Question for those who have a CPA do their taxes

[shaynaatl]

When you hire a CPA to do your taxes, how closely do you check their completed return? Do you ever find issues they need to correct?

I always did our own taxes when we only had W-2 income. It was straight forward. But then we started doing some small business investments, and started to get Schedule K-1's. It was complex, and this started around the time we had kids, so we figured let's outsource to H&R Block. 

I kept finding issues with H&R Block's returns, such as not doing Backdoor Roth form 8606 correctly. One person even tried to convince me that Congress banned the Backdoor Roth! So then we moved to a local CPA firm. But I always have to go through the completed returns, and I only ever recall one year I didn't have to correct something. 

We are filing tax returns this week, and on this year's return, I found errors regarding Form 8606, and how they handled some hobby income we have. 

I don't even bother trying to check the Schedule K-1 filings, because they are complex and over my head. So I am just blindly trusting those are correct.

Should I expect a better level of service? It's been 4 different accountants during this time, so it's not like I just got one bad apple.

[sadlebred]

You should expect the returns to be correct. They should correct them at no charge. I'd be happy to give you my CPA's number (I think she's semi local to you.).

[acr]

Once I had K-1s, H&R Block no longer cut it. I use a CPA, and the couple hundred I pay for that is worth not having to think about whether there's an error (and if there is that the IRS happens to find, my CPA will take point on handling it).

[sandandsea]

You should expect them to be correct however it’s also very hard for cpas when they get information just before the deadline and have to turn around returns quickly. They are likely doing hundreds or thousands of returns in the 2-4 weeks before the deadline. So I wouldn’t be too harsh on small errors as it’s likely they are inputting the data and relying on the software. However, if the misses are large and you’ve pointed out the same thing multiple times and it doesn’t get fixed, I’d look for a new cpa.

[Susie]

I stopped doing my own taxes when I switched from W-2 to K-1 at my law firm.  I read them, but I'll be honest, I don't know that I'd recognize an error, and in fact we had a big error that nobody noticed one year.

On our 1040s, I am "Taxpayer" and H is "Spouse," dating back to when I did our taxes when we started filing MFJ.  I now receive a K-1 and pay self employment taxes as a shareholder in the firm, while H is a W-2 government employee.  One year our accounting firm attributed my T income to H as S at the data entry stage based on the completely stupid assumption that the husband is T and the wife is S.  (Insert slow burn rage here.)  It totally screwed up our self employment tax.  No one noticed until EOY of the following tax year, when our accountant was advising on Q4 estimated taxes.  The error had carried forward, and meant we had underpaid the previous year and been underpaying on estimates all year, to the tune of $10-20k more due.  

We had paid full fees for the error year, and they tried to charge us full tax prep & advising fees the following year.  I asked for a reduction and they gave us $250 off.  I didn't switch only because this firm also does my law firm's tax work, which streamlines a lot of things.  But I was def underwhelmed.

[CrazyLucky]

We (actually just DH) stopped doing our taxes the year we moved and had four state returns to file. We do not check the CPA's work. If we're going to have to check their work, we may as well save ourselves $600+ and do it ourselves. Last year the IRS sent us a notice about an irregularity. We took it to the CPA. They handled it within a day. It was the IRS's mistake, not theirs. Now that we're back down to two states, I kind of wish DH would go back to doing our taxes and save that money, but since he's the one doing it, I don't feel like I have a lot of standing to complain.

[flygirl]

I do double check mine (first year we used a CPA) but I would not use H&R Block either. They do not have the best reputation for handling anything complex.

[wanderingback]

No I do not check the CPA other than basic things like my name and social security is correct. I would have no clue what errors to look for.

[sdlaura]

We had a CPA doing our taxes for a few years and later realized they made a ton of mistakes. Like didn’t add one of our kids after they were born. Also had an identity theft issue with their clients. We switched to a much better CPA who was recommended by friends and colleagues. He was able to get us some money back by correcting past returns and also helping us minimize taxes/write off some things we haven’t been but are able to.

[jwright]

This hits close to home as I am a CPA who, when I worked full time, was in tax. Now I do my own returns but I do send one of our businesses out to a local CPA firm because I didn't want to deal with the unique circumstances in that one from home.

First, never go to H&R Block. Full stop. They are using the same prompts that any over the counter tax software would use and know less than you. The training they receive is inadequate.

Second, you are responsible for all the information on your return. You need to review it. There are stories about fraudulent preparers adding tons of unwarranted deductions to returns to get taxpayers large refunds and the taxpayers just blindly sign (like adding thousands in medical expenses to a healthy person's return or filing a business at a loss when the taxpayer did not have a business at all). You should be asking questions or even insisting on a meeting to go over the return. When I first started we met with almost all of our clients when they picked up and signed the return in person, but nowadays that is less common. Also (and it doesn't sound like this is the case for you), the client needs to provide accurate and timely information to the CPA. I can't tell you how many times people forget to let us know they have a new baby or they lose a form and we never know. Guess who they blame?

Third, mistakes are bound to happen sometimes no matter what. I'm more concerned that your experience sounds like the CPA is doing things incorrectly rather than accidently omitting something or transposing numbers etc. Is the firm large enough to have a significant internal review process? If you have a sole practitioner or small firm that second level of review may not be adequate; can you ask who is preparing, who is reviewing and who is signing off? I would expect them to make the corrections at no charge and to get it absolutely correct going forward. I definitely think it is worth the money to take it off your plate, to have audit representation, to be on stand by for notices or questions throughout the year. If you do not have confidence in this firm, there are plenty of good ones (although a lot are overworked or not taking new clients) and you should be able to find a referral for someone competent.


ETA: I just remembered that on one of my previous business returns that I outsourced, the CPA made a major mistake on the depreciation schedule that I caught.  The partner took responsibility saying the staff member had asked about it and he gave the staff member the wrong answer.  If I didn't have tax experience, I don't think I would have known to look for this issue.  Maybe it is all just a crapshoot. 

[mae0111]

I agree that a CPA should be correct, but that everyone makes mistakes so you should review.

I went to H&R Block one time to help with some cost basis stuff on stocks, and the person knew significantly less about the tax implications than I did working in investment management. So I never did that again.

There are definitely levels of experience and expertise with CPAs. We worked with one for a few years when we had rental properties across a couple of states, and under her care, we were audited twice and owed penalties due to her errors. We blindly trusted and they weren't just careless errors - she did not understand what went wrong and we had to track down the problem and fix it ourselves.

We now work with a good firm that specializes in small businesses, but is also plugged in with our money manager. So we're getting tax advice for business/personal, and our money manager is making investment decision with a full picture of our tax liability for the year. You may be able to find a CPA that really focuses on your type of investments and the K-1s that are associated with those.