Top Questions to Ask Tax Preparer for Better Results
Boost your tax savings! Discover 10 essential questions you must ask your tax preparer to optimize deductions, avoid audits, and secure your financial future.
GoBankingRates noted in a recent study that about 22% of Americans rely on a certified public accountant (CPA) or tax preparer to file their taxes accurately and on time. Typically, these professionals have vast knowledge and experience in tax laws and regulations to help businesses and individuals minimize their liabilities in a compliant manner.
However, tax preparation services are not a one-size-fits-all scenario. The results you get depend on your unique situation and curiosity to find the right expert who matches your needs. With this in mind, here are 10 essential questions to ask your tax preparer for better outcomes.
1. How Does Your Tax Preparation Process Work?
The first thing you want to do before partnering with a tax expert is to understand their work process to evaluate whether it addresses your pressing and future financial needs. By knowing what to ask a tax preparer at this stage, you can clearly understand how they gather information and review your financial records to file accurate returns. Moreover, going through the step-by-step process of tax preparation with the expert gives you confidence in their ability to deliver favorable results.
For insights into selecting a CPA who aligns with your business needs, consider reading our guide on Top Questions to Ask When Selecting a CPA in The Woodlands.
2. What Information Do You Need From Me?
One of the most important questions to ask a tax preparer is the information they need from you. By understanding the type of financial documents the expert needs to prepare your taxes accurately, you can save time and avoid unnecessary delays. Additionally, this will help you create a checklist that serves as your primary point of reference every tax season.
3. How Can I Maximize My Tax Deductions and Credit?
Nearly all taxpayers qualify for a tax deduction or credit, depending on their tax bracket or nature of business. However, you may not know about these tax breaks unless you ask the professional to explain how to maximize them to lower your liabilities. A good tax preparer will highlight all the standard and itemized deductions available to you, including home office expenses, business loan interests and contributions to tax-advantaged accounts, such as IRAs.
Understanding common tax deductions can further aid in reducing your tax liability. Explore our Common Tax Deductions for Small Businesses for more details.
4. What Can I Do Differently to Improve My Tax Situation?
Tax preparation and filing go beyond submitting accurate and timely returns. If you’re a forward-thinking individual, you want to get the most out of the process and save as much as possible. That said, ask your service provider to explain how you can improve your overall tax situation through proven strategies that lower your liabilities in the future. These include leveraging retirement accounts, adjusting your withholdings or accelerating certain deductions.
5. How Will Major Life Changes Affect My Taxes?
Many individuals often overlook how major life changes can impact their taxes in the long term. By understanding what questions to ask a tax preparer when acquiring new property, getting married, or starting a new business, you can gauge how these events will influence your taxes in the future and take the necessary steps to prepare for the changes.
For those embarking on new business ventures, our article on Questions to Ask a CPA When Starting a New Business provides valuable insights.
6. What Happens If I Get Audited?
The IRS closed 582,944 tax return audits in FY 2023, leading to $31.9 billion in recommended additional taxes. This statistic highlights how expensive an audit can be, especially if your annual income exceeds a certain threshold. That said, make it a priority to understand what happens if your tax return is flagged for an audit.
Ask your tax prepare whether they offer audit assistance in such cases and how they handle meetings with the IRS to ensure favourable outcomes. Most importantly, find out if they can uphold accuracy when preparing your returns to avoid triggering unnecessary audits in the first place.
To make your tax season more manageable and potentially reduce audit risks, consider our strategies outlined in Make Your Tax Season Trouble-Free.
7. How Will My Business or Side Hustle Impact My Taxes?
Filing taxes can be complex if you’re a business owner or a service provider in the gig economy. This is because you might need to separate your personal expenses from business transactions to submit accurate returns and claim eligible deductions that lower your overall tax bill. Ask the tax preparer to explain to you how this works and suggest proven strategies that maximize tax-saving opportunities in a compliant manner.
Effective tax planning is crucial for business owners. Learn about the 6 Benefits of Tax Planning for Your Business.
8. Can I Contact You for Tax Advice Throughout the Year?
Tax planning can be complex if you’re about to make impactful life decisions throughout the year. In that case, you would want to take a proactive tax preparation approach that covers you year-round instead of a few weeks leading up to the filing deadline. Ask your tax preparer whether they can offer this service to avoid unpleasant surprises at tax time and reduce the likelihood of an IRS audit.
Year-end planning is an integral part of a proactive tax strategy. Discover more in our article on Year-End Tax Planning for High Earners.
9. How Do You Charge for Your Services?
One of the main reasons why clients work with tax preparers is to reduce their overall tax burden and save as much as possible when filing annual returns. If the cost of accessing this service is unreasonably high, you might be unable to maximize your tax-saving opportunities. With this in mind, know what to ask a tax preparer when inquiring about their charges.
Understanding the benefits of professional tax services can help justify the investment. Read about the Benefits of a CPA Handling Bookkeeping and Taxes.
For instance, inquire about any hidden fees associated with complex tax scenarios and whether they charge an hourly, annual or one-time fee for normal services. This will help you discern whether the pricing matches your budget.
10. What Other Financial or Tax Services Do You Offer?
Lastly, it will help if you inquire about the additional financial or tax services the expert offers. This is important, especially if you’re seeking comprehensive financial guidance under one roof to save time and maintain consistent results. Beyond tax preparation, tax preparers can offer other complimentary services, such as financial planning, retirement planning or year-round bookkeeping, to help their clients realize long-term financial goals.
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Conclusion
Understanding what questions to ask tax preparer experts is the first step to ensuring you partner with a knowledgeable and qualified professional who can file your taxes accurately and on time. Leverage the questions highlighted in this guide to gauge your go-to service provider’s ability to address your unique financial needs and deliver the best results that bring you closer to your goals.
