountant can create a 'needle in a haystack' effect, where even the keenest accountant may not find the one crucial tax document buried deep inside the mountain of clutter you give him.

Clients should sort through their information using the lists and other guidance provided in this article in order to avoid exposing themselves to the 'needle in a haystack' situation.

 

Important Transactions Your Accountant Should Be Informed Of
Here is a list of major transactions your accountant needs to know about in order for him to do his job right (this list is not intended to cover every possible case):

(1) Starting, selling or buying a business including rental properties;

(2) Purchase or sale of business assets including vehicles;

(3) New business loans and refinancing of business loans;

(4) Bankruptcy, whether business or personal;

(5) Divorce, marriage or new dependents;

(6) Buying or selling your home;

(7) Casualty losses arising from fire, flood, storm, theft, etc;

(8) Business lawsuits;

(9) Inheritances and gifts;

(10) Moving - whether personal or business;

(11) Investment transactions including the sale of stocks, bonds, derivatives, land, or stumpage;

(12) Hiring employees;

(13) Did you retire this year? Were you an active-status member of the military?

(14) Did you go to college in Maine and then work for a Maine employer and also live in Maine? (Maine offers a special tax credit for this called the Opportunity Credit.)

 

Tax Records and Other Information to Give Your Accountant
Here is another key summary (not intended to cover everything) of tax forms and other records to give to your accountant:

(1) Form W-2 and W-2C for wage and salary income;

(2) Forms 1099-INT, 1099-DIV and 1099-B for investment income;

(3) Form W-2G reporting gambling winnings (also provide a summary of any gambling losses);

(4) Annual summary of any unemployment income;

(5) Form 1099-MISC for various other types of income;

(6) Alimony - whether paid or received;

(7) Form 1099-G reporting prior year state tax refunds;

(8) Any notice received from the IRS or state tax agency;

(9) Form 1099-K reporting revenues received via a credit card processing company;

(10) Form 1099-R reporting pension and annuity income;

(11) Schedule K-1's from partnerships, LLC's, S corporations, Trusts and estates;

(12) Pink and white annual statement of social security income;

(13) Any other Forms 1099, such as 1099-Q or 1099-QA;

(14) Tax reporting statements for Health Savings Accounts - contributions to the HSA are shown on Form 5498-SA and distributions from the HSA are shown on Form 1099-SA;

(15) Forms 1099-C reporting cancellation of debt income and Form 1099-A reporting the abandonment of a real property interest;

(16) Form 1098 reporting mortgage interest expense;

(17) Form 1098-E showing student loan interest and related form 1098-T showing tuition incurred for a tax year;

(18) Receipts or summaries of possibly tax-deductible expenses including charitable contributions, investment interest, property taxes, auto excise taxes levied on the value of the vehicle, out-of-pocket medical costs paid, qualified mortgage insurance premiums, job costs including travel incurred in connection with employment, moving expenses, and certain legal fees paid;

(19) A summary of any federal and state estimated tax payments made;

(20) Information on any foreign bank accounts;

(21) Form 1095-A reporting premiums paid to the federal health insurance exchange.

(22) IRS-issued Identity Protection Pin for the current tax year. Victims of tax return fraud are given this pin code.

(23) Are you (and your spouse if married) U.S. Citizens?

 

 

The Problem With Lists
A truly comprehensive list of what you should give your accountant might be very, very long. So here are some common sense tips to guide you in addition to the specific information provided above:

(1) Most tax forms have an "OMB" number. One way to distinguish an important tax form from mere statements or unhelpful records is to see if it has an official number assigned by the federal Office of Management and Budget. If it does it's likely your accountant will need it.

(2) For deductible business expenses see IRS Publication 535, available for free at IRS.gov.

(3) For deductible personal expenses, including itemized deductions, see IRS Publication 529.

(4) Pursuant to Internal Revenue Code Section 61(a) ALL sources of income are taxable, everything, unless a specific rule or law exempts it from tax. IRS Publication 525 provides a lengthy list of many types of tax-free income.

(5) When in doubt, shout! If you are unsure of whether a transaction or document should be given to your accountant, just ask.

 

What Happens If You Don't Give Key Information to Your Accountant?
The IRS receives information on your taxes from many sources including banks and other financial institutions. If an item of income is reported to the IRS and you don't inform your accountant of it then the IRS may issue you a discrepancy notice. In this case you are likely to owe back taxes, interest and penalties. Missing information may also increase the risk of an IRS audit.

If you neglect to inform your accountant of expenses or transactions that qualify for a tax credit then you may end up overpaying your taxes. However this type of error can be corrected by filing amended tax returns. In general you can correct the prior three years of tax returns before the statute of limitations runs out.

