Ep. 23 | Choosing The Best Tax Professional
Download MP3Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime.
Speaker 2:Welcome back to the podcast, everybody, episode 23. Before we dive into today's topic of how to select the best tax professional for you, let's take a moment and thank our sponsor.
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Speaker 2:Hey, everybody. Welcome back to the Teaching Tax Flow podcast as mentioned. So here we are. We're into March, towards the March. Let's get into something great, something that we hear all the time.
Speaker 2:So I'm John Chapalski, one of the cohosts here at Teaching Tax Flow, the podcast. And stated next to me, how are you doing, Chris Picuro? I am awesome. It's great
Speaker 3:to be back. You know what? It's springtime.
Speaker 2:I really love cohosting these things with you because we get to rouse each other and hit these top. So you are a CPA. Right? Either that or you've been lying to me for twenty years.
Speaker 3:I've been lying to you for twenty years, but not about that. And I am a CPA.
Speaker 2:Well, speaking of people lying, let's avoid the ones that do. Right? So let's talk about how to pick the right tax professional. So, Chris, I'm gonna kinda hand this one over to you a little bit. I know you talked about this, you know, obviously, for the past two decades, as you were becoming the great tax professional.
Speaker 2:But, I know you were recently out there in Great Rapids, Michigan. You were on a couple news stations. Right? I think it was Fox seventeen and Wood TV talking on this. So perfect time.
Speaker 2:Let's kinda rehash those wounds of the, of the less credible little monsters out there. So hit hit us with your insight on how to select the right tax professional.
Speaker 3:Well, thank you. I have I was honored. The Michigan Association of CPA coordinated a couple a couple, news, stories for out in Grand Rapids. And this subject is very important. How to pick the right tax professional?
Speaker 3:Because it's confusing out there. And we always think about if you walked into a room of a hundred people and all hundred people, were a CPA or an enrolled agent. An enrolled agent is a very specific designation for qualified and licensed tax professionals. Just by looking at them, you wouldn't know who's good and who's bad or what we what do you mean by good and what do you mean by bad? We really want taxpayers to connect, to partner with a tax professional that they trust.
Speaker 3:And so I'm gonna give out some tips and tricks to finding that right tax professional because if you think about it, the information that you give a tax professional is very private. Maybe a doctor gets more information, but what's on your tax return is your not only your name, your home address, your social security number, dates of birth are are not reported on a federal form, but on many state forms, driver's license for identification verification, your children's Social Security numbers, your income, your routing number, your bank account number. As you could see, there's just a lot of information that you're sharing with somebody. You wanna make sure that person is trusted and that's going to be there for you. So I'm ready to dive into some some cool tips and tricks and things to look for.
Speaker 2:And when you say somebody's trusted, right, that's more than just, hey. You're a great person. It goes far beyond that. Right? Like, you mentioned all that sensitive information.
Speaker 2:So, hey. You wanna find that person. I'll obviously let you dive into this more, but, you know, you wanna find somebody that not only knows what they're doing on the tax side, but also, you know, is a good fit for you that maybe aligns with your goals and really what your what your your line of business you're in, etcetera, but then also has their blank together. We won't say that word on here. But, you know, so Oh.
Speaker 2:So they're not at Starbucks, you know, flopping around copies of returns and leaving them in the recycle bin, etcetera. So
Speaker 3:Absolutely. And some of us gave up, swearing for lunch. So I've been doing pretty good except on the pickleball court.
Speaker 2:Hey. I beat myself out in, while we're recording it, not even after the fact. So I'm halfway. Impressive.
Speaker 3:Your tax professional, you're gonna want the person to have some technical skills and then some soft skills. And right now, we have a huge deficit of tax professionals out there. So typically, it was easy to find people with the hard skills or the technical skills and really hard to find people with the soft skills. Now it's hard to find people period. And so if you're working with a tax professional, first of all, if you're comfortable with that person, you've you're already winning the game.
