Who can you trust for your taxes? How to choose the right professional.

Ralph
00:00:00

Let's start with a question. Have you ever handed over your taxes to someone and thought, do they really know what they're doing? Maybe you've heard horror stories about people ending up with IRS letters or penalties because their preparer made mistakes. It's scary, right? Well, taxes are complicated and trusting the wrong person can lead to big problems. Bridgette, a small business owner, sent me this question. I've started a business, and I'm terrified of making mistakes with my taxes or trusting some who doesn't know what they're doing. How do I find a right tax professional?

And how can I make sure there's someone I can trust, especially as a Christian? And listen, that fear is so common, and on today's episode, we're talking about how to find a trustworthy tax professional, what to look for, how to avoid common mistakes, and why the right professional can bring you peace of mind.

We've got a lot to cover today.

Podcast Announcer
00:00:49

In a world where crushing debt keeps you trapped, where living paycheck to paycheck has become your new normal, and where the dream of retirement seems impossibly out of reach, there's hope. Join financial evangelist Ralph Estep Jr. A man who's walked through the fire of financial failure and emerged stronger on the other side.

Welcome to Ask Ralph, the show where real world experience meets biblical truth to break the bondage of financial despair.

Get ready to take control of your money, break free from the financial stress and align your resources with God's purpose for your life. This is Ask Ralph with Ralph Estep Jr.

