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Tax preparer checklist ultimate guide

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Ace this tax season for your clients with our ultimate guide to tax preparation
Ace this tax season for your clients with our ultimate guide to tax preparation
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Updated on:
March 11, 2023
March 11, 2023
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Ace this tax season for your clients with our ultimate guide to tax preparation
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Let's be honest – tax season can be a challenging time for tax preparers. However, it's crucial to take the necessary steps to ensure that your clients' taxes are filed accurately and on time. Failure to do so can result in severe consequences for both you and your clients.

The good news is that preparing taxes doesn't have to be a daunting task. By utilizing a comprehensive tax preparer checklist, you can streamline the process and avoid any potential errors. The checklist should include all the necessary documents and records required to file taxes, and you can simply check off each item on the list as you go.

So, without further ado, let's take a look at the ultimate tax preparer checklist – your comprehensive guide to acing this year's taxes for your clients.

Before starting

In the spirit of getting tax preparation over and done with, you're probably ready to jump straight into the actual filing process. Before you start, though, you'll want to make sure you have the right information and documents on hand. Let's walk through the pre-preparation process.

Gather the necessary documents and records

As a tax preparer, your first step in the tax preparation process is to gather all the necessary documents and records from your clients. Tax preparation involves analyzing a vast amount of data, and it's crucial to collect all relevant records and documents from your clients.

This includes forms related to income for both your clients and their dependents, receipts for expenses, previous tax returns, bank statements, investment account summaries, and any other relevant documents.

To help you keep track of everything, here's a specific list of what you'll need to collect:

  • W-2 forms, 1099s, and other income statements
  • Previous tax returns (if applicable)
  • Bank statements and investment summaries
  • Receipts for any expenses related to business or charitable deductions
  • Social security numbers of all dependents (if applicable)

It's essential to keep all these documents organized and easily accessible for reference when needed. A good practice is to store them in a folder or binder, whether in hard copies or digital copies on your computer. This ensures that you have all the necessary information at hand when it's time to prepare your clients' taxes.

Familiarize yourself with tax laws

Tax laws change year after year – some minor changes don't really affect most people's tax situations, but it's important to know what these changes are so that your clients can take advantage of any credits or deductions available to them. Take a little bit of time to read up on current tax regulations so that you're aware of any potential benefits before beginning the preparation process.

Keep a record of all of these points so that when it comes time to file, you have all the information at your fingertips.

Income types and calculations

The income types that your clients may be taxed on include wages, investment income (dividends, capital gains, etc.), self-employment income, retirement account distributions, Social Security benefits, and more. Depending on your client’s country or state's regulations, their income may also be subject to certain deductions such as charitable donations or business expenses.


If your client has an employer, they are obviously earning wages. This is money they make from a job, usually in the form of an hourly or salaried rate. The client’s employer will provide them with Form W-2 which shows how much they earned throughout the tax year and any deductions their employer might have taken out. Ensure you collect a copy of this form from your client.

Investment income

You’ll also need to be aware of your client’s investment income. This includes income from dividends, capital gains, rental property income, and more. Your client will receive reports summarizing your investment activity such as Forms 1099 and K-1s that show all the different investments they made throughout the year along with their corresponding returns (or losses).

Self employment income

Those who are self-employed – freelancers, independent contractors, entrepreneurs – are responsible for paying taxes on their income. They don't have an employer withholding taxes on their behalf. In this case, your client will have (hopefully) kept a record of their income and kept track of any expenses related to running the business.

Retirement account distributions

Has your client made any withdrawals from their retirement account this year? Withdrawals from Roth IRAs and traditional IRAs are taxable income, so make sure to report them in your client’s tax. They may be charged an early withdrawal penalty if they withdraw before reaching the age of 59 1/2.

Social security benefits

Depending on how much other income your client earns throughout the year, a percent of their Social Security benefits may be taxable. These benefits include Social Security, Railroad Retirement, and Civil Service Retirement.

