It’s tax season again. The office phones ring and the caller’s first question is “How much do you charge to prepare a personal income tax return”? The caller is price-shopping, looking for the lowest fee. We try to educate these callers that this question should be the last question asked. The more important questions should include, among others, what is the experience and expertise of the person who will be preparing the return, internal procedures to ensure that the return is prepared properly and that the minimum amount of taxes are being computed, and what guarantees does the firm offer regarding the completeness and accuracy of the return being prepared. Once the caller has satisfied himself/herself that they are dealing with an experienced tax professional and understand the value of the services being offered, then discuss fees.
A business associate recently sent me an article from Wealthlion.com that was titled “Why I Use a CPA to Do My Taxes” published in 2013. Since I believe that an experienced tax professional does not have to be a CPA, I changed the title for this blog posting.
The author of the article spoke about how he likes to handle his own financial affairs. He says “I don’t need a financial planner because I’m my own financial planner. I don’t need an investment advisor because I’m my own investment advisor. I figure that if I know how to do something, why do I need someone else to tell me how to do it? Besides, no one cares more about my money or knows what I like, don’t like, and want to accomplish better than I do, right?” We believe many others share this perspective which is why we are sharing this article with you.
But then the author admits he uses a lawyer for his estate plan and an insurance agent to buy all types of insurance policies. And, heavens forbid, he uses a CPA to do his taxes. When asked by friends why he uses a tax professional to prepare his taxes, he admits that as a DIYer he could do his own taxes, but that he chooses not to for some very good reasons. We think it is worthwhile to discuss the reasons he prefers to use a tax professional.
First, he admits that they save him money because they know the tax law better than he does. He does not have the time to stay up-to-date on the myriad of tax revisions made every year and appreciates the value (e.g., tax savings) the tax professional brings to the table.
Second, the tax professional saves him time. The author realized that the tax law is complicated and he wanted someone experienced to be sure that the letter of the law was followed. He values his time and finds that the fees he pays his CPA are nominal if he were to prepare his own return and the hours he would need to prepare his own return.
Third, the tax professional makes sure that he is legal. He admits that the “peace of mind” factor is worth quite a bit to him.
Fourth, the fee he pays is a small percentage compared to his total income. While taxes are one of the highest annual expenditures we incur, why do we resent paying a small percentage to ensure that we are paying the lowest amount allowed by law?
Fifth, if there is an audit, the preparer who is intimately familiar with his tax situation will represent him before the IRS.
We liked the fact that he finished his article by saying that he organizes his files for his tax preparer to facilitate the tax preparation process (and to keep his fees to a minimum) and that he carefully reviews the draft return he receives as his well-intentioned notes may have been misinterpreted.
To learn more about your personal income tax situation, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation with an experienced tax professional. You can also schedule a consultation at Click Here.