Ralph
00:01:28

Well Bridgette, thank you for your question. It's such an important one. And to everyone listening, welcome. If you're feeling stressed about who to trust with your taxes, you're not alone. Taxes can be overwhelming, especially if your situation has gotten more complicated, like starting a business. But here's the good news.
There are professionals out there who can help you. And today, I'm going to walk you through how to find the right one, someone who will support you and give you confidence during tax season. Now yesterday, if you missed it, we talked about how to recognize when it's time to hire a tax professional. So today, you've probably made that decision that say, Hey, Ralph, I think it is time to hire a tax professional.
So if you missed yesterday's episode, I'm going to encourage you to go check it out. You can find all of our episodes at askralph.com. As we talked about yesterday, some signs its time to find somebody is if you're feeling completely lost, like your taxes have gotten even more complicated than they were just a year or two ago, or you're dreading tax season because you're afraid of making mistakes. If that sounds like you, don't forget. Again, check out yesterday's episode at askralph.com.
Well, let me get to Bridgette's whole question. Cause I just shared a little bit of at the beginning. This is what she said. She said,
"Hi Ralph, I've always tried to handle my taxes on my own, but now that I've started a small business, I am completely lost. I've heard horror stories about people hiring the wrong tax preparer and ending up in trouble with the IRS. I love my business, but I'm terrified of making mistakes or trusting someone who doesn't know what they're doing.
How do I choose the right tax professional? And how do I make sure there's somebody I can trust, especially as a Christian?"
Well Bridgette, first of all, like I said, you're not alone in this. Taxes are overwhelming to some people, especially if you're a small business owner, because it's not just about numbers.
I wish it was that simple, but it's about trust and you're absolutely right. Trusting the wrong person can lead to big problems. I was on Facebook earlier today and someone had mentioned about, you know, looking for a tax preparer, looking for an accountant, and there was a laundry list of terrible things that people put about how terrible experience they've had. And I've seen it happen. A client once came to me after working with someone who promised these quick results and low fees.
And what happened, that prepare missed deductions, they made mistakes, and they caused huge IRS penalties. My client was stressed. They were overwhelmed and didn't even know how to fix it. Now they came to me and we fix those mistakes. We filed the right forms and created a plan for the future. And I'm happy to report, today,
her business is thriving, and tax season no longer keeps her up at night. And Bridgette, and everyone else listening, I don't want you to go through that same pain. So today, let's talk about how to find the right professional, someone who will handle your taxes with integrity.
While as we're talking about integrity, let's look to the good book and see what it has in store for us today.
So the verse that came to mind when I read your question, Bridgette was this Proverbs 11:14. And it says this. "Where there is no guidance, a people falls, but in an abundance of counselors there is safety." That's such a great reminder, isn't it? See, God doesn't expect us to do everything on our own. He gives us wise counselors to guide us, whether that be in faith, in relationships, or even our finances.
That's why I do the show. And finding the right tax professional isn't just about avoiding mistakes. Of course, we all want to avoid mistakes. We don't want to have our taxes reviewed and audited by the IRS. But it's also about walking in wisdom and finding the right persons about managing the resources that God has entrusted to you in a way that honors Him.
So that's my goal today on the show. I want to figure out a way to manage those resources God has entrusted to all of us in a way that honors Him.
Well, let me start by explaining the different types of tax professionals. A lot of people don't even realize what's out there so I wanted to start with that.
Well, the first one is a Certified Public Accountant or a CPA. Now Delaware, like other states also have a thing called a Public Accountant. That's actually what I am. I'm a licensed Public Accountant. The only big difference between me and the typical CPAs is I don't get into doing audits of big businesses, but that's the first thing I want to talk about.
Certified Public Accountants or Public Accountants. And I want to really start there because these are what I consider the top people that you want to select for doing your taxes. They're licensed professionals. Every year I have to go through continuing education. I have to be aware of the tax laws. There's a board of accountancy that makes sure that I'm doing the right thing.
So there's extensive training. There's a license it goes along with that. And they are ideal for people who have small businesses or maybe they are an individual tax payer that has some complexities. Maybe that'd be a rental property, maybe that'd be a sale of a home. There's all kinds of complexities.
Like we talked about yesterday when we discussed when you're at that point where you need to hire a professional. And then another thing I love about CPAs and Public Accountants is many of us specialize in tax planning. And if you've listened to my show, you know I say this all the time. Tax preparation is great.