 

Super-Diligence
For various reasons some clients will want to go all the way to make sure their taxes are prepared to the highest degree of precision. The heuristic "rules of thumb" and lists provided above may be insufficient in this case. And so I am providing a full-blown 66 page Client Organizer for 2016.
Here it is:  

Client Organizer

 

LEGAL DISCLAIMER

George Adams
Certified Public Accountant Master of Business Administration
Tel: (207) 989-2700 E-Mail: GeorgeAdams@IntelligenceForRent.com
450 South Main Street: The HQ of IQ
Brewer, Maine 04412-2339

©2015 Copyright George Adams CPA MBA. All Rights Reserved.

Business Cases:

Nucor Steel: Into the Storm

10-25-2011 Hits:2665 Company Analysis George Adams

Nucor Steel: Into the Storm

One of the largest steel companies in the U.S.had a forty year track record of unbroken profitability until 2009. How can Nucor succeed in a tougher, harsher climate?

Read more

RITZ-CARLTON (Circa 2008)

12-15-2011 Hits:2706 Company Analysis George Adams

RITZ-CARLTON (Circa 2008)

 The business strategy of luxury with a human face requires both popularity and exclusivity. How can Ritz-Carlton master this apparent contradiction?

Read more

SAS Company Analysis (Circa 1995)

12-13-2011 Hits:2192 Company Analysis George Adams

SAS Company Analysis (Circa 1995)

Does it pay to fly dirty?

Read more

Otis Elevator (Circa 2004)

12-13-2011 Hits:3426 Company Analysis George Adams

Otis Elevator (Circa 2004)

The largest elevator company in the world has to make some tough choices.

Read more

Vertex Company Analysis (Circa 2003)

12-27-2011 Hits:1901 Company Analysis George Adams

Vertex Company Analysis (Circa 2003)

Crucial business decisions can benefit from the insights of combinatoric analysis.

Read more

Walmart Company Analysis (Circa 2003)

12-27-2011 Hits:1896 Company Analysis George Adams

Walmart Company Analysis (Circa 2003)

The largest retailer in the world is getting too big to grow any further without new and better thinking.

Read more

Sara Lee Corporation (Circa 2008)

12-27-2011 Hits:1865 Company Analysis George Adams

Sara Lee Corporation (Circa 2008)

Nobody doesn’t like Sara Lee, until the company started hating itself.

Read more

Southwest Airlines (Circa 2010)

12-27-2011 Hits:2084 Company Analysis George Adams

Southwest Airlines (Circa 2010)

How can the most successful U.S. airline keep it up?

Read more

The Power to Save the World: Fusion, the Unknown Ideal

12-28-2012 Hits:2592 Company Analysis George Adams

The Power to Save the World: Fusion, the Unknown Ideal

Energy is the ultimate question of our time: how do we get it, at what cost and what consequences?

Read more

Business Issues:

IT'S TAX TIME AGAIN

02-03-2017 Hits:333 Business Issue Analysis George Adams

IT'S TAX TIME AGAIN

The 2017 tax filing season opened on Monday, January 23rd when the IRS began processing returns.

Read more

HOW TRUMP DID IT

11-09-2016 Hits:482 Business Issue Analysis George Adams

HOW TRUMP DID IT

This article is strictly non-political and explains how the billionaire Donald Trump legally avoided income taxes for many years.

Read more

WHAT RECORDS SHOULD YOU GIVE YOUR ACCOUNTANT?

01-13-2017 Hits:487 Business Issue Analysis George Adams

WHAT RECORDS SHOULD YOU GIVE YOUR ACCOUNTANT?

For many people it's not obvious what records and information their accountant needs. This article will discuss the most important information your accountant must know when it's time to do your taxes.

Read more

BEWARE OF DARK CARS

01-13-2017 Hits:263 Business Issue Analysis George Adams

BEWARE OF DARK CARS

One phenomenon that began in the last few years in Central Maine is dark cars

Read more

YEAR END TAX PLANNING

11-29-2015 Hits:1261 Business Issue Analysis George Adams

YEAR END TAX PLANNING

Once more it’s time to play another deep game of chess with the IRS. Are you ready? The clock is ticking....

Read more

Why Are You Using An LLC?

05-20-2012 Hits:4264 Business Issue Analysis Administrator

Why Are You Using An LLC?

It can cost you a fortune if you choose the wrong entity for your business.

Read more

Pi and Pi Squared

10-31-2011 Hits:4393 Business Issue Analysis George Adams

Pi and Pi Squared

How can companies motivate innovation and manage internal conflict effectively?

Read more

Secret Unions: Employee Collusion and Conspiracy

10-25-2011 Hits:4621 Business Issue Analysis George Adams

Secret Unions: Employee Collusion and Conspiracy

Anyone can use Game Theory to try to get ahead. But sometimes there is a better, simpler strategy.

Read more

Jump! Employee Performance On Trial

10-31-2011 Hits:4273 Business Issue Analysis George Adams

Jump! Employee Performance On Trial

The true and the obvious frequently differ, especially when it comes to assessing employee performance.

