Tax advisor question..

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Tax advisor question..

Postby tjstogner » Fri Dec 21, 2012 2:42 pm

Is one better than another? If so, how do I find he/she? How do I ensure that I am getting all that I am entitled to?
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Re: Tax advisor question..

Postby RadAudit » Fri Dec 21, 2012 3:11 pm

tjstogner wrote:Is one better than another?


Yes

tjstogner wrote:If so, how do I find he/she?


Shop around. Ask friends. Look for the preparer's credentials and years in the practice.

tjstogner wrote:How do I ensure that I am getting all that I am entitled to?


Good tax advice is not an entitlement, yet.

I think a better question would be: Is the tax advice I am about to purchase worth the amount of money I am about to pay? I guess the answer would be based on how much better is the tax advice you get from a paid advisor compared to advice you could get for free or a lesser amount. And that depends on how complicated the return is and how much you valued paying a lower tax bill.
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Re: Tax advisor question..

Postby cheese_breath » Fri Dec 21, 2012 8:34 pm

If anyone promises you a big refund before he even sees your financial records run the other way.
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Re: Tax advisor question..

Postby sscritic » Fri Dec 21, 2012 8:42 pm

RadAudit wrote:Shop around. Ask friends. Look for the preparer's credentials and years in the practice.

Is a preparer an advisor? I don't have either, but I would expect a preparer to prepare and an advisor to advise.

If you want to know a good tax strategy for 2013 and 2014, do you go to a preparer? Your other advice I agree with: ask yourself
Is the tax advice I am about to purchase worth the amount of money I am about to pay?

Then of course there is advice on estate taxes, which is also tax advice.
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Re: Tax advisor question..

Postby bUU » Sat Dec 22, 2012 7:27 am

I find the whole "adviser" realm to be abusively difficult to traverse for me. The suggestion given above seems awfully fragile to me: "Shop around. Ask friends. Look for the preparer's credentials and years in the practice."

Shopping around works only if you know what to look for. People who need advice need advice because they don't know. Presuming to assess someone's abilities to do something you know nothing about doesn't make sense.

The value of asking friends is dependent on whether friends have made good choices, which may be about as reliable as picking someone at random from the Yellow Pages. Those friends I have asked about tax advisers have provided distinctly unsatisfying pointers. For example, one pays someone $300 to prepare his taxes each year, and takes that person's advice. Is that a good recommendation? Who knows? How would you know?

And I don't see any indication that tax preparer credentials necessarily qualifies someone to provide tax advice. It seems to me that there needs to be some means of certifying tax advisers, like we certify financial planners.
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Re: Tax advisor question..

Postby Bob's not my name » Sat Dec 22, 2012 7:49 am

RadAudit wrote:Good tax advice is not an entitlement, yet.
:D On the other hand, everyone is guaranteed bad tax advice. You can't get away from it these days.
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Re: Tax advisor question..

Postby johnep » Sat Dec 22, 2012 8:27 am

bicker wrote:I find the whole "adviser" realm to be abusively difficult to traverse for me. The suggestion given above seems awfully fragile to me: "Shop around. Ask friends. Look for the preparer's credentials and years in the practice."

Shopping around works only if you know what to look for. People who need advice need advice because they don't know. Presuming to assess someone's abilities to do something you know nothing about doesn't make sense.

The value of asking friends is dependent on whether friends have made good choices, which may be about as reliable as picking someone at random from the Yellow Pages. Those friends I have asked about tax advisers have provided distinctly unsatisfying pointers. For example, one pays someone $300 to prepare his taxes each year, and takes that person's advice. Is that a good recommendation? Who knows? How would you know?

And I don't see any indication that tax preparer credentials necessarily qualifies someone to provide tax advice. It seems to me that there needs to be some means of certifying tax advisers, like we certify financial planners.


There is a means of certifying tax advisers. It is called a CPA which is far more rigorous than CFP certification. It requires a 4 year degree in accounting, some experience and passing a very difficult exam which many people do not pass the first time.

I would not randomly seek referrals from friends. Instead I would ask friends who are good business people or ones who handle their business affairs very well. Another source would be to ask small business people you respect who they use. There is always risk involved in selecting a tax adviser (or attorney or any other professional) but it can be done if someone is judicious in doing this.
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Re: Tax advisor question..

