How to Get More From Your Tax Preparer Next Year

Taxes
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By William Bissett

Learn more about William on NerdWallet’s Ask an Advisor.

With tax-filing season behind us, I’ve heard a lot of people recently express disappointment in the way their taxes were done. The complaints are not only from clients, but also tax preparers are feeling frustrated with the process.

Tax preparers grow tired of working with troublesome clients who drop off a box of unorganized papers or come running through the door on April 10 asking for a completed return, with no extension, and generally have impossible expectations.

Clients, meanwhile, grow tired of the tax preparer who just can’t seem to get it right, who doesn’t communicate about expected completion times, always files an extension or fumbles through the organized materials the client provided. Faced with bad tax preparers, clients want to make a change but don’t want to go through the process of “breaking in” a new one.

This shared dissatisfaction is odd, because clients and tax preparers want the same outcome – the lowest taxes possible in the easiest way possible.

How to alleviate the stress on both parties? One way is to work with a good financial planner.

Having the client use the financial planner and the tax preparer together is optimal. An annual conference call or meeting including the tax preparer, client and financial planner – typically organized by the financial planner — will almost always eliminate frustration and anxiety.

The annual meeting doesn’t have to be long — 30 to 45 minutes should be enough. If a meeting takes place twice a year, then the calls could be as short as 20 to 30 minutes (these could be longer for complex tax situations).

The meeting keeps the tax preparer up to date on what’s happening. Is there a job change resulting in increased pay, 401(k) rollover, stock options, a new benefit package or withholdings? Was a house sold? Did a child go off to school? Was there a big turnover in the portfolio, creating capital gains?

And that’s just for starters. If there are things that the financial planner and client have been discussing from a strategy perspective, it’s a good idea to discuss those with the tax preparer in the middle of the year, too. Part of the discussion should be whether it would be useful to implement the strategy in the summer or whether they should they wait to discuss it again in December before acting on it. Something else in the client’s situation may prevent the strategy from being useful or may highlight a different tack.

Specific things to consider might be whether there is missing cost basis from an inherited stock or security purchased many years ago or whether an individual 401(k) should be set up for consultants or self-employed clients. Capital gains are another key topic to discuss: Should they be accelerated because the client is in a low tax bracket this year, or should losses be realized to minimize other income?

A good financial planner has the resources, expertise and knowledge to navigate these questions when working in coordination with other key team members.

Disclaimer: Not all financial planners offer to meet with your tax preparer, and not all clients have enough complexity to justify the meeting. Ask your financial planner if he or she typically does this and whether you would benefit from it.

If such a meeting is justified, one might wonder what it’s worth to the client and to the tax preparer. It’s hard to put a number on it because in any given year it might result in a big reduction in taxes or it may simply reduce the client’s anxiety. Tax savings are great, but satisfaction is a big plus too.

For the tax preparer, a cleaner, more streamlined process will likely lead to more time available to work with additional clients – and more client referrals.