Speaker 3:And even if that professional none of us know everything. And even if your fact pattern is kinda stretching the scope and expertise of that professional, I would encourage you to maybe ask that professional to network or to to bring someone else in. And my point is having a great relationship with someone, the the grass isn't always greener on the other side of the fence when you're working with tax professionals. So having a great relationship with someone is important. Let's talk about those technical skills first.
Speaker 3:Excuse me. You're gonna wanna work with somebody or a firm that is licensed and insured and has some type of professional designation. That could be a CPA. That could be, like, the aforementioned enrolled agent. When you want to make sure that they have professional liability insurance, you also want to make sure that they have a technology stack that keeps your data protected.
Speaker 3:That is very, very important. And although you're concerned about the cost of the tax preparation, that's that should not be one of your top three to four concerns. And I know it's important, but one of the things that a tax professional is going to wonder about is if you're looking for a new tax professional and you ask about the price in the first one or two questions, to be very honest, that's gonna be a red flag for your tax professional. So make sure that because if you trust someone, you know that they're adding value that far exceeds the cost of the services that they're providing. So that those are some of the some
Speaker 2:of the things you're gonna wanna look for. And actually starting in that conversation, say with, you know, maybe not a pre existing relationship, say somebody you've been working with for a while, you know, might seem odd to ask in this down the road, but say you're say you're searching for a new firm to partner with. Kind of maybe a dumb question, maybe not, but like you had mentioned, making sure that they're they're insured. As simple as that. Is it a similar kind of conversation, say, a contractor coming into your home?
Speaker 2:You know, know, they kinda put it right out there in the open, say, we're licensed, bonded, and insured. I don't think I've seen that too much on the tax side, or preparer side at all. But how do you start a question like that? Is it awkward if somebody asks, you that or kinda walk us through that maybe, like, an easy way to ask.
Speaker 3:Absolutely. It's not a common question that people ask, although it might. Maybe it should be. Now our practice, we've been in business for over twenty years, so it's typically not something that, someone that is just starting their practice would get that question more often. The first thing you're gonna do let let's let's start with your current situation.
Speaker 3:Make sure that your when you look at your tax return, that your tax professional is actually signing their return as a paid profession paid preparer. Unfortunately, we've seen some some situations where someone says, well, I've had uncle Joey or aunt Judy do my prepare quote, do my tax return. We don't like that word, but prepare my tax return. And when you look at the tax return, it says self prepared. So that's that's really important.
Speaker 3:Making sure that the person that you are is preparing your tax return is actually in the business of doing the tax return, and that does include the proper licensing and the proper the proper professional liability insurance, the proper continuing education. And that's that's step one.
Speaker 2:And those are actually really easy to file. Right? So it's usually whatever form it is where you would sign it, it's usually just below that. Right?
Speaker 3:Yeah. If you're looking at a tax return, right where you sign your tax return, it's gonna be below it where it says paid prepares use only. Now so when you're when you're looking for what to look for with a tax professional, I know it sounds like I'm being redundant, but I hope the vast majority of our listeners are already with someone, and this is more of a affirmation podcast. Okay. I feel good about that.
Speaker 3:So these are but but if you're in the and, unfortunately, 80% of people look to change tax professionals between January 15 and April 15 of the year, which is the worst time
Speaker 2:to be doing it. That's what every everybody in the preparing world has a sign in their door that says do not disturb. Right?
Speaker 3:Most people. Most people do. I would agree. But some things to look for are really what are your needs and making sure that that person is a good fit for your needs. Is the person available all year round is a great thing to consider.
Speaker 3:What happens if you get a letter from the Internal Revenue Service or a state? Is that person going to be there to help you? Is the assistance part of what you paid them for the preparation of the return? Or is that an additional fee? There's no wrong or right answer, but it's all about setting expectation, setting an expectation of what is the service that's being provided, what is their avail availability and making sure back I'm going back to another thing you're going to look for is making sure that your data is protected.
