Questions You MUST Ask Your Accountant Before Signing a Return
Feb 08, 2023Nobody is talking about this right now, and they should be! It's not a tax strategy, it's a series of questions that can help you avoid costly mistakes when it comes to your taxes. Avoid all kinds of headaches, mistakes, and fallouts by doing these things with your tax pro, ideally before hiring them.
First, you want to check your engagement letter, it's the contract outlining which things are your responsibility and which are your tax pros. Ask questions if you have any!
Here are additional questions you need to be asking:
1. Will you be offering any tax planning during the year to help me minimize the financial impact of my financial decisions?
2. Will you provide support in the event that my return is audited and will you cooperate with my representative if they ask for information?
3. Will you explain the risks of the tax positions we take and how I can best position myself to defend those decisions?
At the end of the day, understand that when you sign your tax return, you assign responsibility to yourself. You're saying, I agree with everything on this return and I'm prepared to defend it. You need to make sure your tax pro truly has your best interest in mind before hiring or signing.
"You don't get what you don't ask for - take some responsibility and make sure your tax professional is delivering the service you expect and making sure you're compensating them fairly for that."
In this episode, you will learn the following:
1. Discover how asking three simple questions can save you potentially thousands of dollars in taxes.
2. Uncover the responsibility you have to ensure that all blind spots are covered when hiring a tax professional.
3. Learn why it's essential to ask your tax professional about the risks of the tax positions you take and how to best position yourself to successfully defend them.
What you'll hear in this episode:
- Three questions you can use to verify with your tax professional that you’re on the same page.
- Don’t put the tax pro in the position of having to do everything.
- Will you provide support in the event that my tax return gets audited? Will you cooperate with my representative if they ask for info?
- Take a breath and take a pause before you sign anything, even if it's on the deadline day.
Here are some brief snippets from this episode:
[00:01:44]
When your tax professional works with you, they're going to send you a contract. The engagement letter for an accountant has a lot of information in it. I encourage you to read and get to know that engagement letter. Ask when something is unclear or when something goes against your assumptions.
[00:02:47]
Will you be offering any tax planning during the year to help me minimize the tax impact of my financial decision? Make sure the tax professional that you're hiring is more than a preparer. Just make sure all your blind spots are covered.
[00:05:41]
Find someone who isn't the person who created the return, someone who it did not prepare for you and have them represent you. The preparer would have a conflict of interest potentially. You should want to ensure their success through cooperation as much as possible.
[00:09:08]
Will you explain the risks of our tax positions? No one is doing this, and I don't know why. Here is the cost of this strategy in terms of your time, energy, and responsibility to maintain it. I like to bring taxpayers back down to earth and explain that to them.
[00:10:54]
Ask your tax pro before you hire them or before you sign a return. What documentation do I need to have ready to prove these strategies were taken legitimately? The success of your relationship is not just in the form of tax savings, but it's in the peace of mind.
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Resources:
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.
