Spot-checking your CPA on taxes

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johnanglemen
Posts: 713
Joined: Thu Oct 01, 2009 1:00 pm

Spot-checking your CPA on taxes

Post by johnanglemen »

I believe I have a very good CPA, but I would nonetheless like to 'spot check' my tax returns each year. What are some lesser known points that would be good to verify? For instance, verifying that foreign tax credit was claimed.
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: Spot-checking your CPA on taxes

Post by livesoft »

You might review the NYTimes explanation of a tax return which is an annual thing for them:
2011: http://www.nytimes.com/interactive/2012 ... -1040.html
2012: http://www.nytimes.com/interactive/2013 ... n-doc.html
etc.
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john94549
Posts: 4638
Joined: Tue Jul 26, 2011 8:50 pm

Re: Spot-checking your CPA on taxes

Post by john94549 »

Check that Kansas Food Tax Credit (just kidding).
Topic Author
johnanglemen
Posts: 713
Joined: Thu Oct 01, 2009 1:00 pm

Re: Spot-checking your CPA on taxes

Post by johnanglemen »

Any other thoughts here? What sort of mistakes have people made on their own taxes?
MarkNYC
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Joined: Mon May 05, 2008 7:58 pm

Re: Spot-checking your CPA on taxes

Post by MarkNYC »

The extent to which a taxpayer can "spot check" the accuracy of a professionally-prepared tax return depends on the taxpayer's overall tax knowledge along with the nature and volume of information on the return. With limited knowledge, here are a few things to check, which the IRS is likely to catch if incorrect:

1. Schedule B: are all financial accounts that generate taxable interest and/or dividends listed? (and do any amounts look suspicious?)
2. Schedule 8949: are all security sales during the year listed?
3. If a taxable IRA distribution was taken, is it listed on Line 15a? If any portion was rolled over, does the taxable amount on 15b appear correct?
4. If estimated taxes were paid, does the total on the tax return (fed and state) coincide with the amount actually paid?

Other items might include:

5. Schedule A: does the real estate tax amount appear correct on line 6?
6. Schedule A: does the charitable deduction amount seem correct?
7. Schedule 8949: does the amount of gain or loss for each sale seem reasonable?
8. If you have any foreign-based financial account, is it disclosed on Schedule B, Part III ?
9. If you made a traditional IRA contribution, is there a corresponding deduction on page one of the 1040? If not, is the contribution listed on line 1 of Form 8606?

There are other potential items that might be checked depending on the specifics of each person's tax return.
buckstar
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Joined: Wed Jul 06, 2011 9:38 am

Re: Spot-checking your CPA on taxes

Post by buckstar »

I don't just spot check my CPA, I check the entire thing. I've usually catch one or two minor things a year. I like reviewing the entire thing because it makes me understand the tax code a little better, and hopefully improves my tax planning for the future.
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tractorguy
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Location: Chicago Suburb

Re: Spot-checking your CPA on taxes

Post by tractorguy »

I got a new CPA this year. Because I hadn't worked with him before, I did my taxes as best as I could in turbotax and compared its summary with his. Everywhere I found a difference, it was my error. However, he found a mistake in my 2011 return (done by a different company). They incorrectly had me paying state tax on my pension (Illinois doesn't tax pensions). So I had to go back to the previous company and have them file an amended return (which they did gratis). I'm still waiting for the check from Illinois.

At the end of the exercise, I found that my return is still too complicated for me to use turbotax and the guy I hired was well worth his fee. My long term goal is to simplify things enough so that I can fire him however.
Lorne
SeattleCPA
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Re: Spot-checking your CPA on taxes

Post by SeattleCPA »

I agree with MarkNYC's ideas. But let me also suggest these points for getting a better tax return prepared by a CPA (which I admit is slightly tangential to OPs original point)...
1. Use the organizer so you, the taxpayer, do a good job of telling the CPA everything he or she needs to know. This is really key.
2. Turn in all your stuff at once not in dribs and drabs. Start and stop makes it easy for things to drop between the cracks.
3. Don't wait until the last minute--or if you have turned stuff in really late have the CPA extend your return. Last minute work leads to errors.
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mikestorm
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Re: Spot-checking your CPA on taxes

Post by mikestorm »

For years I did my own taxes. Then this year, due to a confluence of ONE TIME financial events, this past year I hired a CPA. I'm new to the area, and he came very highly recommended via Yelp.

Well, the DIYer that I am, I combed through my returns and found about a half dozen concerns/issues. From forgetting to reference PY investment property lossesto flat out getting wrong the 2012 tax implications of my 2010 Roth IRA conversion (deferred tax bill to 2011 and 2012 and moved from one state to another in the middle of 2012) to forgetting to include depreciation on some five year depreciable items.

I brought all to his attention, he fixed all. Now that my taxes are more BAU I will not be going back to him or any other CPA.
mikep
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Re: Spot-checking your CPA on taxes

Post by mikep »

CPA's make mistakes too, mine made 5. Thankful that his wife made a mistake telling me the price, $200 vs the $450 or whatever our return came to. You are right to scrutinize. Next year I'm going back to Taxact.
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