How Best to Work with a Tax Preparer: Would you like to know how best to work with a tax preparer? In this finStream video and in the article below, Jean-Luc Bourdon answers the question: What is the best way to work with a tax preparer?

Article: What Is the Best Way to Work With a Tax Preparer?

Are you planning to use a tax preparer this year? Our expert gives some tips on how to make the most of this important relationship in a time of increasing complexity.

By Jean-Luc Bourdon

Many taxpayers are facing a significant challenge due to the shortage of tax preparers and rapidly increasing tax preparation fees. The aging and retirement of many tax practitioners are the primary reasons for this shortage, leaving a significant gap in the talent pool. Additionally, the growing complexity of tax regulations is making it more difficult to file tax returns, requiring more time and effort from tax preparers. As a result, it’s more important than ever to maximize the value of working with a tax expert by working effectively with them. Finding expertise that fits complex needs can be a challenge. Then, it’s not only smart to nurture the competent help you may already have, you should also consider being kept too. Being kept? Yes, tax experts are in high demand and can be choosy about who they work with. They may also have to reduce the number of clients they serve – which is bad news for their least favorite clients. For example, as my mentor phased into retirement, he passed on clients to other tax preparers in what could be described as a popularity contest. He began by shedding the most problematic clients, which was an easy task. However, as he continued to scale back, he only retained his favorite clients. Some clients would bring him a home-cooked meal to their tax appointment. Others would visit him as if they were visiting a close friend or relative. Some clients even came with a bottle of wine as a token of their appreciation. The common thread between these clients was that they were punctual, organized, and kind.

Understand 3 Types of Business Relationships

To effectively work with a tax advisor, it helps to differentiate what makes advisors different from other commercial relationships. Here are three common types of business relationships:

Order taker. You get more of what you want by being detailed. For example: I’d like a Grande chai tea latte, 3 pumps, skim milk, lite water, no foam, extra hot.

Salesperson. You get more of what you want by doing your own research, evaluating your options, and negotiating.

Advisor. You get more of what you want by outlining your general concerns and working collaboratively. Advisors guide you through complexity that involves expertise. For this, an advisor engages you in a thought-process that delineates the issues, their possible solutions and the pros and cons of each. The process equips you to make informed decisions.

For instance, if you report an ache to a physician, they start an analytical process that leads to a diagnosis. Evaluation of possible remedies involves a collaborative process that results in a chosen treatment. Clients who approach tax advisors as order-takers cause the most friction because taxpayers don’t get to choose the amount of tax they pay. Considering a tax preparer as a salesperson leads to a lack of trust that impedes the valuable collaborative process. Tax and financial advisors work with you to identify and plan optimal solutions to your challenges.

Do Your Due Diligence

Because you rely on an advisor’s guidance, trust is a critical factor. Therefore, it’s important to be aware of the legal standard of care required by your tax advisor, as well as the regulatory framework they operate within. For example, a CPA is bound by a regulatorily enforced code of conduct and practice standards. If you have a serious problem with a CPA, you can contact your state board of accountancy to resolve it. It’s wise to do your due diligence and check the regulatory record of any tax professional you work with. After all, regulatory oversight is partly funded by your tax dollars, so you should get your money’s worth.

Ask Questions!

Typically, filing your tax return is a stand-alone “tax compliance” service. However, if you’re looking for additional guidance and support, it’s wise to proactively request it. One effective way to do this is to ask your tax preparer for feedback, advice, and planning. Consider asking the following questions to get the most out of your tax preparation services:

How can I improve my tax situation?

Are there any red flags in my financial situation that I should be aware of?

If you were in my situation, what would you do differently?

Is there anything else I should be asking you?

It’s always helpful to ask for advice on how to improve your tax situation moving forward. Your tax preparer can offer insights on tax planning strategies that may work best for your particular circumstances. They may also be able to recommend specific financial tools or resources to help you stay organized and on top of your tax obligations. As the complexity of the tax code increases and the pool of qualified professionals shrinks, it is smart to make sure you are getting the most value for your tax preparation fees. This can be accomplished by understanding the advisory relationship, doing your due diligence, and asking questions. It’s also worthwhile to nurture a relationship with your tax preparer. Tax preparers tend to keep their favorite clients – those who are kind, organized and punctual. Offering a bottle of wine is optional, but always appreciated.

About the author: Jean-Luc Bourdon

Jean-Luc Bourdon, CPA/PFS is the founder of Lucent Wealth Planning, a wealth management firm located in Santa Barbara, California. He previously developed a Registered Investment Adviser (RIA) entity for a CPA firm. In the past, Jean-Luc served on the PFS Credential Committee and on the Personal Financial Planning Executive Committee of the AICPA. He has written many financial planning articles for AICPA publications including the Journal of Accountancy, the Tax Adviser, CPA Insider, and Wealth Management Insider. Jean-Luc received the 2017 Personal Financial Planning Distinguished Service Award from the AICPA. He served for a decade on the Personal Financial Planning Committee of the California Society of CPAs.

For more free videos to help you with tax planning, please visit the finStream Tax Planning Center at this link: https://www.finstream.tv/videos/tax-planning/