We do not normally recommend that you should find a new tax preparer, unless you want to upgrade from unpaid assistance to an experienced professional. The primary reason to maintain a relationship with a tax preparer is that the longer one person prepares your annual tax returns, the more familiar he or she becomes with your financial affairs, which improves their ability to serve your needs. Like any positive long-term relationship, the results get better as each person involved becomes more familiar with the details of the situation.
Another good reason to not switch to a new tax preparer is the hassle of securely moving your financial record archive to a new location. Change is hard, so be prepared to deal with the stress of finding the right person, setting up your new account, and familiarizing your new tax preparer with your financial past and present, as well as your future intentions.
However, if you do need to find a new professional to help you file your 2011 taxes on-time, then you should understand a few basics about selecting a good tax preparer. We discussed this topic on our most recent Saturday afternoon radio broadcast on KDOW 1220 AM. Some of the points we covered on the show were:
- Check the preparer’s professional qualifications. All paid tax preparers need to be registered with the IRS as an enrolled agent. To be an enrolled agent, you need to be a licensed attorney or CPA, or you need to have passed the IRS’s Special Enrollment Examination (SEE) and a background check.
- Conduct your own secondary background check of the preparer on the official websites of the American Institute of CPAs, the California Society of CPAs, and the State Bar of California (or the corresponding professional organizations in your state).
- The cost for the services of your tax preparer should be a flat fee, not based on a percentage of your refund. You might find a large difference in the cost of hiring one preparer versus another, so keep in mind that you get what you pay for. If you are audited by the IRS, which professional do you want representing you in front of the government’s hired guns?
- Is your CPA, attorney, or other tax preparer accessible during tax season? It is often difficult to immediately contact tax preparers during tax season, because they are doing a year’s worth of work for many clients in just a few weeks time, but your tax preparer should be available within a reasonable amount of time (48 hours) if you try to contact them via phone or email. Get your questions in as early as possible, because the closer it is to April 15, the more difficult it will be for your preparer to respond to the questions you should have asked weeks ago.
- Your tax preparer is required to conduct due diligence regarding the expenses you declare, which means they cannot prepare a tax return for you to sign if they suspect it contains illegitimate expenses, so it is good – even desired – if a prospective tax preparer asks you up front about your expenses for 2011.
- Never sign a blank tax return, even at the last minute. No further explanation should be necessary about this concept.
- Never assume your tax return is 100% accurate, because tax preparers are only human. During tax season, they are usually working long, tedious, and stressful hours, almost every day for close to four straight months, so they do ocassionally make honest mistakes. Be sure to avoid making a costly mistake yourself, by closely reviewing your tax return before you send it to the IRS. You, not your tax preparer, will pay for any mistakes you submit.
We also discussed a few other points about how to select a good tax preparer, so if you missed the original airing of this episode of Wealth Management and You with Connie Yi, you can stream or download a podcast of this program from our Radio Show Podcasts archive.
Remember, April 15 gets closer every day, so choose your new tax preparer soon to receive all of the attention you need, before crunch time suddenly, but not unexpectedly, arrives.
If you would like a free consultation with Connie Yi, a California tax attorney and a CPA, about filing your 2011 tax return, please contact us. We have four conveniently located offices around the San Francisco Bay area.