QUESTION: This is not a question that an accountant asked me, but a fellow traveler on my vacation. He was using a tax preparation service and wasn’t happy and felt he could do just as well by doing his own tax return. I told him there were many benefits to using a tax professional like a CPA or EA that were well worth the extra cost. So my question to myself is “What are they?”

RESPONSE:  People with rental property, unincorporated businesses, investments that generate K-1s, grantor trusts, substantial investments in marketable securities or large retirement accounts and 401(k) balances need to engage a professional firm, and this checklist is directed toward those clients.

Many people have simple circumstances that can be handled adequately by storefront tax preparation services or by self-preparation with TurboTax types of software, and this checklist doesn’t cover those clients.


  1. Engaging a professional tax accountant or CPA is the start of a professional relationship that includes more than preparing a tax return. It is acquiring a “partner” in your quest for financial security and someone who can be called with any type of financial, investment, business or employment compensation question.
  2. The professional can offer advice to maximize tax savings opportunities both for the return they are working on and the current year.
  3. Many professionals, including CPAs and EAs, are required to attend substantial numbers of continuing education courses and tax updates. This puts them in the position of staying current, interacting with fellow professionals where tax-saving ideas are shared and people that they can discuss specific client situations anonymously with.
  4. Accountants are planning-oriented, looking to the future to see how clients can do things that reduce their taxes.
  5. Accountants analyze trends and can use this skill to pick up drifts that can be called to the client’s attention to help them going forward, by the client being able to reverse unfavorable and capitalize on favorable changes.
  6. Accountants are knowledgeable in a wide range of retirement plans – deductible and non-deductible. Their guidance can possibly save some taxes retroactively and can explain the benefits of establishing a pension plan for the current and future years that will maximize tax savings.
  7. Accountants can assist a client in establishing investment allocation formulas based on client’s goals and considering the client’s entire investments including retirement accounts and unmanaged securities.
  8. Besides asset allocation, the CPA can help determine the proper location for assets between individual and retirement plan ownership.
  9. CPAs can help clients in mortgage refinancing, auto lease or buy choices, life insurance policy acquisition and many other financial situations that arise.
  10. CPAs can assist clients contemplating switching jobs with employment contracts and exit agreements, and option exercising and restricted stock tax alternatives.
  11. CPAs are knowledgeable in entity selection to maximize tax benefits of commercial activities including single-owner businesses and those that invest with others.
  12. CPAs can be consulted with about financial aspects when contemplating a divorce, retirement, funding children’s college, buying a house or any other change-of-life action.
  13. Through the tax preparation relationship, accountants know their client’s level of aggressiveness and are adapt at explaining the risks of taking tax positions that the IRS might be targeting.
  14. Accountants are aware of IRS “hit” lists and advise clients against positions that have high probability of challenge and disallowance.
  15. When clients take positions contrary to the Tax Code, accountants prepare the proper disclosures so penalties will not be assessed should an IRS challenge be sustained.
  16. Accountants are aware of the myriad forms and substantiation requirements and regularly advise their clients about what is needed and when it must be in their possession.
  17. W-4 withholding requirements and estimated tax rules are important to follow both from compliance and cash flow standpoints, and CPAs regularly advise on this.
  18. Accountants can explain the special tax rules that apply to businesses including inventory methods, basis of accounting, start-up costs, T&E expenses and tax credits.
  19. The alternative minimum tax is a “killer” for many clients; however, CPAs can explain some ways of taking advantage of this tax and the application of AMT credits.
  20. For some clients, the state of residency and/or domicile can reduce overall taxes and the accountant can advise on this.
  21. Accountants are always available to assist and handle tax audits, advise ways to minimize the cost of representation and ways to prepare returns that will not create red flags.
  22. Accountants can assist with tax agency notices and mail audits.
  23. Accountants are available, knowledgeable and helpful when clients must have assistance.