Selecting the Right Tax Preparer
Taxes? How can anybody even be thinking about taxes right now – they are not due for months. That is true, but the best time to search for and select a CPA is before you need them.
You might be thinking, “I don’t need a tax preparer, I’ve been doing my taxes for years and everything has been fine.” And you might be right. If you usually file a simple return (such as a 1040EZ) and you feel comfortable completing your return, then you do not need a high-priced tax professional such as an attorney or CPA.
However, when you prepare your own return there is always a chance you may not be taking advantage of all of the credits or deductions allowed on your return. Only a seasoned tax professional has the experience and knowledge to ask the right questions to appropriately identify your best method of legitimately reducing your tax liability.
Your next thought might be, “Maybe I need a tax professional, but I heard my cousin/neighbor/guy-who-rents-an-office-above-the-laundromat does taxes on the side. Aren’t all tax preparers the same anyway?” Absolutely not. Many independent tax preparers are not licensed or regulated, and may or may not be adequately qualified to prepare your return. And while “chain” tax preparation offices are very conveniently located and complete thousands of returns each year, there have been questions about the quality of the returns prepared by “chain” and unlicensed preparers. A limited 2008 study of “chain” and unlicensed tax preparers conducted by the Treasury Inspector General for Tax Administration found that only 39% of tax returns tested were completed properly. Wow!
If you think you require a paid tax preparer, your best approach is to find a qualified Certified Public Accountant. CPAs in the state of Illinois generally have completed a minimum of`150 hours of college credit, passed a strenuous, multi-day exam, adhere to a code of ethics, complete at least 40 hours of continuing education every year and are licensed by the Illinois Department of Public Regulation (the same organization that licenses physicians).
But you shouldn’t just choose any CPA either. Take your time. Meet with a few different CPAs. Verify they are a member of the American Institute of Certified Public Accountants (www.aicpa.org). Make sure you feel comfortable talking to them about your personal finances and that they are professional and focused on your specific needs. Much like your doctor, your CPA is going to know things about you not even your closest friends and family know.
Similarly, it’s important to think of your association with your CPA as long-term relationship. Your doctor helps you manage your health by understanding you and your family, and making recommendations to maintain their health. Your doctor does this best after getting to know you and your family over a period of years. Similarly, your CPA helps you best manage your wealth by getting your know you and your family’s needs over a period of years.
Another factor when selecting a CPA is cost. Make no mistake about it, CPAs are expensive. But it’s important to remember that preparing taxes is neither fast nor easy work. (For proof, please read through the thousands of pages of the tax code. Let me know when you are done). And when you work with a CPA to prepare your taxes, you are working with an expert. Regardless, I don’t believe the cost of preparing your return should be the deciding factor when selecting a CPA. For many taxpayers the cost of a CPA will be worth the benefit of lowering your tax liability as much as legally possible. And in the end, as long as the tax preparer is qualified, you feel comfortable working with them, and you can afford the fees, you may have found your CPA.
