Why is it important to maintain documentation with a tax preparer?

Maintaining documentation with a tax preparer is crucial primarily because it provides evidence in case of disputes. Tax situations can be complex, and discrepancies may arise concerning the information reported to the IRS or state tax authorities. Clear documentation serves as a record that can substantiate the accuracy of the submitted tax return, reinforcing the legitimacy of the tax preparer's work and your claims in discussions or audits.

For instance, if a tax authority questions a deduction, a well-kept record can substantiate that the deduction was properly calculated and documented. This documentation could include receipts, communication with the tax preparer, and copies of prior tax returns, which collectively form a solid foundation against potential disputes.

While tracking payments to the preparer, maintaining records for tax deductions, or sharing information with family members can be beneficial, they do not directly address the critical need for resolving disputes with tax authorities or ensuring compliance with tax laws. Thus, the emphasis on having evidence in case of disputes highlights the importance of thorough documentation in maintaining transparency and accountability in tax preparation.