9 Essential Questions to Help You Prevent a Tax Fiasco
More than half of US citizens prepare their own taxes. According
to the IRS, over 60% of those make some sort of mistake. Believe
it or not, tax payers cost themselves an estimated $50 million
annually by not claiming all of their appropriate tax credits.
Do you enjoy learning the latest tax laws? Are you organized
enough to stay on top of the ever-changing forms and rules? Most
people actually shut down when it comes to their taxes, playing
a "don't ask, don't tell" strategy with their money. How often
do you think that game plan pays off? And if you own your own
business, the stakes are much higher.
Do yourself and your business a HUGE favor and delegate your tax
preparation to an expert. Believe it or not, there are tax
preparers who love nothing better than to find ways to save you
money!
But be careful. Not all tax preparers are alike. Hire the wrong
person and you run a risk of finding yourself on the bad side of
the IRS. Not sure how to go about hiring the right person? Here
are 9 Essential Questions to ask a prospective tax professional:
1. What are your credentials? Tax preparers usually fall into
one of the following categories: certified public accountants
(CPAs) who are licensed by the state, enrolled agents (EAs), who
are licensed by the government, and unenrolled agents (pretty
much everyone else). Be careful because many states do not have
licensing requirements for tax professionals so basically anyone
can call him or herself a pro.
2. How much experience do you have? The key here is to ask for
experience that is relevant to your situation. A good way to
find out if someone has relevant experience is to ask them to
describe his or her typical client.
3. How much professional education do you get annually? Because
tax codes and interpretations change every year, it's not enough
just to pass a licensing exam. EAs are required to take 72 hours
of continuing education every three years. But the requirements
for CPAs vary by state.
4. What is your policy on returning phone calls or emails? One
of the most common complaints from clients is that their tax pro
won't return their calls. If communication is a priority for
you, let them know your expectations.
5. What is your policy if you make a mistake? Make sure they
carry Error and Omission insurance. If they make a mistake, the
tax preparer should pay the penalties as well as the interest.
6. Are you available outside of the tax season? Many tax
preparers work only seasonally, the first four months of the
year. If you have ongoing needs because you are self-employed or
own a small business, make sure you can get attention year round.
7. Can I get references from other clients? If possible, get two
or more references from long-time clients. Ask them about the
issues that are the most important to you and get as specific as
possible. For instance, how easy is it to get an appointment or
have they ever needed help with a crisis?
8. Do you have any questions for me? It's important that they
ask you questions so that they have a clear picture of your
situation. There is a direct correlation between how well he or
she understands your needs and the quality of attention that you
get.
9. How much do you charge? Tax preparers may bill by the hour,
the form, or the overall return. After reviewing your previous
returns and interviewing you, they should be able to give you an
estimate.
As the tax season draws closer, now is the time to get into
action and begin interviewing prospective team members for your
business. Take your time and interview at least three different
professionals. Pick the one that best matches your needs and
style and feel secure in knowing that you have a partner looking
out for your best interests.