I can help you do a good job of dotting the I's, crossing the T's, and make sure that it's get submitted correctly to the IRS. But the real value is in tax planning. Because in that tax planning, I can help you save money long-term not just get the return filed and get whatever you're due back or pay what you owe.
Let's look at tax planning. Now the second category are what are called Enrolled Agents. You might hear these called as EAs. Now, these are not CPAs, not Public Accountants. They have a special authorization by the IRS. They specialize in taxation. They've gone through a specialized training.
They've taken IRS testing to get that EA status. And again, these are great for both individuals and business. And one of the great things about them, just like the CPAs or the PAs, they can represent you before the IRS if needed. You might be saying, what does that mean Ralph? Well, if you get an IRS notice and the IRS wants you to give more information, a CPA, a PA or an EA can all represent you and help you with that,
with the IRS. The IRS will talk to them on the phone. The IRS will accept letters once you get that power of attorney side. So those are the two things that you really want to look out for. Like in my opinion, these are the top two. A CPA, a Public Accountant or an EA. Now there's also a Tax Attorney. Tax attorneys or lawyers who specialize in tax law. Now, in my humble opinion, they are best
if you have a situation that has grown past the ability of that public accountant or that enrolled agent. Typically, these are times when you've got audited, you couldn't get through the audit process, there's some kind of legal issue involved on the IRS, and at this point, and I've said this to clients, I've had clients in the past who we've gotten to a point with the IRS where, you know, I said, Hey, Joe, for example, Joe.
Yeah, we've done everything we can do. The IRS just isn't listening to what we're saying. So at this stage, I think the best thing for you to do is go and hire an attorney. Now I'm going to tell you right now, these aren't for your normal routine tax preparation. Because these tax attorneys, let me just tell you. Their fees are outrageous, but again, this is what they specialize in.
So if you've got a very specialized situation, let's say you've been charged criminally, you've got tax evasion, you definitely want to hire a tax attorney and make sure you've got the best legal representation to help you through that process, because that's when those things with tax evasion and you can end up in jail. You don't want to be like Al Capone.
So that's when you hire the tax attorney, but these are not the people to handle your routine tax preparation. And I would venture to say, most attorneys would say to you, that's not what they're interested in. Now, the fourth category are what we call Non-Credentialed Preparers. These are everybody else.
These are people without formal licensing. They don't have the CPA or like me, the PA or the EA, or they're not an attorney. Now, that's not to say that they don't have experience. Many of them have a ton of experience. These are the people that work at the big tax preparation houses, like the H&R Block.
Jackson Hewitt, the Liberty Tax. All those type of things. They've got, and some of them have a lot of experience. Now, the only thing I'm going to say that. You gotta be very careful that. I fix a lot of returns that these people do. But they do lack expertise for complex cases. A lot of times, they've got like a six week training class.
Like I said, they may have been doing it for several years, they've gotten information throughout those years, but they generally don't have a lot of expertise on complex cases. And I have to be honest. This is where I see a lot of mistakes and problems happen. Because you go and meet with somebody, and I'm not picking on any, I'm not even gonna use any of their names.
You go meet with one of these people and they do this part-time. It's not what they do every day. One of the big problems with that is once tax season's gone, you know, I liken it to the shopping mall. You've got that guy or that lady set up in the kiosk at the shopping mall and they got the little divider set up and you go sit down and this person now, normally there's a Christmas tree here during the holidays, but now you've got this person working on taxes.
Well, once the tax season's gone, they're gone. Trying to find them is a challenge. And that's why I'm not a big fan of those non-credentialed preparers. You get what you pay for. But so I really would be careful about using somebody like that, because at that point, in my personal view, you'd be better off just doing it online yourself. Now you might be asking, Ralph that's great.
Why does all this matters? Well, here's why it matters. Because if you hire the wrong person, If you go and find that that non-credentialed preparer. You may very well have mistakes on your return. Now I'm not going to say that CPAs and PAs and EAs and others don't make mistakes. Of course, we're all human.
We make mistakes. But you think about it for a second. This is what I do every day. This is what most tax CPAs do every day. This is what most Enrolled Agents do every day. So the likelihood of us making a mistake is a lot less because we've got that routine. You know, the other problem is you can lead to IRS audits and penalties. And once you get those things, and I'm gonna talk about that later this week about what to do when you get that IRS notice. Then I'm going to talk the next day about what are the red flags and how to avoid an IRS audit. But this thing, you're getting those notices.
You got that IRS audit. You've got that, those penalties and interest. And what do they do? They lead to sleepless nights. Because now you're trying to fix it all. And if you had selected the right person at the front end, you may very well have been able to avoid all of this. So you might be saying, Ralph, this seems kind of dark. But it's not there.
