Tax season is fast approaching and in efforts to gain your business, tax preparers may promise you big refunds, some of which are valid and others that are red flags. Read further to learn about the things you should consider and what to watch out for.
What to Look for in an Accountant
There are some obvious things to look for such as, how long they have been practicing, if they are reputable and licensed, along with if they have a lot of referrals. But here are more specific things to look for and consider:
1. They should understand your needs
Each person has unique tax filing needs depending on their situation. Pick an accountant who specializes in your situation. For example, if you have investments, you must report your gains and losses on your tax return. If you are self-employed report sales and tax-deductible expenses. Or if you have a rental property, disclose rents collected and rental expenses and so forth. Your accountant can also give you tax advice and develop tax strategies to save you money based on your situation.
2. Are they licensed and insured?
Your tax preparer should be licensed, have a valid business number along with an E-file number to electronically file returns with the CRA. But keep in mind, even Joe the plumber can have a business number and prepare taxes. So make sure your accountant is insured. If you face a penalty because of their negligence or mistake, their insurer will pay it. Your return will also need to include the tax preparers name, number and E-file number on your return. If you experience suspicious behavior from your licensed accountant, report it to CPA Canada, who regulate licensed practitioners.
3. Communicate with your accountant
A good tax preparer will ask you for more than just your pay-stubs or employment slips. Your accountant should ask you questions to see what tax credits and deductions you can qualify for, along with the appropriate receipts and records related to your return. If you just need a personal tax return prepared, then perhaps you only need to speak to your accountant during tax season unless you have questions or are being audited. But for business taxes, it is important to stay in touch throughout the year to keep your taxes and books current.
4. Be cautious of someone who promises you high returns
Tax prepares can create falsified information in order to get you a higher tax refund, which they will get you audited by the CRA. If you have no knowledge of tax laws, they can do this without you realizing. They could also direct a refund towards themselves, so make sure you receive your refund directly from the government and not from your accountant. Avoid any tax preparer that asks you to sign a blank return or manipulates figures. Also, make sure their service fees are not based upon a percentage of your refund. Ask your tax preparer questions and review your return. Never blindly sign the return! keep in mind legally you are responsible for your tax return despite who prepares it.
So Here’s the Tip:
Make sure you understand your tax needs based on your situation and if you require more specific tax advice. Communicate with your accountant; see that they ask you questions to know what tax deductions or credits you are eligible for. Be cautious with anyone who promises you high refunds, manipulates figures or charges you based on a percentage of your refund. Always review your tax preparer’s work!
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.