Now that the complex documents are out and arriving in peoples E-Mails, Mail and Fax Machines keep in mind a few important things.
First the K-1 instructions are very important to the preparer! Often people get supporting documents with W-2 and other less complicated tax documents and develop the habit of disregarding them, cant do that with K-1 instruction sheets, they are a necessary part of the document! Hand it all over to the preparer and let them decide what`s important!
Second the Tax status of those same K-1s are often IRA and not necessarily included on the tax return. Sounds like a contradiction to the first item but bring the status of the document to the preparer`s attention. Many companies produce a K-1 with disregard as to whom or how its custodianed. I`ve seen CPA`s labor for 15 minutes over a K-1 to then realize it was in an IRA and that they must now undo a lot of data entry.
Lastly, we aren’t at Nirvana yet with cost basis reporting on Brokerage accounts so heads up! Look at the statements and if a stock or bond sale took place, especially look at the STCG or LTCG reporting and make sure the cost basis is stated. Otherwise its of no use to your tax preparer so get that info for them before you hand it over. Otherwise they are going to have to stop in the middle of your prep and hunt you down for the answer or guess and generally both are not good.
Keep these simple things in mind as they are very common pitfalls that lead to delay of work, higher cost tax preparation or worst of all ….letter audits in a year or two.
Hope it goes well for you,
the Tax What if Doctor;-)