3003: How to Find a Good Tax Preparer by Kelley Long of Financial Finesse on Money Advice

[00:00:00] Have you ever noticed how a calm mind can really set the stage for a good night's sleep? That's the idea behind our new podcast, Good Sleep. Greg, our host from Optimal Relationships Daily, is here to help ease you into a peaceful night's rest with some positive affirmations. And these affirmations aren't just comforting. They can help ease anxiety and nurture positive thoughts, setting you up for true good sleep.

[00:00:25] So press play on Good Sleep Tonight, because a good tomorrow starts with a good night's sleep. Just search for Good Sleep in your podcast app, and be sure to pick the one from Optimal Living Daily. This is Optimal Finance Daily, How to Find a Good Tax Preparer by Kelley Long with FinancialFinesse.com

[00:00:49] As a CPA who used to actually prepare taxes for other people, many are often surprised to learn that I no longer even prepare my own income taxes. The first year my husband and I were married, I spent the better part of a spring Saturday inputting all of our stuff into the online software and resolved after that to outsource that task to a real pro going forward. When I was single and had just a W-2 student loan interest and a deposit to my IRA,

[00:01:17] my taxes were simple and it took me less than an hour to get them filed. But our taxes are much more extensive these days. My husband is an independent contractor, so he's considered self-employed. We make several trips to Goodwill each year to drop stuff off, which requires an entry for each and every trip.

[00:01:36] And I have income from a moonlight gig as a fitness instructor and writing the weekly savings tip for Feed the Pig. Not to mention that my husband has a brokerage account where he likes to play the market a little bit, with money we can afford to lose, which some years means a dozen or more entries for capital gains and losses. If time is money, then the money we pay our accountant to prepare and file our taxes is money well spent.

[00:02:02] If you're in the same boat or find yourself in a new tax complexity that isn't as easily handled by the tax software available to common folk, here are some best practices for finding the best person to help you. Decide if you want a tax preparer, an EA or a CPA. What's the difference?

[00:02:23] I bet you didn't know that pretty much anyone can call themselves a tax preparer, although the IRS has started to regulate that by requiring people who accept payment for preparing taxes to have a PTIN or a tax preparer tax identification number. An EA, an enrolled agent, is someone who has passed the IRS test for tax preparation and is allowed to represent taxpayers in front of the IRS.

[00:02:50] Most EAs are going to be pretty well versed in the more common tax issues like what you can deduct, self-employment income, and what credits you might qualify for. A CPA, or certified public accountant, is someone who has a degree, studied accounting, and passed the uniform CPA exam, which is no joke. Just because someone is a CPA doesn't mean they do taxes, but if a tax person is a CPA, you can bet that they have a decent depth of knowledge.

[00:03:19] If they are a CPA slash personal finance specialist like me, then they have also passed an additional test demonstrating deep knowledge of personal finance issues like retirement planning, budgeting, and investing. If your situation is pretty simple, but you just don't want to spend the time on preparation, then you may be satisfied with a tax preparer through one of the large chains like H&R Block or Jackson Hewitt.

[00:03:45] Just know that since these companies guarantee accuracy and your lowest taxable income, they're likely to go a little overboard in requiring you to document things that ultimately may not matter, like casualty losses and medical expenses, which must exceed 10% of your adjusted gross income to count. If you have a little more complexity, like self-employment income, income in multiple states, or rental properties, then you may want to look at either an EA or a CPA.

[00:04:14] The biggest difference here is probably going to be cost, although not always. How to find an EA or CPA to help with your taxes. For an EA, check out the National Association of Enrolled Agents. For a CPA, look to your state's society of CPAs by searching Illinois or whatever state you live in, CPA Society.

[00:04:38] That's the best way to find a database of those in your area since CPAs are registered through their state rather than nationally. For CPA slash personal finance specialist, check out the website www.findacpa-pfs.com. When performing your search, make sure you limit results to specialties that apply to you.

[00:05:02] If the database has a category for individuals, always check that and then also look for other complexities you may have, such as multi-state or small business. Your search is likely to turn up multiple results, so you'll want to filter out anyone who works for a large firm because they're less likely to actually work with everyday people and instead specialize in very wealthy individuals. I tend to look for people who work in a small office or even on their own.

[00:05:30] They're more likely to want to work with everyday people at an affordable rate. After that, it may come down to convenience. Whose office is easiest for you to get to in order to drop information off, sign documents, or stop by mid-year for a tax planning session? This brings me to another criteria. Do you want someone to just prepare and file your taxes or do you want someone to help you save money on taxes going forward? Our accountant is a straight-up tax preparer, at least for us.

[00:05:58] If you're looking for more guidance on saving money going forward, then you'll want to ask a potential preparer if they do tax planning, and you may want to look for the CPA slash personal finance specialist credential, or PFS. The sad fact is that there aren't a lot of CPAs out there who actually want to do income taxes for regular families who just have jobs, kids, a house, and a few charitable donations.

[00:06:24] The easiest way to find one that does is to just pick up the phone and start asking, do you accept individual tax clients and what is your minimum fee? If the minimum is more than $500, I'd say move on. You just listened to the post titled How to Find a Good Tax Preparer by Kelly Long with FinancialFinesse.com. I know we've all been there, setting those ambitious New Year's resolutions.

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[00:09:05] This is a really relevant article to me personally because I'm actually talking to my CPA tomorrow, and now I want to ask him if he's also a personal finance specialist. Once I formed my LLC in 2019 for the Economy Conference, I started working with a tax professional and have found it to be well worth the cost. My CPA gets me a much larger return than I have ever gotten on my own.

[00:09:30] Now that I'm also self-employed, it's even more important that I work with someone that's making sure I'm claiming all the deductions I can. I used to like to do my taxes myself, but back then I was just taking the standard deduction, and my situation from a tax perspective was really simple. I also agree with the sentiment to find an independent CPA or a small firm.

[00:09:53] The first person I worked with was at a large firm, and they charged me $700 for a very simple filing I needed for my LLC. I also didn't trust this person's knowledge base due to a number of inconsistencies in his advice. I had my back against the wall with a deadline, so I begrudgingly paid the $700 for this one filing. But I'm so happy I then took the time to find an independent CPA.

[00:10:21] I'm now getting much better service at a much lower cost. And that's another edition of Optimal Finance Daily in the Books. Have a great rest of your weekend if you're listening in real time, and I'll be back tomorrow where your optimal life awaits.