Five Mistakes People Make in Choosing a Tax Preparer

Did you know that you are legally responsible for everything on your tax return, even if another person prepared it for you? Did you also know that your tax return paints a unique picture of your financial situation that you can use to make smart financial decisions throughout the year? Those are a few of the many reasons it’s so important to choose a tax preparer who really knows his or her stuff. The New Jersey Society of Certified Public Accountants (NJSCPA) points out common mistakes people make in making this choice and offers helpful solutions:

Mistake #1: Not Asking What Preparer Means
Anyone can use the title tax preparer, so find out what kind of training and experience the person actually has. In addition, you should be aware that even some preparers who are registered tax preparers with the Internal Revenue Service (IRS) may have only met certain minimal requirements. A Certified Public Accountant, on the other hand, must meet rigorous education standards and pass the demanding Uniform CPA Examination. CPAs are also required to receive continuing education throughout their careers to keep their skills sharp. They also meet high ethical standards in order to maintain their licenses.

Mistake #2: Not Asking About Experience
Remember that CPAs have hands-on experience helping a variety of clients understand how to comply with the tax laws and minimize their tax outlays. They are familiar with overlooked deductions and with common mistakes made on returns. That means you can rely on their unique level of expertise to spot challenges and opportunities in your tax filing. In choosing a preparer, ask how long the person has worked with clients in situations like your own and whether he or she can offer advice on the financial issues that are on your mind. Solid experience and training are particularly important if your return will be more complex than average, which could be the case if you are self-employed, for example, or if you are dealing with estate issues, a small business or other complications.

Mistake #3: Not Asking Questions About Fees
To avoid surprises later, determine up front how much the preparer will charge. A preparer’s fees may vary based on the complexity of your return and other factors. And while more experienced preparers may cost a little more, the savings or other financial advice they can offer may actually cover some or all of any added expense. Avoid working with someone whose fee is based on a percentage of your refund or how much they can save you in taxes. Ask whether the preparer can represent you before the IRS in case your return is audited and any extra charges that might be involved.

Mistake #4: Not Reviewing Your Return Once It’s Done
Look over your completed return to ensure you understand it. If you see anything that you believe may be incorrect or that just doesn’t make sense, contact your preparer and ask questions.

Mistake #5: Setting Your Return Aside and Forgetting It
Did you pay too much in taxes last year? Are you taking the right steps to prepare for retirement, a child’s college education or other long-term goals? Your tax return, which contains vital information about what you earned and how you spent it, can help answer those questions and many more.

Best Advice: Turn to Your Local CPA
If you do have more questions about your tax situation or about any aspect of your financial life, consult your local CPA. He or she has the expertise to advise you on all your financial concerns.

If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.