Choosing the right tax preparer is one the most important financial decisions we make in our life. Although many people don’t often think about it, your income taxes are your largest lifetime expense, more than your home mortgage, your retirement contributions or your children’s college expenses.
As someone who has prepared over 10,000 Federal Tax returns, I know that controlling your income tax expense can make a tremendous difference in your financial well being. So let’s examine the types of tax preparers and how they work.
The most common type of tax preparer is the non-CPA who works for a national tax franchise. This type of preparer generally has no formal education in accounting and frequently has only a few weeks of training. Often they are retirees looking for a few weeks of extra income each spring. This type of tax preparer is not licensed to respond to IRS inquiries and generally has only a rudimentary understanding of the techniques used to reduce taxes. An unlicensed tax preparer should never accompany you to an IRS audit, and in fact this type of preparer would probably not be allowed by their employer to do so. The non-CPA tax preparer is in my opinion usually appropriate for only the simplest types of tax returns, such as an hourly worker that has household income of under $50,000 a year and that does not invest in stocks or itemize deductions.
A Tax CPA is very different from the unlicensed tax preparer found in most franchised tax operations. The CPA normally has at least 5 years of college study in accounting, has passed a comprehensive technical examination. In most states a new CPA has to apprentice under an experienced CPA for 2 years before getting their license.
For any business tax return, r for an individual who itemizes deductions or makes investments, or for any situation where there is a dispute with the IRS or in which tax planning is required a licensed CPA is a must.
Of course not all CPA’s operate the same. Some tax CPA’s only want to fill out the tax forms (the historians), and others are afraid of the IRS (the phobic’s).
The rarest type of tax preparer is pro-active and likes to search tax saving opportunities for the future while preparing your current year’s tax return.
At Trippon & Company CPAs our goal is to be forward thinking enough to protect our clients now and in the future. Call us at 713-661-1040 and put our experience at work for you!