About Your Tax Preparer

I was appointed the finance correspondent for Senior Life Advisor, an online magazine for investors near or in retirement. The articles for Senior Life Advisor were designed to offer actionable information as well as items of interest about economics, investing and personal finance.

With tax day around the corner, it’s time to refresh yourself about the realities of getting help with your return.  

Expertise not guaranteed.  The only standard tax preparers must meet is having an up to date Tax Preparer Identification Number.  That’s it.  Be warned.  

CPA designation not a credential.  Being a CPA is a good start, but it does not guarantee a happy ending.  Personal taxes are different from corporate taxes, or international tax, or audit services, which the bulk of CPAs concern themselves with. 

Outsourcing.  It’s not unheard of for CPAs to outsource some of the heavy lifting and drudgery to other firms here or abroad, increasing privacy risks and other concerns.  Ask.  You have a right to know if this is happening with your return. 

Restraint. CPAs, by nature and training, are conservative.  This means your tax bill may not be as low is it can go because they don’t want to provoke an audit or and the  liabilities that can accrue to them if you are audited.  If you want aggressive tax accounting, speak up.  Further recognize that if you want your accountant to turn over every leaf, time is money.  

Storage issues.   There are no industrywide standards on the retention of your documents.  As mentioned, CPAs are conservative, and loathe to dispose of anything.  However a firm with hundreds or thousands of clients will over the years likely shed files, some of which might be yours.  

If there are mistakes, you may have to pay.  If a tax preparer makes an error, like transposing numbers, or forgetting to file, they will generally pay up.  But if you provide incorrect info, you will be on the hook.  Look at your agreement.  

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