Calculating income

Now that you know the different types of income, it's time to figure out your client’s total taxable income. This is done by adding all sources of income together and subtracting any applicable deductions or credits. For instance, if they’re filing a joint return with their spouse, both incomes can be combined for a higher deduction threshold.

The income will be subject to different deductions or credits depending on your client’s country or state's tax regulations – but some of the most common deductions are for charitable donations, business expenses, and healthcare costs.

To report your client’s income, you'll need specific documents: the W-2 from their employer, 1099s from investments, and relevant forms for any other income sources. Have their receipts handy as well for deductions and credits.

Deductions and credits

In tax vocabulary, deductions and credits are two different types of incentives that can help reduce your client’s tax bill. They're both beneficial, but they aren't the same – and the distinction is important for getting taxes done right.


A deduction is an amount of income that's taken off taxable income before being taxed. This means it reduces the amount of money your client owes in taxes and can potentially save them money. Common deductions include student loan interest, mortgage interest, charitable donations, and medical expenses.

The reason these deductions exist is that the government wants to incentivize certain activities – like donating to charity or investing in a home. Sometimes, these deductions are limited by an income threshold, so you should be sure to check for any limits before claiming them for your clients.


A credit is a dollar-for-dollar tax reduction on your client’s total liability. It's more beneficial than a deduction because it's taken directly from the amount owed in taxes. Common credits include the earned income tax credit and the child tax credit.

These credits are designed to help people who make less money or have dependents like children, so they don't get taxed on that income. It's important to note that if your client’s total tax liability is lower than the amount of credit available, they won't get any additional money back; only what they’ve already paid will be refunded to them.

Maximizing credits and deductions

Many people try to find loopholes and hacks for getting the most out of credits – but the main key to maximizing deductions and credits is to find out which ones your client is eligible for. They can't leverage something you don't know about, so research and read up on the various credits available to make sure your clients aren’t missing out on potential money-saving opportunities.

Other tips include double-checking deductions and credits for accuracy, not claiming more than your clients are eligible for, or overestimating the amount of money they’ll get back.

Hopefully your clients keep detailed records throughout the year so that when tax season rolls around, you have all the documents necessary to prove their deductions and credits are legitimate. It’s the client’s responsibility to keep all of these details on record.

Properly reporting deductions and credits

Once you have all the documents, deductions, and credits ready to go, it's time to report them.

There are specific forms and line items for reporting deductions and credits, so make sure you know exactly where to put them. The IRS is always watching out for fraudulent activity, so be honest and accurate when filling out your client’s tax returns.

Tax forms and schedules

The tax filing process is facilitated through a series of forms and schedules. As we said, different locations have different forms – but since the majority of our readers are US-based, we'll be focusing on the IRS requirements for this section.

Form 1040 and Form 1040-SR

Most taxpayers in the US will use Form 1040 as their primary tax return form. There were once three variations of the 1040 form – the 1040A, 1040EZ, and 1040X – but they're now merged into one form (plus Form 1040-SR for seniors over 65).

Via this form, you'll report client income, claim their credits and deductions, and calculate their final tax owing or refundable amount. You may need to add schedules depending on the client’s individual circumstances.

W-2 Employment Income Form

W-2 forms are used to report wages, salaries, and other income from employers. Your clients will need this form for claiming a refundable credit like the earned income tax credit (EITC).

The client’s employer will send this form to them in the first couple of months each year. If they for some reason haven’t received one (which is unlikely, but happens), recommend that they contact their employer as soon as possible.

The W-2 will show proof of how much your client was paid, their contribution to the company retirement plan, and any withheld taxes.

Form 1098

Is your client paying off a mortgage or student loan? Form 1098, which is typically delivered to them by mail, will give a rundown of the interest they paid over $600 for loans during the year. It's helpful to know this because interest over $600 is usually deductible.

If they are in fact paying off a student loan, they’ll receive the 1098-T form showing how much was paid for tuition within the year. The 1098-E form reports any interest paid on those student loans – again, typically deductible.

