Tax Season Tips

With tax day right around the corner, it’s time for a refresher course on the realities of hiring a tax preparer to file on your behalf.

Expertise is not a guarantee. The only requirement needed to prepare taxes professionally is an up-to-date Tax Preparer Identification Number. That’s it. Be warned.

CPA designation is not a perk. Hiring a Certified Public Accountant (CPA) is a good start, but it doesn’t guarantee a perfect tax return. Personal taxes are different from corporate taxes, or international tax, or audit services, which is the bulk of the work CPAs do on a daily basis.

Outsourcing is not uncommon. It’s not unheard of for a CPA to outsource some of the heavy lifting to other firms here or abroad, increasing privacy risks and other concerns. Be sure to ask your accountant before filing, since you have a right to know who will be handling your return.

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Expect restraint. CPAs, by nature and training, are conservative. This means your tax refund may not be as high as you expect, since accountants don’t want to provoke an audit. If you want aggressive tax accounting, speak up, but be aware that time is money, and in-depth analysis may result in increased costs.

Prepare for storage issues. There are no industry wide standards on the retention of your tax documents. As previously mentioned, CPAs are conservative, and loathe to dispose of anything. However, a firm with hundreds or thousands of clients will likely shed files over time, some of which could be yours. Always maintain record of your tax return in your personal files for safe keeping.

Do your due diligence. If there are errors in your tax return, you may have to pay up. If a tax preparer makes an error, like transposing numbers, or forgetting to file, they will generally pay on your behalf. However, if you provide incorrect information, you will be on the hook for the bill. Be sure to read your agreement with your tax preparer before filing and provide all necessary documentation.

David R. Evanson is a financial journalist in Philadelphia.