It's time to find a CPA

If you think you'll need a new tax preparer for this upcoming April, start your search now. 

This piece should help you decide if you need to hire, and what you can expect as you start your search.

When it makes sense to hire a Tax Preparer

Self-preparing (via Turbo Tax or H&R online) is fine when things are simple and you want to keep costs down.

But when complexity hits, it's time to hire a pro.  

People generally hire a tax professional when their careers or situations change shape. Some common examples are: they started a business, now own rental real estate, or perhaps they cashed some stock or exercised stock options.

Or perhaps they are simply tired of doing it and want to outsource.

Let's talk about prices...

Quality tax preparers - both available and affordable - are getting harder to find. And due to that shortage, prices are up everywhere.

It's hard to pinpoint exactly why the shortage exists. But I can speculate.

It seems like a lot of tax folks retired during or right-after 2020, leaving a big hole to fill. Right around then, the tax code grew more complex, meaning there was more work to do for the same price.

The new-guard is in and they’re learning to charge what they’re worth. On top of that, they need to raise prices to protect their workloads (and keep quality high).

The adjustment has been difficult for customers to swallow. What you thought might cost a few hundred bucks, might be more-than-double that today. In higher cost-of-living areas, like NYC, I've seen starting prices of $1,500 and up.

This is now the cost of doing (high-quality) business.

Are there any cheaper options?

Aside from self-preparing, H&R block, Jackson Hewitt, and the like are always going to be at-your-service for a cheaper cost.

Like anything else, you get what you pay for. And you certainly are not guaranteed any specialists for your situation.

How do I interview a Tax Professional?

When I speak with new people, I have 3 tests I’m trying to fill for:

• Skillset - for the wealthy, it’s not about getting a bigger refund. It’s about accuracy of their affairs and lowering risk of audit.

• Trustworthy - they need to be responsive, and know how to speak to a regular person about complex tax code.

• Price - it’s okay to be expensive, but there are limits.

If they don’t meet 1 of the 3, I can’t make a strong referral.

As of today, I do not have a long list of Tax Pros that have met my own standards from above. But I’m always searching.

And now that higher fees seem to be the norm, it really needs to be a good match before I feel good about making a connection.

Does your firm offer tax preparation services?

Yes, but in a very limited and select capacity.

In general, our bread-and-butter is financial planning, investment management, and tax planning (which is different than tax filing).

For it to make sense: a) you must be an existing financial planning client (tax is an add-on), and b) it needs to be within our skillset.

The more complex situations always get referred to a specialist.

Do you use a separate CPA for your own taxes?

Yes. Even though I understand taxes to a great degree, I still have a CPA whom I pay and lean on for ongoing support.

This past year was the most complex it's ever been:  I lived in multiple states, sold an equity stake, had partnership income, and started a business. 

Just because I know a lot about taxes doesn't mean I should spend time researching and file my household's tax return.

To me, it's money well-spent getting an outside expert's opinion.

When should I get started searching?

Now (in January)

When late March rolls around, most (quality) doors will be closed for new clients.

Some firms have already closed their doors, unless you agree to go on Extension (for October filing).

My most common advice is: if you have a good CPA right now, cherish them and pay their (probably higher) invoice.

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