Drake Software blog for tax pros, covering tax, IRS news, and more

Checklist for Tax Preparers

Checklist for Tax Preparers

Amid the ever-changing rules and regulations within the tax industry, we at Drake Software understand the importance of consistency and routinization to aid tax preparers in their roles. To achieve this aim, we have curated several checklists to simplify the process of filing tax returns.  

First, as a caveat, we delve into the importance of personal information, accuracy, and confidentiality. Our goal is for every tax preparer to be equipped with an understanding of what should be submitted in a return and how to preserve and protect that information. Continue reading to find a checklist for client information that should be retrieved before submitting a return, and another checklist for supplemental items required from tax professionals. We hope this guide is insightful and beneficial for you as you serve clients and strive for excellence in the process of tax preparation. 

Personal Information and Accuracy 

Maintaining accurate and comprehensive information from clients is foundational in the operation of tax preparation services. Tax preparers must precisely collect client information to ensure compliance with tax regulations and ensure successful filing of their clients’ returns. For example, the Internal Revenue Code (IRC) codifies all federal tax laws and consigns preparers to submit accurate data to maintain the integrity of the tax system; similarly, the Privacy Act regulates that tax professionals protect the sensitive information provided by clients. 

To further underscore the importance of accuracy when tax preparers submit returns, it’s helpful to highlight the potential penalties inflicted when returns contain incorrect information. Errors and omissions in tax returns can engender penalties from the Internal Revenue Service (IRS), including fines, interest payments, and even criminal charges in cases of deliberate fraud. By proactively seeking excellence in factuality, tax preparers can mitigate the risk of penalties and protect their clients’ sensitive information. Many mistakes are preventable, but in the case of accidental errors, we recommend obtaining errors and omissions insurance. 

To effectively attain client information, one method of client engagement is solid communication skills. By establishing clarified expectations of accurate personal information and potential consequences incurred from missing details, tax preparers can ensure they are proactively receiving correct information from the source. We recommend utilizing a systematic and secure approach to data collection, whether via online portals, in-person meetings, or encrypted email communication. It may also be beneficial to prepare a questionnaire or template that includes the required fields that are needed from each client, so that no area is missed when it comes to gathering client information.  

Tax preparers may also encounter circumstances where a client’s personal information may have changed or requires an adjustment. With this in mind, contacting clients directly for this updated information is crucial. Clients may also provide these notifications if prompted, including changes in marital status, number of dependents, or contact information. Facilitating client relationships that are marked by trust, transparency, and mastery of skill will support a smooth process of data retrieval and ultimately buttress success in submitting compliant tax returns.  

Protecting Client Confidentiality 

It’s paramount for tax preparers to protect their clients’ information and honor their rights to privacy. Tax professionals can embolden their clients with a sense of confidence as they entrust their sensitive data by implementing robust security measures. Below, we’ve outlined some specific and actionable steps for preparers to take so that client confidentiality remains a priority. 

  • Secure Data Storage & Encryption 

Research and utilize methods to store data safely. Some common examples include employing encryption software to convert data into an unreadable format, cloud storage with access controls, private online portals that require client authorization, backup strategies for recovering information in the event of a disaster, and shredding physical documents to prevent unauthorized access. 

We also recommend avoiding email for the transfer of sensitive information. As this method of communication can potentially be susceptible to interception, speaking with clients over the phone or in-person is one step to take in the interest of data protection. 

  • Employee Training 

Educating all staff within a tax preparation firm or business is a worthwhile endeavor to support security precautions for clients. In addition to highlighting the importance of maintaining confidentiality, it is crucial to establish policies or procedures explicitly concerning data protection.  

  • Data Access Limitations 

One final method of security that tax preparers can consider is access restrictions. Tax professionals can regulate what constituents can obtain a client’s return, thus enabling access only to authorized individuals involved in the return preparation. Preparers can also review and update these privileges to ensure that a client’s information is only accessible to those who have a legitimate need to do so. 

In a day and age that stresses the importance of cybersecurity, there are many available resources to ensure that tax preparers take the proper steps to safeguard sensitive client data. For even more information, read this publication from the Internal Revenue Service that serves as a data security resource guide for tax professionals. The IRS also offers this published guide for businesses to safeguard client data. Furthermore, Drake Software users can sign up for Protection Plus, which offers audit assistance as well as identity theft restoration services. This additional line of defense can promote a sense of security for your clients and help preparers focus on the tax preparation process. 

Failing to honor the sensitivity of client data can invoke severe repercussions for tax preparers. In addition to damaging the reputation of the tax preparer, there may be legal and financial consequences, such as lawsuits, investigations, penalty fees, and sanctions. Moreover, lost or leaked client data can lead to identity theft, fraud, and financial harm to clients. Therefore, tax preparers must prioritize client confidentiality to protect both their clients and their professionalism. 