Form 1099

If your client is an independent contractor or freelancer, they will receive a 1099 form instead of a W-2. This form shows how much money they made from their clients and customers, as well as any other income such as investment dividends or royalties.

In addition to the 1099 forms (which are sent out by January 31st) there are several different variations depending on the client’s individual circumstances:

  • 1099-MISC and 1099-NEC – self-employment income and anything outside of investment earnings
  • 1099-INT – interest income from banks, brokers, and other financial institutions
  • 1099-DIV – dividend income from stocks and mutual funds
  • 1099-OID – for when bonds are bought under face value

They’ll be sent a copy of the form, and another copy will be sent to the IRS. Your client needs to contact the company or institution that would be responsible for sending it if they’re not yet received one.

Forms 1040-X and 4868

Some years, tax filing efforts don't go as planned – and there are forms in place to help fix any mistakes or omissions.

This is particularly helpful if your client gives any false information during the tax preparation process (or if they suddenly remember something after you’ve already filed).

If your client asks for more time to get their tax information together – perhaps because of illness or job loss – Form 4868 is the extension form that allows for an additional six months of filing time. Note that it doesn't extend the payment deadline, so if they owe money, it needs to be paid by the April due date.

It's worth prompting your clients to stay on top of missed deadlines; the late-filing penalty is currently 0.5% of their due amount for each month overdue. That can quickly add up, and the IRS has a zero-tolerance approach to late filing.


A form schedule is like a mini-form that has to be filled out alongside Form 1040. These are used for more complex tax situations, and they need to be sent in with the main form.

Schedule A is the one most people will be familiar with; it's used for itemized deductions like charitable donations or medical expenses. For example, your client might have a mix of property taxes, medical expenses, and other deductions that need to be made distinct from their standard deduction.

Schedule B pertains to taxable dividends. If a client has interest and dividends over $1,500, it'll be taxed – hence why so many people use 401Ks and IRAs, since it lowers their tax bill.

Schedule C is where you enter your client’s income from self-employment or business activity. Income from an Etsy or Shopify store, for instance, would come under this category; side gigs like driving for Uber or babysitting are also considered self-employment. You use Schedule C to report your client’s profits and losses from these income sources.

Schedule D is used to report capital gains and losses. Generally, if your client has sold a property or asset for more than its purchase price, then the gain will be taxed as income. If it's sold for less than the original price, then that loss can be used to offset other taxable income. You can deduct up to $3,000 of those net losses for your client.

Filling out forms correctly

So, there you have it – the main forms and schedules you'll need to file client taxes this year. Keep in mind that accuracy is key: double-check all your entries and make sure they match up with W-2s, 1099s, or other documents.

There are a few common errors tax preparers make when filing these forms – like not entering all income sources, such as interest from bank accounts or stock sales. This is also the fault of clients; make sure you ask them multiple times whether you’ve received all income sources and all vital details.

Not taking deductions or credits your clients qualify for is another common mistake. Go through the IRS website to see if there are any deductions or credits that apply to your client’s situation; even small ones can add up and help lower their taxable income (and they won’t be happy if you end up costing them more money!)

Filing and payment

We're up to the payment and filing process. Nearly there!

When you've taken the time to gather all the necessary information, filing and making the payment can be a breeze. Here's what you need to know.

Filing options

When it comes time to file your client taxes, e-file is the easiest and most popular way to file taxes. All you need to do is enter the information into an online form, then submit it electronically. The IRS will process the return quickly and issue any refund due within a few weeks.

There’s also the option of:

  • Paper Filing. If for some reason you prefer not to use e-file, you can send in paper forms instead. These have to be printed out, filled out manually, and sent in through the mail; this method takes much longer than e-filing (upwards of 8 weeks) but can be done if necessary.
  • In-Person. Note that this option isn't available everywhere. You can, in some cases, visit a local tax office and have them do the filing for you. This is usually only necessary for more complicated returns.

