Sunday, May 12, 2019

A Post I Wrote for the Tax Blog on Having a Great Tax Pro

It's obviously no secret that I favor the use of tax professionals over software. With that said, having a great tax pro matters, and it costs money. This post is about a few of the things that might or might not occur to the average person that a great tax pro can provide. Some of these became especially important with the advent of the new tax law and its effect on tax return results.

Here's the list:

1. If you had a great tax pro, you wouldn't have been surprised that refunds in general were going to be down, but you also would have known that actual taxes paid would also be down. More importantly, a great tax pro would have taken your 2017 tax information and analyzed it under the new law so you would know the EXACT effects on your tax situation.

2. A great tax pro would also have anticipated, through asking great questions, what changes would occur in your life and how they would affect your tax situation. It is amazing to me how many people with okay tax pros end up surprised by simple things that are easily anticipated such as a child turning 17.

3. Expanding on the above, a great tax pro will tell you what you can do to mitigate the effects of tax law or life situation changes. Unlike tax software, a tax pro can make changes to your return, see the results and then make more changes so that you can make informed decisions about what to do.

4. A great tax pro can show you how to use the tools the IRS provides such as withholding calculators, installment agreements and many others.

5. A great tax pro knows state tax laws or where to find them. Software sucks at state taxes. There are numerous state tax deductions that you basically need to know about ahead of time to take advantage of. Software just draws numbers from the Federal with occasionally a few questions. If you use software, ask yourself how many times the state tax return magically occurs without ONE SINGLE QUESTION about state taxes.

6. If you have to file more than one state, your software is going to mess it up. An average tax pro might have difficulty with a state other than the one they work in and maybe a neighboring state. A great tax pro understands how to file multiple states intimately.

7. A great tax pro will save you a ton of time, frustration and worry. If your tax pro is really good, the time and effort you save should make every penny worth it.

8. A great tax pro can answer your questions in the off-season, BEFORE you make a mistake.

9. A great tax pro can help you understand IRS and state tax letters and (often for a fee) help you respond or (if you get their extended guarantee) handle the letters for you and/or go to audits for you. A tax pro who is an Enrolled Agent or CPA is critical for this.

10. A great tax pro will tell you about deductions you've never heard of.

11. A great tax pro can give you interesting non income tax advice you might not think of. The perfect example in South Carolina is when people are paying WAY to much real estate tax because they don't realize they need to inform the county that they are living in the home they just bought. We will also give you a redacted copy of your tax return that you need to file the paper work, and often provide a copy of the form and instructions.

12. A great tax pro can tell you some interesting military stuff, like the 6 states that give military bonus money of various types, the extended period you get to sell a rental property and avoid a lot of taxes, and how to manage tax free combat pay.

13. Really great tax pros have a bunch of worksheets, spreadsheets and calculators that you can use for tax planning or record keeping.

14. Great tax pros see a lot of life occurring and can give great advice based on what we've seen work and not work in people's lives.

15. A great tax pro will check your prior year tax returns for free and make sure you didn't miss anything.

16. A great tax pro can counsel you on the appropriate level of aggression based on the position you want to take and your tolerance for risk.

17. A great tax pro will be up on every tax law change, every IRS ruling and every court case result that affects taxes.

We cost a lot of money. We're worth it. Just make sure your tax pro is great. Okay is not okay.

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