There is good news because there are great professionals out there that can help you. These are people that are licensed, these are people who are experienced and they generally want to see you succeed. They genuinely want to see you succeed because this is what they do for a living. When I see customers of mine, example is Facebook. Like this morning.
I got one guy. His name is Ogie. Now Ogie is like a brand ambassador for me. Every time somebody puts something on Facebook, the next thing I see, you know, if they're asking for who can do my taxes, Ogie's right there, man. He is saying, go see Ralph Estep Jr. Now my accounting practice is Saggio Management.
I'll talk a little bit later how you can connect with me no matter where you are. I can do taxes for anybody as long as you can. You see the screen here with me with Zoom and all that really open a lot of doors. But when you find right tax preparer, when you find that person that is fit to do your taxes, you're going to feel confident and you're going to have that peace of mind.
I don't know how many clients say to me, Ralph, I could probably do this myself. My return is not that complicated. We handled that yesterday. We talked about, you know, what happens to the point where you need to find somebody, but I've got a lot of clients that say Ralph, I just don't want to worry about it.
I want to feel confident. I want to have that peace of mind. I want to know if the IRS or the state sends me a notice, you're going to be able to handle that. I don't want to be burdened with that. I don't want to have those sleepless nights. Because when you do, when you feel that confidence and when you feel that peace of mind, you can focus on your business, you can focus on your personal goals and you'll know that your taxes are being handled properly.
Okay. So now you might be saying, Ralph, how do I find the right professional? I'm going to give you a list of what I want you to do. Number one thing. Check their credentials. Like I mentioned, look for that CPA. Look for that PA. Look for that EA. Look for that tax attorney. Again, tax attorneys are not going to be your front line of people preparing tax return, and that's if you have an issue. Because these credentials, and the truth is the state board of accountancy, especially in Delaware and other states, they make sure like every two years I have to turn in a log of all the continuing education I've taken.
They keep an eye on what's going on. There's a board that meets every month. If somebody has a complaint, they can go file a complaint. So these credentials ensure that the people you're working with, they're trained and licensed. Now, a little insider tip. One of the things you can do is most states have a board of accountancy.
You can go out to their website and actually check to make sure that they have a license. Unfortunately, there are times when people's licenses are revoked and you might not even know that because they've still got that shingle hanging up. They're still putting themselves out as being a licensed professional. You got to follow up.
It's kind of a funny thing. Like a lot of people don't think about that. Second thing. Verify their PTIN. Now you might be saying, Ralph, what in the world is a PTIN? Well, that is a Preparer Tax Identification Number. And every paid preparer, if you prepare taxes and you're paid to do it, the IRS mandates that you have a PTIN. Again, ask them, let me know what your PTIN is.
You can actually go to the irs.gov website and confirm that information. You can verify that they're who they say they are. Number three. And this one is crucial. Ask about their experience. Ask if they've worked with clients like you, especially if you've got a small business or if you've got an interesting situation. For example, last evening, I had a client.
Now, this particular client's a young person. He's actually from the Philippines and he's here on a two year J-1 visa. Now his particular situation is really interesting because he does not have to pay federal and state income tax because he's got this two year window when he's here studying and learning and the state can actually hire him.
Now, unfortunately in this particular situation, the state wasn't doing his W2 correctly. So he was paying into federal. He was paying into the state and we had a meeting last night. This is the second year I've done his return. And I was happy to tell him, listen. I'm able to get you all of that money back.
But again, you've got to ask about experience because that is a very niche thing. A lot of people don't understand how that works. And honestly, I only do a couple a year, but I've trained myself on how to do those. So it's vital. Ask about experience. Number four thing. I kind of alluded to this when I was talking about the Facebook thing. Look for reviews. Ask for referrals.
I think it's great when I see people go on to social media and they ask a question like, Hey, who's everybody using for their taxes? Because a lot of times it's that referral. Those friends, those family, maybe it's people in your church community that you can get these recommendations from, because that is absolutely crucial because like I talked about Ogie earlier.
I've got these brand ambassadors out there who've worked with me and they'll say, oh, go see Ralph. He takes good care of us. I don't ever have to worry about my taxes. Another thing you can do is check online reviews like Yelp or Google. And if your state, or if your area has a better business bureau, I think that's ideal. Go check the Better Business Bureau because you can look at complaints.