It's easier for everyone involved if you go with e-filing, but choose what makes the most sense for your client’s situation.

Important deadlines

Let's talk about payment due dates. It's a real pain for your clients if you miss one, so make sure you know what's when. Here's a list of all the dates relevant to the 2022 Tax Season.

  • The tax season for 2022 begins on Jan 23, 2023. You can begin sending in tax returns from this date.
  • Typically, Tax Day is on April 15; it may extend to April 18 if this falls on a weekend. This is the official deadline for filing tax returns and making any payments due, as well as IRA and HSA contributions.
  • The second quarter 2023 tax payment is due on June 15, the third quarter on September 15, and the fourth quarter on Jan 15 2024.
  • Extended tax deadlines are shifted to October 16.

Note that these are just the key due dates for individual taxpayers. Businesses and partnerships will need to research their own filing deadlines.

Payment options

As a tax preparer, you’re not typically responsible for making the actual payments to the IRS. You will have done all the calculations so they know exactly how much is owing; from there, you can advise them of the different options.

Here's the list of options available, which you can explain to your clients:

  • Credit/Debit Cards: Clients can pay by credit or debit card through certain third-party providers like Official Payments Corporation and PayUSAtax. Be aware that there are often extra fees for using this method.
  • Check or Money Order: They can mail in a check or money order made out to the “United States Treasury”, with their Social Security Number written on the back. It must be postmarked by the due date, so they need to leave enough time for postal delays.
  • Cashier's Check: This is similar to a regular check, but more secure since it comes from a bank rather than an individual. If your client is making a large payment (over $2k) then this may be preferable, as it's less likely that there will be any problems with it.
  • Electronic Funds Transfer: This option is available from some banks. Clients can set up a one-time or recurring transfer, which will be sent directly to the IRS on the due date. This works much like Direct Debit but requires less effort and is more secure since your bank is in charge of sending the payment rather than you.

The payment deadline for owed tax is the same as the filing deadline. Reinforce with your clients the importance of paying on time – the IRS is not known for its leniency when it comes to late payments. They’ll be charged 0.5% per month for any payments that are late up to 25% of the owed balance.

Requesting a refund

At times, you might be in a situation where you need to request a refund for a client. Perhaps you accidentally miscalculated their taxes (it's not uncommon – about 16 million people overpaid the IRS in 2021).

In that case, you can file an amended tax return to claim the refund for your client. You must use Form 1040X and make sure that you include all relevant documents with it, such as any W-2 forms or other income statements.

If the amended return results in a refund, your client can choose between getting it by check or direct deposit into their bank account. This is often the fastest way to get their money back – it may take up to 8 weeks for a check to be issued, whereas direct deposits usually arrive within 3 weeks after filing.

Getting an extension

Are you unable to file your client’s tax on time? Don't worry – you can apply for an extension. This will give you and your client up to 6 months extra to get everything sorted out, although interest still applies if they owe taxes during that period.

To request an extension, fill out Form 4868 and send it in or submit it online before the due date. You don't need to provide any explanation as to why you're requesting the extension, but make sure that your client’s estimated tax payment is accurate so they can avoid hefty penalties later on down the line.

Responding to IRS correspondence and audits

If you receive any kind of correspondence from the IRS, make sure to respond as soon as possible. The letter will usually provide instructions on how to proceed and what documents are required.

In the case of an audit, take it seriously – you'll need to provide evidence that backs up your clients’ claimed deductions and other expenses. Make sure you have all relevant paperwork prepared before meeting with the auditor since they'll be expecting everything to be in order.

Helpful resources

Even if you’re a trained tax preparer, having all of this tax information presented on one page can be overwhelming. Don't fret – help is at hand, in the form of software, guides, and more.

Tax preparation software

Accounting software can make tax preparation a breeze. From tracking expenses to generating reports, they can take the stress out of filing taxes and help your clients get a better return. Some popular programs include TurboTax, TaxAct, and H&R Block.