Tax preparers should familiarize themselves with certain privacy regulations to ensure compliance and best practices. One major example is the Gramm-Leach-Bliley Act (GLBA), which applies to firms that offer tax advice or financial planning services. This law mandates that these so-called “financial institutions” implement certain protective measures to safeguard the security of client information.  

Additionally, it is beneficial for tax preparers to understand any state-specific laws regarding security breaches. Most states require preparers to notify affected clients and relevant authorities if information is compromised. Overall, it is in the best interest of tax professionals to protect sensitive information, for the sake of both the client and the preparer. As with any regulations in the industry, tax preparers should seek the latest news to ensure returns are filed with the utmost accuracy. 

Checklist of Required Documentation from Clients  

In general, tax preparers will need to garner information from clients pertaining to their personal lives, income, credit and deductions, and other additional areas. We’ve compiled a beginning checklist below that you can customize to your tax preparation needs and ideally use to promote a streamlined and successful process. 

Personal Information: 

  • Full legal name 
  • Social Security number (SSN) 
  • Taxpayer Identification Number (TIN) 
  • Date of birth 
  • Current address 
  • Previous address, if applicable 
  • Phone number 
  • Email address 


  • W-2 forms for salary, wages, and/or tips 
  • 1099 forms for corresponding types of income 
  • Examples: Self-employment, rental, investment income, etc. 
  • Schedule K-1 form for partnership, LLC, or S corporation 
  • Unemployment compensation statements, if applicable 
  • Statements for Social Security benefits  
  • Retirement account distributions 
  • Example: Forms 1099-R 
  • Any documentation of other sources of income 
  • Examples: alimony, rental income, royalties, etc. 

Credits and Deductions: 

  • Itemized deduction documentation 
  • Examples: Mortgage interest, property taxes, medical expenses, charitable contributions, etc. 
  • If self-employed, records of business expenses 
  • Education-related expenses and student loan interest 
  • Childcare expenses, if applicable 
  • Information regarding health insurance coverage 
  • Examples: Form 1095-A, 1095-B, 1095-C, etc. 
  • Eligible tax credit information 
  • Examples: child tax credit, earned income tax credit, etc. 

Additional Information: 

  • Bank routing and account numbers for direct deposit or withdrawals 
  • Previous year’s tax return 
  • Tax notices or related correspondence  
  • Any documentation related to significant life events 
  • Examples: marriage, divorce, birth, adoption, home purchase, home sale, etc. 

While expansive, this list is not comprehensive and can vary based on each individual tax preparer’s unique situations. Nevertheless, tax professionals must gain key information using clear and proactive dialogue with their clients, gathering data with the utmost accuracy.  

Checklist of Required Documentation from Tax Preparers 

Not only do tax preparers have to garner information from their clients, but they also must provide certain documentation themselves to properly and compliantly file returns. The supplemental items are an adjunct to the information included in the returns, helping to maintain an exhaustive system of records. We’ve prepared a secondary checklist template to summarize the primary documents tax preparers should submit with returns. 

  • Preparer Tax Identification Number (PTIN) 
  • The PTIN is issued by the IRS and is required for all tax preparers in order to submit returns. The number is simply used to differentiate and identify tax professionals and must be included on each return to meet IRS regulations. 
  • Professional Licenses 
  • Many tax preparers retain updated professional licenses that demonstrate expertise and competency. These credentials help exhibit how the preparer has upheld professional standards and serve to evidence the quality of services they provide. 
  • Examples: Enrolled Agent (EA), Certified Public Accountant (CPA), etc. 
  • Electronic Filing Identification Number (EFIN) 
  • Issued by the IRS, this identification number enables tax professionals to submit returns online in a secure format. This identifier is necessary for preparers to file returns electronically and must be entered with accuracy to ensure compliance. 

All of the documents listed above are to be included in the submission of tax returns, but there are other certification and training regulations to be met in order for a preparer to remain relevant and compliant, depending on your designation. You can read our blog about certifications for tax professionals here. Additionally, we have a publication explaining the Continuing Professional Education (CPE) requirements set forth by the IRS that is available for your ease and knowledge. 

Tax preparers must understand the prerequisite documentation and compliance obligations so that they can provide excellent services to their clients and uphold their professional standing. We hope these resources are edifying to you as you utilize these checklists for supporting correct tax return submission. 

In sum, accurately maintaining personal records and client information is a substantial practice that tax preparers should regard with the highest priority. When submitting returns, preparers must have a keen eye for detail to ensure that client information is relayed correctly and fully. Likewise, tax professionals are entrusted with a plethora of personal data from clients that must be safeguarded from unauthorized access and breaches. There are many courses of action that preparers can take to protect personal data, including encryption, security training, and access restrictions. 

Furthermore, Drake Software has composed two checklists for the benefit of tax preparers, aiming to streamline the process of tracking what data must be gathered from the taxpayer and preparer. We hope our valued customers can implement these checklists into their services to continually pursue success, efficacy, and excellence. 

Emily McCollin