February 14, 2012

What Your CPA Does Not Want You to Know, or Do They?

Credit: Arvind Balaraman
There is nothing like the smell of tax season - the satisfaction of receiving all those end-of-year contribution thank-yous, the joy of seeing how much mortgage interest you can deduct, the feeling of a crisp 1099 in your hand... Personally, one of those “Tax Masters” commercials always makes me chuckle.

While I may no longer be a tax preparer, I remember those days and I thought I would give you some tips for this tax season from a former insider. Here are some suggestions that will help your taxes get prepared more quickly, more accurately, and maybe even for less money. 

1. Form of Delivery- If you are delivering your tax information to your accountant in any fashion other than in a PDF file, a file folder, or one of those nice, brown envelopes with a metal clasp, STOP! I have been given shoe boxes, I have been faxed enough paper to kill the Redwood Forest, and I have been given scribbles on the back of a Krispy Kreme napkin. As a preparer, it could take me hours to organize someone’s tax information before I could even get started on the real tax work! I can tell you from experience that if you give your accountant a pile of junk in a box, it will stay on the bottom of his/her pile, and when they do decide to start your work, they will bill you for every single second that it takes them to reconstruct your last year’s paper trail.

2. State of Organization- You should definitely organize the information you provide your accountant. A pile of nicely folded documents facing the same way can still take valuable preparation time if they are not in some type of logical order. I would suggest organizing your items by type. Perhaps W-2s, interest statements and other 1099s, and then additional income items like rental property information or realized security gains/losses. Where most people increase their tax prep bill is the pile of itemized deduction-related materials they provide. All I ask is that you sort your charitable contribution statements from your property taxes from your medical bills. I know it takes time, but accountants can charge a lot by the hour nowadays!

3. Completeness- Accountants can only prepare a tax return as completely and accurately as the information you give them. If you are missing a 1099 from an account you had last year and still have this year, or some other piece of information you know about, don’t give your CPA anything yet. The more times your accountant has to ask you for additional items and pick up and put down your work, the longer his/her clock runs. If you never provide that missing piece of information, your return won’t be accurate and that is actually on you! Accountants are only responsible for accurately preparing a return based on the information you provide them. Worse than anything, your accountant may be required to report rental income without a related expense or not report a charitable deduction without substantiation solely because your information is not complete.

4. Responsiveness- Finally, be responsive to your accountant. Your CPA is not auditing you; your CPA works for you for crying out loud! Your CPA should want to help you file an accurate and timely return with as little tax liability as possible. In order to help them help you, make sure you completely address your accountant’s initial information request and quickly respond to any follow-up questions.

These suggestions will hopefully make this tax season a lot less painful for you and your accountant. There may not be any tax savings from these suggestions, but if you follow my advice and your tax preparation bill goes up, I would suggest finding a new accountant.



  1. Well....I don't use a shoebox, but I do use the big envelope! But.....my pieces of paper are organized. This year, however, I will make sure they all face the same way! Thanks for the info!

  2. Well, this may be a dumb question, but... What am I supposed to bring with me to my tax appointment? Last year I just brought my W-2 form. Do I need receipts for donations, etc? Sorry... tax newbie here.

    1. Not a dumb question at all! You are at least thinking about what information you might need to put together in order for your taxes to be prepared, and that's half the battle. Most tax preparers will give you some sort of checklist or tax organizer to fill out to help you think through what you might need. They will then ask you specific questions or make additional information requests based on your responses if need be. Below is a link to a sample organizer that might help you prepare for your meeting or at least know what to expect: