How Well Do You Know Your Tax Preparer? Part 2
How Well Do You Know Your Tax Preparer? Part 2
by Gladson I. Nwanna, Ph.D.
I should say, however, that all is not well in all these categories: The time frame for IRS involvement on these and other income tax matters is open-ended and could be next month, next year, in two, three, five or even six years. The important question is: Are you ready? Will you be ready or are you engulfed in the present? Many taxpayers appear to be taking increasing risks with their taxes, some inadvertently and others rather blazingly. They tend to forget what agency they are "fooling around" with. They fail to understand the real danger they may be setting themselves up for; danger that may come when they can least afford to deal with it and that could affect them and their families in a negative way. Amongst potential dangers, are the increasing wrong treatment of incomes and expenses for tax purposes, and the apparent treatment of tax refunds by a growing number of taxpayers as a government entitlement to those who have taxes taken out of their paychecks. This way of thinking stems from their failure to understand what a tax refund is, how it comes about, who gets it and who doe not qualify to get it. Finally, it is a way of thinking by many taxpayers that needs to be well understood by them and approached legally.
As the tax season begins, you may want to begin to examine your personal financial situation with your tax preparer, whom you believe knows more about taxes than you. Again, you may want to ask yourself a few questions. The following questions will certainly suffice for starters:
* Do I really know my Tax Preparer?
* Is he/she the best professional I can buy for this important service or am I pursuing a short cut strategy of sacrificing the future for the present?
* Does my tax preparer really know what he/she is doing or is he/she dependent primarily on the computer outcome than personal knowledge of the rules and laws governing the numbers he/she is keying on your tax return?
* What exactly is my tax preparer's academic background or academic preparation?
* How many years of professional (tax preparation) experience does my tax preparer possess?
* Can my tax preparer effectively represent me in the event of a problem with the IRS, or will I have to pay another person or an attorney to the job?
* Did my tax preparer spend adequate time to research all of the possible deductible expenses I may legally qualify to claim or that I may qualify to claim based on my profession or occupation as well as other personal and unique position?
* Did my tax preparer spend adequate time to research all of the possible deductible tax credits I may legally qualify to claim?
* Is my tax preparer more excited in helping me get a refund than ensuring that my tax is done properly and that all legal tax-saving opportunities are explored and taken advantage of?
You may also need to ask yourself whether you understand the limits of the responsibilities of the tax preparer versus that of you, the taxpayer, who signs the tax returns. Granted many tax preparers know what they are doing and take their jobs seriously, there are many out there providing sub-optimal service, many of them more concerned with the fee you pay them than whether they considered all the tax deductible expenses and tax credits you qualify for. Granted that many tax preparer are concerned about getting you a refund "by any means" than spending time educating and enlightening you on how you can plan for a refund and do so legally. There are many of them out there who are totally lacking a basic understanding of the U.S. tax history and many who really don't give a damn if the IRS were to audit you.
Yes, many tax preparers may not be truly serving your long-term interest. You may also want to keep in mind the fact that you and not the tax preparer is responsible for the information contained in your tax return. Furthermore, there are no laws requiring the tax preparer to research all possible deductions or credits that you may legally qualify to claim except to require due diligence on their part. Obviously, you cannot teach others what you do not know. Ask me and I will say it is "garbage in, garbage out." That is the reason you must strive to be proactive with your taxes and tax planning as you ought to be with your personal finances and many of the other things that are so dear to you. A determined effort on your part to know your tax preparer will serve you much better. Similarly, a little tax planning and learning about taxes on your part will go a long way. Don't be a passive taxpayer or a careless one. It will only end up costing you more money, more time, effort and lots of aggravation down the road.
Finally, if the following piece of news serves as a consolation to victims of incompetent tax preparers so be it. The IRS is currently considering requiring a competency exam for tax preparers. While this might help weed out a few incompetent ones, there will always remain a void that can only be filled by you, the taxpayer, by empowering yourself with relevant tax-related information and knowledge. Good Luck!