As tax season rapidly approaches, it's good to dispel a few rumors, assumptions, and preconceived notions about your tax accountant or tax preparer. Here are just a few things to keep in mind as you're interacting with your tax professional this tax season. These are five statements that your tax accountant could probably make if they were being one hundred percent honest with you, as well as some ideas on how to alleviate the situation.
I didn't actually do any of the work on your tax return.
That sharply dressed professional you met with and handed over your shoebox of receipts to probably didn't do any of the work preparing your return. The work was done by an entry level accountant, the lowest person on the totem pole in the office. Hopefully this was still a Certified Public Accountant (CPA) or someone with at least a four year accounting degree, but it may be someone who's not even that qualified or has a year or less of experience.
After being prepared by a low level associate, your tax return is reviewed by a more senior associate or manager, who lists all the problems to be fixed (and there's always many things to be fixed) and sends it back to the associate. After it's cleared this back and forth process, it eventually makes its way to the partners' desk, who will probably make a cursory review of the return before signing it.
Unless you're an important client (and you're probably not) it's likely that the sharply dressed professional you met with spent no more than five or ten minutes on your return.
I don't care if your return is filed late.
When your tax return is nearing completion, there are bound to be follow-up questions, missing items, or other follow up details needed to complete your tax return. Most tax professionals will call, leave a message, and probably follow up with an e-mail in an effort to get answers. But if you don't call back promptly to supply the missing information, your return is likely going to be put on extension.
If your accountant calls you with questions or requests for additional information, get back to them quickly. If you don't, your return is more likely to be put on extension and dealt with after April 15th, at which point procrastination, and potential IRS penalties can set in.
You're just one of several hundred clients.
Each manager or partner at an accounting firm has from several dozen to several hundred clients, and even a smaller accounting firm can have hundreds or thousands of clients in total. It's easy to get lost in the shuffle, especially in the days and weeks leading up to April 15th. If you're serious about tax planning or getting the most from your tax accountant, meet with them in summer or fall when they have time and energy to devote to your particular situation.
I really don't want to prepare your personal return.
Unless you have a complicated personal return with numerous rental properties, a large Schedule C business, complex real estate transactions, or any other number of complicated wrinkles, there's only so much time that can be spent on your return. And the time spent on your tax return is how accountants make their money. A basic return only takes a few hours to prepare and provides only a limited potential for billable time for any accountant.
Preparing your personal return is just a way in to get access to prepare the audit for the business you own, the trust returns for the trust you have set up for your kids, or the complex estate tax return for your Great Aunt Mildred. This is where the money is.
I make mistakes.
Just like any other profession, tax accountants aren't infallible. Even after the many layers of review noted above, mistakes can still happen on your tax return, and they do happen, more often than you think. Tax laws are so complicated and nuanced it's impossible for any one person, or group of people to know everything and be 100% accurate all the time.
Your accountant is also extremely sleep deprived during "the season", and is likely working 50, 60, or more hours a week from the beginning of February through mid-April. They're going to make the occasional mistake.
Before you sign your return, examine it closely and ask questions if something seems wrong or if something is missing. Most reputable firms and tax preparers will have a policy of paying for their mistakes. Though keep in mind that if you omit or forget information or make a deliberate misstatement, you're on your own.
These five statements aren't always necessarily true, different tax accountants and tax preparers operate in markedly different ways. I am in no way trying to dissuade you from using a professional accountant for your tax preparation, but it's helpful to pull back the professional veil and realize what really happens to your tax return once it leaves your hands. If nothing else, hopefully this article will give you some guidance for questions to ask the next time you're in your accountants' office.