You can also go to the state board of accountancy and see if there are any complaints lodged against this person. Do your due diligence. It's important that you do that. Check those reviews cause you might learn something before you drop your stuff off. And I'm going to talk on tomorrow's show about some bad tax preparers, people who have had done the wrong things.
I want to highlight what those things are so you'll know what to look for. Another thing. I encourage this. Discuss the fees up front. Understand their fee structure, like in my practice. When we send out a new client packet, included in that new client packet is a list of our fees. I try to be completely transparent about it.
Now it's a little complicated with taxes. Because with a tax return, it's not as simple as you're going to the grocery store. Let's put all these things in your cart. Everybody's tax return is somewhat different. There may be things that I need to do for one taxpayer that I don't do for another. But you can understand those fees up front.
Like we have a base fee. This is where we're going to start, but then we might add to it, like for example. We might have a base fee, but let's say you have a rental property or you've taken money out of a pension distribution, or you've got multiple states. Those things are all complications.
Maybe you need to do estimated taxes. Maybe you need to do a tax plan for the future. And here's our huge red flag. Listen to me right now, whatever you're doing. Listen to me. Avoid anyone who charges based on your refund amount. That is absolutely immoral. It is inappropriate and it is unethical. So if somebody says, well, you know, we do taxes and the bigger refund
you get, the more money you're going to pay us. Run the other direction. And the last thing, what I call a number six on my list of how to find a person. And we talked about this a few minutes as well. Look for that person that's available year round. You don't want that person, you know, once tax season's over, their little kiosk at the mall goes away or their place at the strip center goes away. Make sure they're available outside of tax season because the truth is, I've been doing this for over 30 years. That's when you get those notices, that's when those questions come up. I got a Facebook instant message this morning.
I got a client that needs to take a distribution from her pension plan. And she says, Ralph, I need to take about $19,000. What is this going to cost me? It's tax season now. I'm here and I'm here year round. But if you are going to have those typical, non-credentialed preparers, that could be a question that might not get answered until the next tax season
and you need to make a decision now. Because that's when it's important. That whole tax planning thing. I'm going to go through these again. These are the steps to find the right professional. Number 1, check their credentials. Number 2, verify their PTIN. Number 3, ask about their experience.
Number 4, look for reviews and referrals. That is so crucial. Number 5, discover, discuss fees upfront and number 6. And I can't stress this enough. Make sure they've got that year round availability. All of those, all those pieces to the puzzle will help you find the right person.
Now, maybe you're feeling overwhelmed.
You're unsure about your taxes. Or just ready to hand them off to a professional. Let me know, because see, here's the thing. Tax season doesn't have to be stressful. And you don't have to go through it alone. See, if you're a small business owner like Bridgette, you're self employed, or just someone who's ready for professional guidance. I'm here to make tax season as smooth and stress free as possible. So you might be asking, Ralph, why should I work with you? We talked about credentials earlier.
I'm a Delaware licensed public accountant. I've got 30 years of experience helping individuals. I've helped families. I've helped businesses navigate their taxes. And truth is, over the years, I've worked with hundreds of clients to simplify those finances. I've worked with them to reduce their tax burden. And I've worked with them to ensure they file accurately
and on time. I'm not one of these people that continually files extension, because here's the thing. I understand the challenges you're facing. You get that fear of making mistakes. You've got that anxiety of dealing with the IRS. It's a real thing. A few years ago, it's probably been 20 years ago now.
I actually had a client and he hadn't filed his returns for years. I think I mentioned this on the show before. Hadn't filed his returns for years. And he came in to meet with me and he says, Ralph, I have an actual psychological issue where I can not deal with the stress of the IRS. And I kind of looked across the desk, I'm like dude,
are you losing your mind? Like I never knew anything, but sure enough, he actually had a letter from his psychiatrist. That said he had significant, I know you all call it post traumatic stress disorder or whatever it is, but he had significant anxiety of dealing with the IRS. In his particular case, I was able to work with the state, with a U.S. Senator from Delaware at the time, it was actually a Senator Joe Biden before he became president and his office was able to help me.
And we were able to get the IRS to waive all the penalties. We were able to get them to do it. He knew he had to pay the interest, but that was a legitimate thing. There's people have anxiety of dealing with the IRS. People have the frustration of trying to figure out the deductions and those tax laws on their own.
