Here are 3 questions you definitely want your tax preparer to ask you.
#1: Can You Provide Additional Information to Support Your Numbers?
Your tax preparer should absolutely be questioning your numbers.
The term “GIGO” (Garbage-In-Garbage-Out) is (unfortunately) commonly used in the tax preparation industry. It refers to the following situation:
- Numbers are provided to the tax preparer that are wrong, either knowingly or unknowingly
- The tax preparer uses this information “as is” and does nothing to verify the numbers are correct
- The end product – the tax return – is not accurate
It is not safe to assume that your tax preparer is verifying your numbers. This is why this question is so important.
Some numbers are provided via legal forms, such as W-2s, 1099s and 1098s. These forms provide a certain level of reliability that the amounts are accurate.
However, most business and investing activity is based on the accuracy of the recordkeeping so verifying the numbers is extremely important.
In order to verify your business numbers, your tax preparer needs additional information. This additional information is used to verify that the amounts reported in the recordkeeping match up and make sense.
This additional information may include settlement statements, bank statements, credit card statements, loan statements, purchase or sale documents, organizational documents, prior year tax returns and ownership documents.
While this process may not uncover all errors, it does provide a certain level of reliability and provides the tax preparer with a sense of how accurate the recordkeeping is.
If your tax preparer is not asking for this information, then odds are, your tax preparer is not verifying your numbers.