How to Hire a Good Tax Professional

Here's a reminder that if you hire a poor tax return preparer, it's not him/her who's on the hook if the return is wrong -- it's you:

Unfortunately, [the preparer] is not the one on the hook should the IRS examine her tax return. In fact, she'll be left owing the IRS the back taxes, interest and possibly penalties if her return is selected for examination.

This is why it's important to be sure and get a tax preparer you can trust.

I use a CPA and have for several years. Here's the advice I can offer you for finding a good one and making sure your return is done correctly:

• Ask people you know, trust, and respect for references -- ask them who does their taxes, how long he's done them, etc. I got my referral from the CFO at my former company. he was a very successful and frugal businessman and I knew he'd point me in the right direction.

• Once you have a recommendation, interview the potential advisor. You can do this over the phone, but I prefer a face-to-face meeting. I had mine in the CPA's office (so I could check out the set-up as well as talk to the guy directly.)

• Ask for references from current clients. Call them up and ask what sort of service they've received, what they like and dislike about the preparer, etc.

• Once the preparer is hired, be sure you do your part. Give him the right information, summarized appropriately, and in a timely manner. Also be sure to communicate the events in your life that may impact your tax return.

• Be sure you know the tax law yourself (at least at a basic level) and review every page of your return. Yes, the preparer is a professional, but even they make mistakes. Looking over my return with a fine-tooth comb saved me a ton of money this year.

Anything I missed?

Comments

[MonkeyMonk]

I've used the same Enrolled Agent for nearly 10 years now and he's fantastic. He charges $350 annually to prepare my joint account with my wife (she's simple with just a W-2 but I've got a full business return). He's paid for himself many times over and the only time there has ever been an error on a return he offered to reimburse me all interest and penalty charges (which were around $100).

[Kevin]

As a CPA, I think that's a pretty good checklist. #1 is right on target, in fact, that is how we get most of our new business. From our point of view, that is the best way of getting quality clients - from people we are already working with.

[Everyday Finance]

I think it's especially important for bloggers to engage a tax professional. There are some especially important tax and incorporation issues a good tax advisor will cover with you. For instance, there are some deduction nuances that I wasn't aware of even as a relatively informed self-filer. Additionally, he advised on setting up an LLC, the benefits and costs and how to manage the process. Now that I've taken my blog to the next level, I've found this to be invaluable. For instance, I just got my first legal notice from an organization I was critical of and I can sleep much better at night knowing I have an LLC firewall set up.

[cmadler]

Like MonkeyMonk, I use an Enrolled Agent. Being a CPA has nothing to do with income taxes, it means that person is certified to audit public companies. An individual CPA might be a very good income tax preparer, but the CPA designation has nothing to do with it.

[Stop Getting Cheated]

This is an excellent checklist. I pay $650 each year and my EA is worth every bit of it. One primary question you want to ask is if the CPA/EA has background knowledge of, and experience in handling homebased businesses. You want to be able to take the maximum amount of legal deductions. In your interview with the tax professional, discuss your documentation (there are 5 rigid criteria) and how he would like the numbers and documentation presented to him at tax time. Just like there are good and poor ballplayers, there are good and poor tax professionals. You want to do your homework so you don't cheat yourself.

Cade

[US Tax Jobs]

Nice list. It is pretty important to have a good tax professional service you returns. People usually hire one through a recommendation from friends or relatives, but don't blindly trust them. Interviewing him is a great way to see if he's compatible with your requirements.