In this first part of an ongoing series, I start with a phrase my clients are used to hearing from me. Often, we see things narrowly, especially when financial decisions are involved. I ask my clients to make choices while considering how they’ll affect theirs and their family’s lives “in the big scheme of things.” In this installment, I discuss how the value of a CPA extends far beyond the filing of a return. –John
If you prepared your taxes yourself this year using products like TurboTax or used a quick tax service, you’re not alone. While in recent years companies like H&R Block and JacksonHewitt have seen declines in business, online DIY tax programs are growing in popularity. The motives behind either of these routes are understandable: life is busy and, in a crunch, a last-minute tax prep at one of the chains seems like a quick fix. Likewise, when more of our business happens online by our own hand (think online trading and banking), filing online seems easy, especially for those with a do-it-yourself attitude.
Of course, the cost—that is, the perceived cost—of hiring a CPA, is probably the deciding factor for many individuals to choose one of these options. In reality, the average price of filing via a quick tax prep service and a CPA firm is about the same.
But the topic of this post is what a CPA can offer you after you file, so whether you’re happy with your experience preparing your own taxes or having an accountant at a chain store prepare them for you, there are pitfalls that can arise after filing that could cost you far more money and stress than hiring a licensed CPA from the start.
Enter: the IRS.
The IRS reserves the right to inquire about a tax return up to three years after the original filing. Chances are, if you’re contacted for audit two or three years after filing, the temporary worker at the chain store may no longer be around to answer your questions or prepare you for the audit. By law, a CPA keeps records of your tax returns usually for at least seven years. If you use a licensed CPA from the start, none of this is an issue: if the IRS calls, as your CPA, we can speak to them on your behalf and represent you at an audit. Plus, at our firm, we’ll answer any questions you have throughout the year for free.
Even if you prepared your taxes yourself, you still may not be able to adequately answer the IRS agent’s questions. Because the tax laws in the United States change each year, it may be difficult for the lay-person to keep up. Anyway, reading up on changes in tax law would probably be quite boring for anyone but a CPA. For these reasons, our CPAs have advanced degrees and years of experience so that they may not only help you maximize deductions, but also give you the peace of mind of never feeling like you’re on your own.