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Frequent Asked Questions (FAQ)
- How much will it cost for you to prepare my return?
That is a little like asking, “I'm going to the grocery store. How much will I spend?” The longer the return takes to prepare, the more it will cost. A return fee is usually based on how long it takes. I will give you a reasonable estimate, but it's just that, and estimate. I can say that my hourly fee is very competitive and you will quite likely pay more elsewhere.
- If I file for an extension of time to file my return, will I be more likely to be audited?
No. Absolutely not! In some cases, I strongly recommend filing for an extension.
- My CPA made a mistake on my return. Should I change CPAs?
Probably not. Every CPA makes mistakes, although we all try hard not to. The important things are that a CPA should not conceal an error, and should do everything possible to correct it once it is discovered.
- Should I buy a bigger house to save on taxes?
“Saving on taxes” is no reason to do ANYTHING. What matters, financially speaking, is increasing your wealth. While tax impact should be considered in making any financial decision, taxes should not be the "reason" to spend more money. You will never save more than you spend.
To put it another way, how about if I charge you $10,000 to prepare a small tax return? That will save you some taxes!
- Can you help me cheat on my tax return?
If that's the kind of help you want, please look elsewhere. I am committed to helping my clients, but at the same time, I am committed to complying with the law.
- How long do I have to keep my bank statements, canceled checks, etc.?
There is no definitive answer on this one. The IRS says that you must keep your financial records for as long as they might be needed. That's not much guidance! Here's what I do myself:
- Check registers - “forever”, in my tax return file for that year.
- Bank statements and canceled checks - five years.
- Purchase documents for major purchases (such as a home) - as long as you own the asset.
- Brokerage account statements: as long as you still own any investment with activity on that statement.
- Credit Card statements, receipts, etc. - personal, one year or less; business - five years.
- Prior year tax returns - indefinitely, but at least five years. I have mine all the way back to 1972! But after five years, you can dispose of the supporting documents.
- Utility bills, etc. - zero to three months, unless you love saving paper.
- I have always done my return myself. Why should I use a tax professional?
It's our job to know the law and to keep up with tax law changes, and we have learned many strategies to lower taxes which most people simply don't have the time or interest to figure out. If you are overpaying your taxes, you can bet the IRS won't let you know. At the very least, you should have a competent tax professional look over your returns every so often to see if there is anything you could be doing differently. It's worth it.
- Does Every CPA know a lot about taxes?
NO! In fact, there are almost no questions about taxes on the CPA exam. The "CPA" designation tells you absolutely nothing about an accountant's tax knowledge. Right now, there is no special certification to indicate that a CPA is a tax specialist. Tax is a specialty that some of us choose to pursue; many don't.
When choosing a tax professional, you should look for a CPA who specializes in taxes, or an EA, Enrolled Agent, who may or may not be an accountant, but who has special certification from the IRS. Don't let “just anybody” handle this for you.
- I am paying too much in taxes. Can you help?
Maybe. It depends on WHY you are paying “too much” in taxes. Obviously, everyone's situation is different, so the strategies will be different for everyone. Sometimes, there is nothing that the client is able to do, or is willing to do differently. If you aren't sick, a doctor can't cure you. Likewise, if you don't have a true tax problem, I can't solve it.
No one likes to pay taxes, and everyone would like to pay less. But sometimes, I find that people's expectations are such that only Congress can lower their taxes!
- Can you help with financial planning or legal matters?
Like income tax, financial planning is a specialty which warrants full-time attention. Beyond basic financial planning, I prefer to refer you to a specialist in that area.
I am not an attorney, but I can refer you to an attorney whom I believe is competent to handle what you need.
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