The bank calls you while processing your loan application and asks for a copy of your income tax return. Can you put your hands on it without turning the house upside down? If you can’t find it quickly, you end up calling your tax preparer to get another copy. If you did it yourself…perhaps you will have to order a transcript from the IRS.

All in all, keeping paper tax returns can be just another thing that adds to the clutter in life. There is a better way to handle tax documents by working with your professional through a paperless tax preparation process.

Let’s walk through a process that firms with current technology may be able to provide their tax clients. It’s January and you have received your W-2s, 1099s and other tax statements for the previous year. At the dining room table you grab your smartphone and log into your tax firm’s branded application or “app” that has a secure file exchange and scanning features.

Inside the app you notice that you have a task to complete. After reviewing the tax engagement letter you sign it right from your phone. Next you scan each tax document on your table and upload them via the secure file exchange in the app to your tax firm.

The professional at your tax firm receives notification that you have signed the tax engagement letter and uploaded your source documents. Once the firm has organized the tax documents, you will be notified if there are any missing documents or outstanding questions to answer. Unsecure email is avoided entirely.

You will receive notification via your smartphone’s app that a draft copy of your tax return has been prepared and reviewed and is ready for you to approve. Once you have looked over your return and have your questions answered, you sign the e-filing documents and pay the tax preparation invoice via the firm’s secure app. As soon as that is completed, the tax firm submits to you a final PDF copy of your tax return and an organized PDF copy of your source documents. The tax return is e-filed. In a day or so you get a notification that your e-filed return has been accepted by the IRS and the state. In two to three weeks you get your tax refund direct deposited to your bank account.

 

 

 

 

 

 

 

 

 

 

Some tax firms provide clients with their own online portal to paperlessly store their tax returns and source documents. The newest direction is to encourage each client to open their own personal secure online portal through either Box.com, Google Drive or OneDrive and move their tax documents from the secure file exchange to their own portal. With the number of portals we all log into today—doctors, banks, credit cards, law firms, etc.—it is nicer to store all your personal documents in one place, especially if you change firms. What do you do with the paper copies of your tax documents and receipts? Shred them.

 

If you later need a paper copy of some of your documents stored in your portal, you can reprint them. If your bank needs a copy of your tax return, send them a secure link and they can download it themselves. No sending documents over email. Going paperless means no more making multiple trips to your tax professional’s office and no turning the house upside down to find a copy of your tax return or W-2s. You just go to your own secure online portal and it is all there. Aaahhh!

 

Have a great last month of summer!