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— Will Rogers They’re known by various names in the accounting industry: “shoebox” clients, “answers on the ceiling” clients, high-maintenance clients, ideal clients. Your tax accountant has a label for you. And although you may not care what your accountant or enrolled agent thinks of you personally, being disorganized can cost you money, both in taxes and tax prep fees. Here’s what you can do to earn the label of the ideal, organized client.

Shoeboxes are for shoes

Enrolled tax agent Kirt Flynn of Tyron, N.C., worked with one client who honored him with a folder. “He had a folder in his desk that said ‘Flynn,'” the accountant recalls. “Whatever he thought was pertinent to preparing his tax returns, he dropped into that folder. When I got that folder at tax time, I had to sort it all out.” At a fee of $80 to $300 an hour, paying your tax accountant to sort your receipts gets expensive. “If someone comes to me and has a relatively complex tax return but has everything well-organized, I might charge $400 to $500,” says Eva Rosenberg, an enrolled agent in Northridge, Calif. “If someone has a simple return but is thoroughly disorganized, I might charge $1,000 because of all the time I have to spend organizing. That’s my baby-sitting fee.” For charitable donations, you need not just a blank receipt, but also an itemized list of what you donated. “If you gave four T-shirts, four pairs of underwear — write every piece down,” O’Herron says. “There are sources that can help determine a fair market value of the donation, which is usually yard-sale value.” Organize and itemize those receipts. Then add them up for each category on your return. Fill out the tax organizer your accountant gave you.

Dancing on the ceiling

Those missing papers could be the key to getting money back from the IRS or more ominously, mean you owe more taxes and the accompanying penalties. “We have clients all the time who forget to bring us an item that could result in additional tax, and after filing, could result in penalties,” Flynn says. Giving your best guess in April is a bad idea. For example, you can deduct miles driven for volunteer work but you need to keep a record every time, ideally in a notebook you keep in the car, O’Herron says. “If it looks like it was prepared long after the fact, the IRS could get nasty about it,” she says. With no backup paperwork, it can be expensive and time-consuming to prove you don’t owe more taxes. For example, one of Rosenberg’s clients, a truck driver, was asked during an audit to provide a receipt for every single toll. “Another client had about $50,000 in expenses and no receipts because he paid cash for everything,” Rosenberg says. “He paid nothing in additional taxes, but it cost him a lot for that audit.” Get a shoebox. (Just kidding). Save your receipts and all those tax documents from your employer, the IRS, your retirement accounts and your stocks. Next, organize that paper into categories. If your volunteer work involves driving, get a notebook and keep it in the car to record mileage.

The paper trail

Rosenberg estimates she has to file an IRS power of attorney to get missing W-2 statements and other information from the IRS for about 5 percent of her clients. But some documentation has to come from the client. “I had one client that I didn’t get to finish her tax return for a year and a half because she didn’t get me her mortgage statement,” Rosenberg says. “That’s a high-maintenance person.” “If your accountant gives you a list of things to get together, put them all in one place and send them,” she says. Not eventually, but right away.

Last-minute filers

Don’t wait until April to think about taxes.

Liars

Tell the truth.

Deadbeats

Pay up.

The ideal client

The ideal client calls his tax accountant before he makes a financial decision (such as selling stocks and taking capital gains) that could impact taxes. When your accountant or enrolled agent says ‘Keep in touch,’ he or she is not just making small talk. Related Links: Related Articles: SHARE:

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