CPAs Make Mistakes On Your Tax Returns And How To Avoid Errors

CPAs do make mistakes on tax returns inadvertently. Sometimes these errors are noticed by the IRS but often they do go unnoticed. We will address 8 tips on how to avoid common errors.

I am sure your heads must already be spinning after completing your own returns; so before we delve too deep into my numbers; here are some fun historical facts

Fun tax ice breakers for a party  – Prior to the early 20th century, most federal revenue came from tariffs rather than taxes.  – The Revenue Act of 1861 had introduced the first federal income tax, motivated by the need to fund the Civil War. That tax was repealed in 1872

Why Should You Worry About Your CPA Prepared Tax Returns

Vicki Robin in her famous book Your Money or Your Life equates money with life energy. Trusting someone else with money is equivalent to trusting that individual with your life.

While we may not agree with everything he says, there are nine decades of wisdom buried in Warren Buffett’s quotes.

Would you really trust your CPA or an investment adviser or a money manager with your life? If not, why would you trust them with your money?

I have always used a CPA from my first year of filing taxes in the USA. The tax code is complicated and made up of over 70,000 pages. Not sure I would bother reading all of it. I rely on CPAs to stay current and updated wrt all the nuances of the tax code given that this is their core skill set.

How To Avoid Errors In Your Tax Returns  I do not have any magic wand or special software but here are the typical steps I follow.  1. Study the high-level details of what are the changes when a major tax change occurs; and identify in advance how it might impact you.

2. Make sure you maintain a list of all your financial accounts so you can validate that you have at least received some tax document from each of them.   3. Handover your documents to your CPA in advance so you have adequate time to validate the returns before they are filed. You can of course file an amendment but if possible, try to avoid it.

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