Speaker 3:You mentioned I I mean, you don't want your tax professional with all of your tax documents sitting at a coffee shop, where someone could walk by or or someone can see something. I'm actually uncomfortable with tax in my own personal opinion and what we do in our practice. We like all of our tax preparation and our all our applications in the cloud where there's where there's firewalls in place instead of on a on a desktop because that computer could fall in could be stolen, could break, could anything could happen to that computer, and now now you've got another issue.
Speaker 2:And it seems like time flies. I mean, you guys have been doing that for well over a decade. It seems like I mean, you guys as far when I say you guys, your your private practice, I remember when you when you made that transition too, and it was almost, you know, an early adopter in a sense of, you know, you guys always led with security on the forefront, which was great, but I remember you having to train pretty much your clients how to use it. And a lot of people weren't familiar with it at the time, so kind of rolling it into tech stack. I mean, that that is very important.
Speaker 2:Sometimes some practices, I'm sure, are a little slower to adopt with that. Well, it's not the end of the world, but it's always nice to have it. I know the way that that you guys have set it up. It's it's built for security and convenience. Right?
Speaker 2:Like, it saves having to mail something. It saves, having to go and physically drop off documents. So the likelihood of something getting spilled on them, call out to my father on this one. He's still mailing you guys stuff. So this is a this is a public push for him to to migrate to this after so long.
Speaker 2:But it's it's it's really twofold. Right? Like, a lot of the the stuff that you guys have implemented is for the practice efficiency and security, but that also for the client experience. Right?
Speaker 3:Absolutely. Absolutely. And now now there are certain tax practices that are a little more old school that want paper copies of things. And if you're a tax preparer prefer if you're a taxpayer that you want to sit down in an interview style with your tax documents, then you should find a preparer that shares the same beliefs from a technology stack or left or lack of technology stack. Mhmm.
Speaker 3:It's all about the right fit. Right.
Speaker 2:And, So you you find that match. It's not like you if your if your preparer's not doing it that meets one of these criteria, they're not doing it wrong. There's like, you had mentioned, that's a great point that there's there's a fit for everybody
Speaker 3:in there. Absolutely. And, typically, you're going to find prepares either, you know, based on your geographic geographically centered or specialty center. So if you have a situation, one of a friend of mine from the National Association of Tax Professionals is an expert, in assisting people that own child cares. And she she has clients all over the country.
Speaker 3:She's a better fit to handle a a taxpayer that has a a childcare than myself in our firm, even if we live five miles away from the childcare. So for someone that's specialized in an industry, it would it would be it makes sense to work with that person. Yeah. When you're looking at these tax professionals, no matter what, each tax professional has to have something called a PTIN, which is a a tax preparer identification number. And that's PTIN.
Speaker 3:Correct? Yes. PTIN. That's issued by the Internal Revenue Service. It has get renewed every year, and that PTIN is part of the information that is put on the preparers portion of the tax return that they're signing, but that's something you're gonna wanna ask a preparer if they have a PTIN.
Speaker 3:And you could ask for proof of it. They also one of the things we mentioned is making sure the preparer is actually signing that return. Ultimately, remember, your tax return is your responsibility, but the PACS preparer does have some responsibility as well under not to get too technical, but under Circular two thirty. That's why you wanna make sure that tax preparer is licensed, either we have some type of professional designation and is part of some type of professional organization as a watchdog or as a as a third party, yeah, watchdog organization to fold us all accountable. Excellent.
Speaker 2:So I know there's a lot of things to look for. Right? We only went into a couple of them. I know we've talked of probably 20 of these, over the years. So just really, really briefly.
Speaker 2:So the the marketer in me is gonna come out for a second. Right? It's very easy for somebody to, say, run a Facebook ad, you know, saying that they're taking on new clients and doing this. There's really no no we should say credibility behind it, but, really, that's what you've seen as the public. You've seen this ad that's been put out there.