Postby bUU » Sat Dec 22, 2012 8:47 am

I used to work for a Big Six firm (which gives you some idea how long ago, but still...) and my understanding of CPA requirements is that they involve accounting and reporting, regulations and compliance, and basic economic concepts. I don't think there is anything there that qualifies someone with regard to making choices between several different, equally-legal approaches regarding taxes.

There has to be a better way than "ask friends". Or rather, there doesn't have to be, but I wish there was, given that I don't feel confident about the recommendations I would get from friends, for the reasons I outlined earlier. At the very least, I would hope there were some tell-tale signs folks could share that don't rely on the business qualities of the friends of the person seeking assistance. But I suppose that's not necessarily possible.
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Re: Tax advisor question..

Postby johnep » Sat Dec 22, 2012 1:25 pm

bicker wrote:I used to work for a Big Six firm (which gives you some idea how long ago, but still...) and my understanding of CPA requirements is that they involve accounting and reporting, regulations and compliance, and basic economic concepts. I don't think there is anything there that qualifies someone with regard to making choices between several different, equally-legal approaches regarding taxes.

There has to be a better way than "ask friends". Or rather, there doesn't have to be, but I wish there was, given that I don't feel confident about the recommendations I would get from friends, for the reasons I outlined earlier. At the very least, I would hope there were some tell-tale signs folks could share that don't rely on the business qualities of the friends of the person seeking assistance. But I suppose that's not necessarily possible.


I have a degree in accounting but never practiced as an accountant. The curriuculum includes accounting, auditing and tax accounting (2 semesters). The tax courses give students a very good understanding of tax regulations, concepts and theory. You are correct that taxes are not covered on the CPA exam. However, many CPAs do specialize in taxes and given the fact they had tax education and proven their competency of accounting through a rigorous exam and experience, I believe that is a pretty good credential.
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Re: Tax advisor question..

Postby BL » Sat Dec 22, 2012 1:52 pm

tjstogner wrote:Is one better than another? If so, how do I find he/she? How do I ensure that I am getting all that I am entitled to?


Your question is incomplete so no one can answer it as well as if you said what you needed.
Are you a beginner just wanted taxes done for your W-2 income? Or do you have a business and need advice during the year as well as a competent preparer? Or something in between?

You really need to learn as much as possible in order to be able to judge the quality of the advice you are given. As mentioned, a CPA who specializes in taxes should be able to handle very difficult complicated taxes but with a charge that is also very high. We have no way of knowing whether this is what you are looking for or not. If you are young and things are not very complicated, doing your own, whether in addition to hiring a preparer or not, can help you understand how the system works and what the choices you make during the year affect your taxes. It can be a valuable lesson.
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Re: Tax advisor question..

Postby bUU » Sat Dec 22, 2012 2:30 pm

johnep wrote:I believe that is a pretty good credential.

I didn't make myself clear... a credential, yes, but for what? Compliance; yes. Maximizing retirement savings (for instance); no way to know. Many CPAs do specialize in taxes, and even have lots of expertise providing tax advice, but the CPA credential doesn't differentiate between CPAs that have such expertise and those that don't, and indeed there are non-CPAs who are better at providing the kind of comparative perspective I'm talking about than some CPAs. My experience with CPAs is that even those that put themselves forward as "advisers" are still aiming to "advise" on matters of compliance, which isn't what I personally am looking for. I also don't need someone to tell me which stocks or funds to pick (i.e., a broker), but I do need someone to help me work through Roth versus traditional, conversions, portfolio tax efficiency, etc.
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Re: Tax advisor question..

Postby jared » Sat Dec 22, 2012 4:52 pm

johnep wrote:You are correct that taxes are not covered on the CPA exam.

This is not true. The Regulation exam (1 of the 4 required exams) covers federal taxation. Here is a very high level view of the topics tested on this particular exam:

I. Ethics, Professional, and Legal Responsibilities (15% -19%)
II. Business Law (17% - 21%)
III. Federal Tax Process, Procedures, Accounting, and Planning (11% - 15%)
IV. Federal Taxation of Property Transactions (12% - 16%)
V. Federal Taxation of Individuals (13% - 19%)
VI. Federal Taxation of Entities (18% - 24%)

For more detail regarding the content of the exam, see page 21 (http://www.aicpa.org/becomeacpa/cpaexam ... 7-1-11.pdf)
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Re: Tax advisor question..

