Right now, many firms still use the same tax preparer handoff every year. They send a QuickBooks file, a prayer, and a “Call me if you need anything.” Then March hits, and everyone suddenly needs everything. The preparer asks ten questions, you answer nine, the client answers zero, and everyone gets cranky.
The complication is simple. Missing support turns a straightforward return into an email chain that never ends. It delays filing, adds work, and it makes you look disorganized even when you’re not.
So, here’s the question to solve: What exact package makes a tax preparer say, “Bless you, Debra,” and move on with their life?
The answer is a standard ‘Tax Prep Package’ you send every time, for every client, along with a one-page cover memo flagging the weird stuff.
Start with the two financial statements:
Those are the maps. However, the maps without receipts are just nice drawings. So, you back them up with tie-outs and documents proving the numbers.
Next, include your reconciliations. Send the final bank reconciliation for every bank account and the final bank statements matching the reconciliation. It’s the same idea for credit cards and loans. If the balance sheet says cash is $84,219, your recons and statements make that number inevitable.
Payroll needs its own little spotlight. Include the W-3 and show that the wages in the books match the W-3 totals. The IRS literally tells filers to reconcile payroll totals across forms. Do it once and stop the guessing game.
The tax preparer also needs two more pieces of information to correctly prepare the return.
Their question gets answered even before it is asked.
Document tax related payments cleanly. Provide the list of payroll tax payments, estimated tax payments if applicable, and any notices or letters received during the year. If you already know the client got a love note from the IRS, do not make it a surprise party.
Fixed assets are where good handoffs go to die. You are going to be annoyingly clear. The tax return is supported by a ‘Depreciation and Amortization Report’ generated from their tax software.
Get a copy of the report from the tax guy, and your totals need to match their fixed asset totals. Having furniture and fixtures as one huge amount slows them down.
Send a fixed asset list and a separate list of new assets acquired during the year with dates, amounts, and what they are. You’ll also want to include any disposals. This ties to the balance sheet totals and the ’Depreciation and Amortization Report’.
Now the key move I make next is this. I do not record depreciation for the current year. Once the return is prepared, I ask for the current ’Depreciation and Amortization Report'. Depreciation is right there for me to record. In my cover memo, I add, “No depreciation recorded in the books. Awaiting tax depreciation schedule.” That one sentence prevents incorrect journal entries and second-guessing later.
Meals and entertainment needs a reality check. Entertainment is generally nondeductible and meals are generally limited to 50% unless a specific exception applies. So, if your client is coding meals at 100%, like it’s still a 2021 party, flag it. The IRS guidance on the 50% limit is clear. Your preparer will appreciate it if you don't make them play ‘guess that receipt’.
For the books, record the full spend and keep your job simple: set up three accounts, “Meals 50%,” “Meals 100% Exceptions,” and “Entertainment Nondeductible.” Most client meals live in the 50% bucket. Entertainment gets a full addback on the return. Your tax preparer can make the adjustments cleanly without reverse-engineering your P&L like it’s a cold case file.
If a meal happened during entertainment, make sure it is split. Otherwise, it may fall into the nondeductible pile. If your client thinks small talk with every hostess, cashier, and DoorDash driver makes lunch deductible, flag it in your memo. Your preparer knows where the optimism is booked.
Now include the ‘things the preparer cannot read from the financials’ section. This is where your cover memo becomes a professional favor.
Put these in it:
Scan a complete copy of this prep and send it securely. Keep track of when it was sent. This will cover you – just in case.
Here’s the simple cover memo format I use. Take out what doesn’t apply for each client.
Dear Tax Preparer,
Attached is the Tax Prep Package for 20XX. Books are closed through December 31, 20XX.
Questions are welcome. Call/text Debra at (number).
Thanks, Deb
This time of year is challenging for tax preparers. I know – I am married to one. Let’s make this tax season a bit easier for them. And tax people in return? Please treat us with the respect we deserve. I know most of you do.
We can succeed together, and we’re on the same team working together to make our clients successful.