Picking The Best Tax Adviser For You

Tax season is upon us again, and the age-old question of “Who should help me prepare my taxes?” is endlessly heard. Should you take the tip from your barista, your neighbor, your uncle who all claim, “I have the best tax person!”? Before you do, you might want to consider a different approach, especially with the sweeping changes in the tax code.

Find someone right for you.

While that might sound like a no-brainer, people continue to take advice from those around them without considering what they actually need. The tax code is complicated, and you need someone who specializes in your current situation, which may not include your “yard guy’s guy.”

Instead, follow the simple and straight-forward steps below, because if you really want to save on your taxes, you want to find a tax specialist who can:

  • Help you rethink your tax situation in light of the new laws.
  • Guide you through your financial transactions.
  • Tell you which tried-and-true tax-saving strategies are still applicable and which ones you should avoid.
  • Inform you of new tax-saving opportunities.
  • Advise you if you are seeking structured settlement purchasers which would probably include the pros and cons of the process.
  • Review your old returns to ensure they were filed correctly with all the strategies and opportunities taken advantage of to give you the edge you need.
  • Alert you to dangerous new tax traps which can cost you thousands of dollars and possible audit from the IRS.

Where You Should Start

The most important place for you to start is usually where NOT to start, and that is looking at ads including billboards, local newspapers, online ads, and “coupons” delivered in the mail. As in any service industry, the best providers are those that do not need to advertise. They expand their respective businesses from client referrals.

When it comes to selecting a tax professional, many of us ask friends, neighbors, people we work with, etc. That can lead to a list of good candidates, but not the ones which will give you the edge you are seeking. So who do you ask?

Ask two people. The manager at your bank and your attorney. The reason for these two people as they are well-connected people in your community and both have your best interests at heart. If they recommend the wrong person, chances are good you may take your business elsewhere. They also are privy to information your friends, family, co-workers, and neighbors do not know. Therefore, they are more likely to recommend the perfect person to handle your taxes.

To help in getting the RIGHT recommendation, it is always important to make your expectations clear. We suggest the following:

  • The tax specialist should be familiar with your line of work and the market for which you do business. This is a MUST HAVE requirement, and especially if you own your own business.
  • They must be comfortable with your income level. Getting a tax advisor who only has millionaire clients and you make less than $100k a year would probably not be a good fit.
  • Neither overly conservative nor unreasonably aggressive. You want a tax professional whose financial philosophy is compatible with yours.

When asking for recommendations from your banker and attorney, always ask for at least two. And just because you get recommendations from these professionals you trust, doesn’t mean you should go out and hire one right away. This is your livelihood and you need to interview them. Take this seriously, because it is serious.

The maximum number of interviews you should take on is three. If both your attorney and banker recommend the same person, that should be the first person you interview.

Here is how you should proceed:

1) Call each of the recommended tax specialists.
2) Inform them who referred you.
3) Ask if they are accepting new clients.
4) Ask to set up an appointment to meet in their office. Make sure you ask if there is a fee to meet with them. If there is, do not discredit them, in fact, that is a showcase of their confidence in their talent. The typical fee runs $200-400.
5) Ask if you should bring previous tax returns, bank statements, etc.

At the meeting, it is important for you not only to listen but also to ask the right questions as well. The most important is the fee structure. You don’t want to hire someone you can’t afford. This is a common mistake. Here are some questions we recommend you ask in the interview:

  • What is the fee for preparing a tax return?
  • How much do they charge for advice or consultation?
  • Does the fee include visits during the year? If so, how many?
  • If you own and operate your own business, ask them of their expertise in your market, changes in tax laws, how to structure corporate stock, pay dividends, sharing business profits with your children tax-free.
  • If you are an active investor, what tax strategies are key for you to follow to ensure paying the lowest tax rate possible on your investments.
  • Ask about retirement planning and how to ensure you will be comfortable during your golden years.

While you want to pay attention to what they say and how they answer your questions, you also want to be attentive to their body language and how they communicate with you. If they seem aloof, condescending, interrupting you, or being interrupted by staff, or on their smart=phone texting while you are speaking, they are probably not a good fit for you. Also look for personality clashes as well. This is an important part of your life which could cause tremendous stress. You want someone you have full confidence in.

Remember, you can always change specialists later, but it is important that you hire one, and one that is good. In person interviews will showcase who is the best specialist for you. Ask tough questions, and listen for reasons they give as to why they want your business. The magic phrase to listen for is “This is how I can best help you…” and listen to what they say and measure it against what you need.