Editors' pick: Originally published Feb. 2.
While there is a big push to go mobile this tax season, many of you have complicated tax returns and will need facetime with an accountant.
So get ready to pour your heart out. Think of it as lying on the recliner in your therapist's office, because you have to be completely honest with your tax accountant.
"We know more about some of our clients than their doctors," says Fred Slater, CPA and partner at MS1040 LLC in Manhattan.
That goes the same for their therapists...and sometimes even their spouses.
A good tax accountant will try to figure you out.
Because while you are not breaking the law when you keep things from your financial advisor, it is illegal to keep things off your tax return.
And that means you need to be totally comfortable with this person.
Now don't wait until April to knock on some preparer's door and expect your return to be done on time. Odds are good, she'll slam it in your face.
Go find someone now.
Look for a CPA or EA
Ideally you're looking for a Certified Public Accountant (CPA) or an Enrolled Agent (EA).
CPAs are accountants who have passed a bunch of tough state exams and met some stringent experience requirements.
But big note: not all CPAs do taxes. So be sure to ask that question.
The perk to using a CPA is that person can represent you in case of an audit and help you with financial planning.
EAs are federally licensed tax nerds. They too can help you with an audit, but they aren't really trained to offer much financial planning.
And granted, there are tons of people preparing tax returns without either certification. And while they may be fully qualified to do so, know that you're on your own in case the IRS comes knocking.
The best way to find one of these folks is to ask friends and family for recommendations.
Otherwise check out your state's certification site to find a CPA near you.
Then Start Asking Questions
Once you find someone, you have to interview him. So start asking questions. And here are a good five topics to start with:
- Credentials. Other than the person's tax knowledge, what is her experience with the IRS? How does she keep up with the changing tax laws?
- Clientele. The preparer's clientele should mirror your needs, says Susan Allen, senior manager of tax practice and ethics for the American Institute of CPAs. So for instance, if you are self-employed, make sure the person has tons of experience with Schedule C - Profit or Loss from Business.
- Fees. Upfront, you should know how you will be billed. Hourly? By the complexity of the return? Ask.
- Longer-term. You want to be able to call this person throughout the year in case tax issues come up. So make sure you're fostering a long-term relationship here.
- Risk Tolerance. And finally, ask the person how he thinks he can help you with your taxes, suggests Allen. Then you'll get a sense of whether the preparer is aggressive or conservative. Hopefully, he makes it very clear that your risk tolerance is most important.
And always ask for references, says Allen.
Of course, if the preparer doesn't ask you questions throughout the interview, walk out. "It is not about the five things the taxpayer asks; it is the five things the accountant asks," says Slater.
A good, interested accountant will ask you a ton of questions as well. "We will invade your space to get to know you," says Slater, who has turned clients away, because things weren't mutually agreeable.
Tax season can be long and stressful, so make sure you really like each other.
And then let the BFF games and deductions begin.