USE A TAX PREPARER - Even the simplest individual tax returns can be complex because of the child care credit, educational credits and the earned income credit.  If you receive a Form K-1 from a Partnership, Limited Liability Company, Trust, an S Corporation or have to prepare a Form 8824 Like-Kind Exchanges, forget about trying to prepare your own Individual Income Tax Return.  If you are responsible for filing a Partnership, LLC, Trust or Corporate Tax Return you should use a tax preparer.  A good tax preparer should, over a period of time, save you an amount equal to or greater than the amount you have to pay them. 

KEEP EVERYTHING IN ONE PLACE - You should keep all Forms W-2, 1099 and 1098 that come in envelopes marked “Important Tax Documents Enclosed” or anything else you need to prepare your tax return in a file folder, large envelope or shoe box (this will bring a smile to your tax preparer’s face).  This will make it easier to retrieve them when they are needed. 

ORGANIZER - If your tax preparer sends you an organizer, use it.   The organizer will contain the figures you used on your previous tax return and will be in the order it appeared on the tax return.  This will help the tax preparer to focus on looking for ways to reduce your tax instead of finding and summarizing your information. 

THINGS TO DO TO SAVE TAXES

• Use your employer’s flexible spending account to pay for medical and dependent care expenses before the income is taxed to you.
• Participate in and contribute the largest amount you can to your employer’s 401(k) plan.  Good tax planning is controlling the timing and flow of your income. 
• If you have large medical expenses, pay property tax, pay interest on a mortgage, make charitable donations or have unreimbursed employee business expenses consider itemizing your deductions. 
• If you use a space in your home to administer your business, consider taking the home office deduction.
• Learn as much as you can about our Federal and State tax laws because the more you know about them the less you will pay.

Tony Phillips, CPA has a certified public accounting firm, Phillips & Company in Pasadena and is President of Downstream Exchange Company which helps investors save taxes when they sell their investment property.