Read more

You Have to Break Eggs to Make an Omelet

11-30-2011 Hits:3966 Business Issue Analysis George Adams

You Have to Break Eggs to Make an Omelet

Some employees take their work seriously while others don’t.

Read more

The Fallacy of Teamwork Part I: Train of Thought

11-30-2011 Hits:4817 Business Issue Analysis George Adams

The Fallacy of Teamwork Part I: Train of Thought

Is teamwork the answer to every business problem?

Read more

The Fallacy of Teamwork Part II: Michael Jordan Doesn’t Need a Memo

11-30-2011 Hits:5687 Business Issue Analysis George Adams

The Fallacy of Teamwork Part II: Michael Jordan Doesn’t Need a Memo

What does neuroscience have to say about the applicability of the team sports model to business collaboration?

Read more

On the Relative Importance of Sales People and Technical People to Business

11-30-2011 Hits:4364 Business Issue Analysis George Adams

On the Relative Importance of Sales People and Technical People to Business

Is it really true that technical employees are just a bunch of nerds a company puts up with so its star sales people can make big profits?

Read more

Business Cannot Ignore Its Environment

11-30-2011 Hits:4276 Business Issue Analysis George Adams

Business Cannot Ignore Its Environment

The power of goodwill to destroy the most successful companies.

Read more

Artificial Intelligence

11-30-2011 Hits:5821 Business Issue Analysis George Adams

Artificial Intelligence

There is nothing new under the sun, until computers become smarter than the smartest person.

Read more

The Growing Spectacle of Job Lotteries

11-30-2011 Hits:4296 Business Issue Analysis George Adams

The Growing Spectacle of Job Lotteries

A new take on the growing commodification of labor.

Read more

Understanding Tax Clients

06-05-2012 Hits:2752 Business Issue Analysis George Adams

Understanding Tax Clients

The primary cliché of our profession of taxes and accounting is that every client is different.

Read more

Making Business Succeed, Part One: Winning at Retail

06-26-2013 Hits:2917 Business Issue Analysis George Adams

Making Business Succeed, Part One: Winning at Retail

What you don't know may put you out of business.

Read more

Making Business Succeed, Part Two: Fresh Thinking For Farmers

07-23-2013 Hits:2303 Business Issue Analysis George Adams

Making Business Succeed, Part Two: Fresh Thinking For Farmers

There are many reasons for having faith in a seed.

Read more

Making Business Succeed, Part Three: Succeeding with Services

09-05-2013 Hits:3805 Business Issue Analysis George Adams

Making Business Succeed, Part Three: Succeeding with Services

Your journey to success will have many twists and turns. Here are important insights to guide you to success with your service business.

Read more

Making Business Succeed, Part Four: Victory for Vacationland

09-26-2013 Hits:2719 Business Issue Analysis George Adams

Making Business Succeed, Part Four: Victory for Vacationland

Tourism and related businesses dominate the economy of Vacationland.

Read more

Five Key Facts of Life for Non­‐Profits

08-14-2013 Hits:3367 Business Issue Analysis George Adams

Five Key Facts of Life for Non­‐Profits

You may be the last line of defense for your non-profit organization.

Read more

CLOUDY, WITH A CHANCE OF PAIN

07-31-2014 Hits:2600 Business Issue Analysis George Adams

CLOUDY, WITH A CHANCE OF PAIN

The truth about cloud-based accounting and the dangers of bundling.

Read more

TAX RETURN FRAUD IS RAMPANT

04-26-2015 Hits:1525 Business Issue Analysis George Adams

TAX RETURN FRAUD IS RAMPANT

According to a January 2015 news release from the IRS, for the period 2011 – 2014 the tax agency stopped 19 million suspicious tax returns and prevented the issuance of approximately $63 billion in phony refunds.

Read more

GEORGE'S POWER BREAKFAST

01-17-2016 Hits:1587 Business Issue Analysis George Adams

GEORGE'S POWER BREAKFAST

Business owners are the nucleus of their business, the center upon which everything else depends. It is frequently the case that business owners simply can't afford to get sick. Healthy food is the best preventative medicine of all.

Read more

GHOST ASSETS

10-27-2016 Hits:449 Business Issue Analysis George Adams

GHOST ASSETS

Are You Being Haunted By Them? If You Are It’s Costing You Money

Read more

 

Contact Me

Member

Telephone: (207) 989-2700
Fax: 1-866-444-0032
Email - georgeadams@intelligenceforrent.com
Address: 450 South Main Street: The HQ of IQ
               Brewer Maine 04412-2339

Maine Society of Certified Public Accountants
Certified QuickBooks Professional Advisor
Bangor Region Chamber of Commerce
Beta Gamma Sigma and Phi Kappa Phi
National Association of Independent Writers and Editors
Published Contributing Writer-Maine Eagle Magazine
New England Peer Review

 

© 2017 Copyright George Adams CPA MBA. All Rights Reserved.
George Adams - More Than Just a CPASM