At Bonsai, we've got tools specifically designed to help you out with clients come tax season. Our expense tracker keeps tabs on expenses, profit, income before and after fees, and tax deductions – and we'll remind you about upcoming filing dates.

IRS publications

Keep in mind that the IRS itself has plenty of information pertaining to taxes that can help you in preparing your clients’ returns. The IRS website is full of helpful resources, including Form 1040 and its instructions, which are both essential tools for filing. There are instructions written up for every single form and schedule.

Under 'Filing for Individuals', the IRS website explains who should file, how to file, when to file, and where to file. You'll also be able to view information about refunds, credits, and deductions. Since the website is written and maintained by the IRS, you don't need to worry about accuracy.


What are the benefits of hiring a tax preparer?

A professional tax preparer can help you maximize deductions and credits while minimizing your liability. They'll also make sure that all of your paperwork is in order, so there won't be any unnecessary delays or headaches down the line.

How do I choose the right tax preparer?

Look for resources online such as reviews and recommendations. You should also take the time to vet your potential tax preparer – check their credentials, read up on any past cases they've handled, and make sure that there's a good level of trust between the two of you.

What documents do I need to bring to my tax appointment?

You'll need to bring your Social Security number, a valid photo ID, and any relevant documents such as W-2s, 1099s, investment statements, account numbers (for bank accounts), charitable donation receipts, etc. Your tax preparer may also require additional documents to complete your return accurately.

How can I reduce my tax liability?

There are several strategies you can use to reduce your tax liability, such as claiming deductions and credits. You should also explore other options like making charitable donations or setting up a retirement account – these will lower your taxable income and thus reduce the amount of taxes you owe.

What tax credits am I eligible for?

Your eligibility for certain tax credits will depend on a variety of factors, such as your income and filing status. Some common ones include the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), American Opportunity Credit (AOC) and Lifetime Learning Credit (LLC). Talk to a tax preparer if you're unsure of which credits you qualify for.

How long do I have to keep tax records?

You should keep all records related to your taxes for at least 3 years. This includes documents such as receipts, canceled checks, bank statements, and more. However, it's best to keep them even longer – some types of records may need to be kept for up to 7 years in the event of an audit or other kind of dispute.

What happens if I miss the tax deadline?

You can apply for an extension, which will give you up to 6 months extra to file your taxes. However, interest still applies if you owe taxes during that period, so make sure that your estimated tax payment is accurate. If you are unable to pay the full amount due by the filing deadline, contact the IRS as soon as possible to make arrangements.

How can I check the status of my tax refund?

You can use the 'Where's My Refund' tool on the IRS website to check on its status. You'll need to provide your Social Security number, filing status, and expected refund amount in order for it to work.

How can I pay my taxes online?

You can pay your taxes online through the Electronic Federal Tax Payment System (EFTPS). You'll need to set up an account on the website and provide information such as your bank's routing number.

How do I report cryptocurrency on my tax return?

If you've had any kind of income related to cryptocurrency, it needs to be reported on your tax return. This includes transactions involving crypto exchanges, mining rewards, and more. Gains from these activities are considered taxable – so you need to use Schedule D and Form 8949 to report gains and losses, and Schedule C to report income.


Come tax season, the best thing you can possibly do for yourself as a tax preparer is to get all your ducks in a row early. That means knowing the right documents to use, understanding tax credits and deductions, and having a solid plan for obtaining the necessary information from clients.

Use the information we’ve laid out in this article to create your own tax preparer checklist. When tax time rolls around, all you need to do is check off each item for all of your clients and you’re good to go.

Don't forget to check out our tax capabilities at Bonsai. We've got tools to suit individuals and businesses across all industries; there's no need to take care of menial expense-tracking tasks yourself when you could be freeing up time for acquiring new clients. Sign up for free today!

Ace this tax season for your clients with our ultimate guide to tax preparation
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