Speaker 2:So without going into a ton of detail on this, we could do a whole another show on this. But, like, what are a few things maybe to really watch out for or kind of stay away from from your perspective?
Speaker 3:Great question because the IRS just put out some some information about what what to be aware of. And and, unfortunately, there are some predators out there, when the tax preparation field. The best thing you could do is ask for a referral from someone that has a similar situation as yourself. Now we don't walk around knowing everyone's tax situation, but in general, it could be a friend, a coworker, or someone if you're if you're into doing a bunch of crypto, for instance. It could be one another person that does a lot of crypto investing, and you might ask them.
Speaker 3:So that's gonna be the first step. The second step is commit yourself to to a longer term relationship with a tax professional. It's okay to ask if they if they are a little more mature aged. It's okay to see if they have a transition plan because this is important to you. And make sure that, make sure that obviously you're comfortable with their their data security.
Speaker 3:Make sure you're comfortable with you should not ask how much their their preparation fee is, but make sure that you have an understanding of of what to expect. And just like you wouldn't go to a restaurant and order things off a menu without a price assigned to it. So That's another that's another consideration. And then, and if it is someone that you don't know that well, make sure that you do a little bit of due diligence. And and and the final thing is commit yourself to getting the best result possible.
Speaker 3:This is this podcast is going out in late March. If you don't have a tax professional at this point, my best advice to you is to file a tax extension and find someone that's gonna be a great fit for you because the best result possible is always better than the fastest result possible.
Speaker 2:And without going into any more detail on that too, we have a whole show on it. You're not doing anything wrong by filing an extension. So we'll we'll leave that we'll leave that one at that. You're not gonna cause trouble for yourself. Chris, before we do wrap this up, though, is there anything else that you really wanna add to this topic as a whole?
Speaker 2:I mean, I know this is something that, you know, you could have somebody that just to throw in a couple scenarios, you may have moved to a new town. Your previous prepare isn't comfortable you not being there anymore face to face. So you, you know, obviously, have have parted ways there. So you're in that situation of finding somebody else. Or, Chris, as you mentioned too, which is a great point, you know, this isn't really made, is not crafted this content around.
Speaker 2:This is a way to fire your your tax preparer. Right? This might just add the add the warm and fuzzies to it. Say, yep. I have the right person.
Speaker 2:They may be missing a component of this, but that component is not really that important to me. So you absolutely have the right person. So anything else to add before we wrap?
Speaker 3:Well, my thought my thought is exactly the grass always isn't greener on the other side of the fence. Remember, tax professionals are humans also. One thing to consider would be talking to your tax professional about how they're how they are obtaining their continuing education and and, making sure that they're up to date on on tax rules. They're not gonna know every rule. Hopefully, they spend some time networking with other professionals and could bring resources in when needed.
Speaker 3:The Michigan Association of CPAs put out a really nice, document about the top 10 questions to ask a tax tax professional. We're gonna put that here in the show notes, a link to that as well, and focus on getting the best result possible. And if you if you're struggling to find a tax professional, please let us know. We would be happy to try to guide you in the right direction. That'd be hello at teaching tax flow dot com.
Speaker 3:Shoot us an email. We're happy to help. Excellent, Chris. Well, thank
Speaker 2:you for diving into that. I know you you've talked about this a lot. Obviously, just doing the Fox seventeen and the Wood TV interviews. So thank you again for repeating some of this stuff and maybe bringing up some new topics. If anybody has any specific questions or, like Chris had mentioned, reach out to us at that email.
Speaker 2:Free feel free to hop out of the defeating taxes Facebook group. Post any questions on there. Sometimes, the fellow members are quicker to respond than we are because sometimes they're on it right away, and help each other out. Like, if somebody has an issue with it, maybe you find yourself in the same situation as them. Maybe you're in the same, you know, line of business.
Speaker 2:You might be able to refer amongst yourselves as well. So please feel free to post anything in there. But beyond that, we will see everybody next week.
