PHILADELPHIA PA – Did you know you are legally responsible for everything on your tax return, even if another person prepared it for you? Did you also know 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 two of many reasons it’s so important to choose tax preparers who really know their stuff.
The Pennsylvania Institute of Certified Public Accountants, with offices in Philadelphia, outlines some common mistakes 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. 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 (CPA), on the other hand, must meet rigorous education standards and pass the demanding Uniform CPA Examination. CPAs are also required to take continuing education throughout their careers to keep their skills sharp and to meet high ethical standards in order to keep their licenses.
Mistake 2: Not Asking About Experience
In choosing preparers, ask how long they have worked with clients in situations like your own and whether they can offer advice on the financial issues that are on your mind.
CPAs have hands-on experience helping a variety of clients understand how to comply with tax laws and minimize their tax outlays. They are familiar with overlooked deductions as well as common mistakes made on returns. You can rely on their expertise to spot challenges and opportunities in your tax filing. 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 or if you are dealing with estate issues, a small business, or other complications.
Mistake 3: Not Asking About Fees
To avoid surprises later, find out up front how much preparers will charge. A preparer’s fees may vary based on the complexity of your return and other factors. More experienced preparers may cost a little more but the savings or other financial advice they offer may cover some or all of any added expense.
Keep in mind, too, that you should avoid working with someone whose fee is based on a percentage of your refund or on how much they can save you in taxes. Also ask whether preparers can represent you before the IRS in case your return is audited and what extra charges might be involved if they do.
Mistake 4: Not Reviewing Your Return Once It’s Done
One of the most egregious mistakes you can make is to not review your return. Look it over and make sure you understand it. If you see anything you believe may be incorrect or that doesn’t make sense, contact your preparer and ask questions.
Mistake 5: Setting Your Return Aside and Forgetting About It
Do not ignore your return once it is filed. It is an important financial document. 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.
If you have more questions about your tax situation or any aspect of your financial life, be sure to consult your local CPA. He or she has the expertise to advise you on all your financial concerns. To find a CPA in Pennsylvania by location or area of expertise, visit www.IneedaCPA.org.
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