As tax season nears, you may well decide that your tax situation is a little more complex this year and you need a professional to prepare your personal tax returns. You may also be considering a switch in tax preparers.
Before hiring a preparer, ask him or her five key questions:
1.Do you have any professional designations?
CA’s, lawyers and other professionals must fulfill continuing-education and licensing requirements and are bound by ethical standards. The continuing-education requirement is important in that it ensures your preparer stays abreast of new and developing tax issues that can impact their ability to recognize eligibility for various deductions and credits, saving you dollars. They are also authorized to represent a taxpayer before the CRA in all matters, including audits, collections and appeals.
2. How much experience do you have with my type of return?
You probably don’t want your tax preparer learning the ropes on your tax return! Ask the preparer how long they have been preparing tax returns and whether they are familiar with your type of return (i.e. preparing rental or business activities statements, farm income/expenses, etc.)
3. How do you determine your fees?
Most reputable preparers will charge a flat fee based on the complexity of the return (the number of schedules needing to be completed for example). For example, someone whose only income is shown on a T4 slip will usually pay less than someone with rental and/or investment income on T3/T5 slips as well. You should stay away from preparers who will base your fees on a percentage of your refund and avoid preparers who claim that they can get you a bigger refund than someone else. It is impossible to determine the amount of a refund without first reviewing your financial information.
4. Have you represented many clients in CRA audits?
It is always good to have a preparer who has experience dealing with the CRA and can help you if your return is scrutinized. However, be wary if your preparer deals with the CRA a lot, as this could be a sign that they claim a lot of questionable deductions.
5. How will my tax return be reviewed and approved within your office?
It could be helpful if your tax preparer will have another person review their work. A second set of eyes can be beneficial to take one last look to ensure all available credits and deductions have been claimed.
A final thought. Do keep in mind that you are ultimately responsible for the information on your tax return. Ideally, your tax preparer should call or email you with questions before completing your return. Then, you should review it for completeness and accuracy and sign it before it is filed with the CRA.