Postby johnep » Sat Dec 22, 2012 10:00 pm

jared wrote:
johnep wrote:You are correct that taxes are not covered on the CPA exam.

This is not true. The Regulation exam (1 of the 4 required exams) covers federal taxation. Here is a very high level view of the topics tested on this particular exam:

I. Ethics, Professional, and Legal Responsibilities (15% -19%)
II. Business Law (17% - 21%)
III. Federal Tax Process, Procedures, Accounting, and Planning (11% - 15%)
IV. Federal Taxation of Property Transactions (12% - 16%)
V. Federal Taxation of Individuals (13% - 19%)
VI. Federal Taxation of Entities (18% - 24%)

For more detail regarding the content of the exam, see page 21 (http://www.aicpa.org/becomeacpa/cpaexam ... 7-1-11.pdf)


Thanks for correcting me. I never took it and graduated with accounting degree 35 years ago. I looked it up online and did not see it listed in the description of exam.
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Re: Tax advisor question..

Postby gerntz » Sat Dec 22, 2012 10:51 pm

bicker wrote:
And I don't see any indication that tax preparer credentials necessarily qualifies someone to provide tax advice. It seems to me that there needs to be some means of certifying tax advisers, like we certify financial planners.

"IRS Registered Tax Return Preparer" is a new designation by the IRS that requires one to pass a test and which every preparer needs to be starting in 2013. CPA are exempted from the test but must still pay to register as a RTRP. Does this insure they'll give good advice? I doubt it.

We've been paying a CPA $600+ to do taxes for eight years now (Did them myself previously) due to complications (at least to me) & he's saved us more than we've paid by taking income or not at certain times, making us aware of and avoiding particular investments, and correcting significant errors I made on my own even with tax problems. There was also an estate return I had screwed up.
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Re: Tax advisor question..

Postby LadyGeek » Sat Dec 22, 2012 11:25 pm

gerntz wrote:"IRS Registered Tax Return Preparer" is a new designation by the IRS that requires one to pass a test and which every preparer needs to be starting in 2013. CPA are exempted from the test but must still pay to register as a RTRP.

Here's the IRS link: Registered Tax Return Preparer (RTRP) Information

IRS wrote:If you prepare Forms 1040 for compensation, you must follow recently enacted requirements for federal tax return preparers. Most individuals must become Registered Tax Return Preparers (RTRP) under these new rules (unless you are an attorney, certified public accountant, or enrolled agent, or in some cases supervised by an attorney, certified public accountant, or enrolled agent).

*The IRS is currently phasing in new rules requiring tax return preparers to pass the new RTRP competency test. Existing tax return preparers generally have until December 31, 2013, to pass the new test and to officially become an RTRP.
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Re: Tax advisor question..

Postby pshonore » Sun Dec 23, 2012 10:19 am

The only requirement right now is 15 hours of Continuing Education if a preparer wants to renew their PTIN for 2013 (allowing prep of 2012 returns). PTIN = Preparer Tax Identification Number. In my opinion, this will weed out a significant number of preparers. The requirement to pass the standardized test by 12/31/2013 will probably reduce the number further. I believe I read somewhere that approx 5% of current preparers have passed the test so far.
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Re: Tax advisor question..

Postby bsteiner » Sun Dec 23, 2012 10:32 am

Finding a tax person is much like finding a doctor, dentist, lawyer, plumber, auto mechanic, etc. You could ask someone in a related field whose judgment you respect. The lawyer who handles your estate planning is likely to have worked with many accountants and enrolled agents, and should probably be able to recommend one or several in your area who deals with similar types of clients, and within your desired budget.
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Re: Tax advisor question..

Postby BL » Sun Dec 23, 2012 1:39 pm

In looking back at a previous topic, it sounds like you just need a very basic tax form done, and would be able to do it yourself using a tax program like TurboTax, although I would encourage doing it by hand as well using the forms and directions available at irs.gov. If you feel you need to, get one prepared at a place like HR Block one time, then study it carefully and do it yourself until you are confident you can do it yourself next year.

For tax planning advice, there is this forum, as well as the wiki and suggested reading, and many other books that might be suggested. Jane Bryant Quinn has several good books on personal finance.
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