Few people actually sit down for an interview with a tax preparer, outside of “Here’s my last return. Do you think you could handle it?” Even if you want someone to simply put you out of your misery and do your return before your head explodes, you will want to go a little bit deeper. Remember, too, that the reason most tax preparers don’t face interview questions is that the customer comes in around tax time with an immediate problem. The best time to be shopping for a tax preparer is right after the close of tax season, around the time you are thinking, “I never want to go through the pain of filing on my own ever again.”
That way, you can contact potential advisors early and take the time to get complete information. Here are the questions you should ask:
Your First Meeting with a Tax Advisor
Here are the questions you will want to answer as you go about selecting and working with a financial planner.
How long have you been preparing tax returns?
Tax law is always changing, but experience counts for something. Think back to the first time you faced any tax form on your own, and you’ll understand why you don’t want to be any preparer’s test drive into a new area of the tax code.
Looking at my return from last year, how do I compare to your average client? Am I more or less complex, or about the same?
Bring previous tax returns to an initial interview so that the advisor gets an idea of what is involved and can accurately forecast a cost.
By asking how you compare to a typical client, you should find out what concerns the advisor might have in preparing your returns. (“Most of my clients don’t have self-employment income [or fill-in-the-blank unique need]” is a big red flag.)
Get the advisor to describe his or her average client, using specifics of age, family situation, average income, and so on. His idea of “average” may come from the paperwork—”a 1040 with Schedules A, B, D, and other standard forms”—rather than personal data, but if you want him to provide counsel beyond merely filing returns, you will need to resemble the average client in more than just the forms you fill out. If you will have questions about removing money from annuities while the typical client is worried about getting money out of a college savings plan, you may be asking questions the preparer is unprepared to answer. If he isn’t used to doing a return like yours and answering questions for clients in the same situation, find someone who is.
Another way of getting at this information is to ask for the range of forms the preparer filed the previous year. She may have done a lot of Schedule A and B forms, but not a single Schedule SE, which affects people who are self-employed. If the range of forms is narrow, make sure your previous returns do not eclipse the advisor’s comfort zone.
Are there any areas on which your practice is focused or in which you specialize?
Tax advisors can be generalists or specialists. They may focus on a particular clientele—doctors or small-business owners, for example—or type of situation, such as cases of divorce. Just because an advisor has a specialty doesn’t mean she won’t branch off into other arenas depending on a client’s needs, but make sure your needs fall in the trunk area of the practice, and not out in the tree limbs.
What continuing education classes have you taken? What credentials, if any, do you have?
Tax-preparation credentials require ongoing classes or certification exams. Find out what makes the preparer qualified to be your personal expert; you will find that many people with similar professional designations have different backgrounds, with some opting to do the minimum and others going back to school for master’s degrees in taxation or extra schooling to handle specialized situations.
Regardless of credentials, your preparer must be current on the law, which changes almost daily. The IRS does not care if you—or your preparer—are unaware; ignorance is no defense for overzealous deductions or underpayment of taxes due, so be wary of advisors who haven’t been to continuing education programs in more than a year. Remember, you’ll be the on the hook for the bill if your advisor makes a mistake.
Smart Investor Tip
Regardless of credentials, your preparer must be current on the law, which changes almost daily.
Copyright 2010 by Chuck Jaffe. All rights reserved. John Wiley & Sons, Inc."
Content provided here under exclusive license
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