Think about it. You do it one time a year. I do it 10 times a day. So when you work with me, you'll have peace of mind knowing your taxes are handled by a licensed expert who cares about your success. So just imagine this, if you will. No more second guessing if you're doing things right, no more sleepless nights, worrying about audits or penalties. Instead, you'll have the confidence, knowing your taxes are prepared professionally, accurately, and with your best interest in mind, because that's what we're here to do.
So here's how I can help you. I'll take the time to understand your unique financial situation, whether you're an individual, like I said, a family, a small business owner, I'll make sure every deduction you're entitled to is accounted for. I'm going to save you money where possible. I'm going to handle all the paperwork.
I'm going to handle the calculations. I'm going to handle the filings so you don't have to stress about the details. And if the IRS ever comes knocking, you'll have a licensed professional on your side to address any issue. So I'm going to ask you to do this. Avoid the pain and hassle of hiring the wrong tax preparer.
You don't want to go down that road. I've helped many clients over the years who came to me after trusting these unqualified preparers. And they ended up with mistakes. They ended up with penalties. They got those IRS letters and it costs them time. They cost them money and they cost them stress and they just lost their peace.
They didn't have that peace of mind. And I was able to help them resolve their issues. They often wished that they had hired a licensed professional from the start to avoid the stress and additional costs. So listen to me, don't let that happen to you. By working with me, you'll save yourself time because I'll handle your taxes efficiently while ensuring accuracy.
You're going to save yourself money because I'll help you maximize the deductions and avoid costly mistakes. And here's the best part. You'll save yourself stress because you'll have the confidence of knowing your taxes are prepared by a trusted professional. So you might be asking, Ralph, I'm sold.
What's the next step? It's simple. Go to askralph.com and book a call with me. Choose a time that works for you. And during that call, we'll discuss your unique situation, your tax needs and how I can help. So why wait? Tax deadlines are fast approaching and the earlier we get started, the more time we'll have to ensure everything is done correctly.
So by booking a call today, you're taking that first step towards a stress-free tax season and financial peace of mind. So listen, don't put it off. Let's take the stress out of taxes together. Again, go to askralph.com. Schedule your call because I'll look forward to helping you simplify your taxes. I look forward to helping you save money.
And most of all, I look forward to give you confidence and knowing everything is handled professionally. Remember, with over 30 years of experience as a Delaware licensed public accountant, I'm here to make tax season easier for you. So let's work together to get it right the first time.
Well, as we close today, I want to just focus on a few reflection questions. These are things that I think you really need to allow yourself to think about.
Number one thing, we talked about this today. What credentials will you prioritize when choosing your tax preparer? Do you have a somewhat simple return. Then may be you go with a CPA, or a PA, or EA. Maybe you've got some situations where you've been putting off stuff and you know, the IRS has coming at your door, you've got liens and levies and all that kind of stuff.
Maybe you need to look for that tax attorney, but ask yourself that question. What credentials are you going to prioritize when choosing your tax preparer? Second question. How can you ensure your financial decisions honor God's principles of stewardship? Hey, that's what we talk about on this show. Part of honoring God's principles of stewardship is making sure you do the right thing with your taxes.
Make sure they're done accurately. Make sure that they get all the deductions you're entitled to. So that's the second thing. Number three, the last reflection question is this. What steps will you take today, not tomorrow and not next week. What steps will you take today to prepare for a smoother tax season?
Because listen. You can have that smooth as you can, have that peace of mind. Like I said, you're welcome to reach out to me and work with me. If there's somebody in your community that's got that credential, that you've done those background checks, you've looked at their reviews, you've checked the Better Business Bureau,
then by all means, use them as well. There's a lot of us out there that are looking to help people.
Well Bridgette, I hope these steps give you clarity and confidence. You know, you've made that decision that you want to find somebody. So I hope that today I've given you that clarity and confidence and for everyone else listening, remember. You don't have to figure this out alone.
This is not a walk you have to take by yourself. Like I said, if you need help, I'd love to work with you. Book a call with me at askralph.com. Now tomorrow, we're going to talk about, as we continue our tax week, who's doing your taxes and can you trust them? Yeah, I know that's a provocative thing, but we're going to talk about those red flags to look out for.
We'll talk about how to watch out when you're choosing a tax preparer and remember this. My passion is to help you achieve financial success. I want to see you live out your dreams, and I want to see you grow in your faith. And I know together, we can master your finances from a Christian perspective. So make that decision today.
If you're going to be in the market for a tax professional, do your homework and find the person that best fits you. And as I always end the show, stay financially savvy out there and may God bless you abundantly.

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