Questions to Ask Your CPA

Why ask it

Ask before the engagement letter is signed. A clear answer separates return preparation from bookkeeping, planning calls, notices, and amended returns; a vague one is how people end up surprised by an invoice in April.

Why ask it

Describe yours in a sentence first: a salary and a rental, freelance income in two states, a small company with staff. An accountant who sees that every week knows where the problems sit before you finish talking, and one who rarely does will be learning on your return. Ask for a rough share of the practice, and treat an honest "not many" as useful information.

Why ask it

A credit comes straight off the tax, where a deduction only lowers the income the tax is worked out on. Either one usually turns on facts your preparer cannot see from the forms: tuition paid, child care so you could work, an adoption, retirement savings on a modest income. What is available changes with legislation, so have it checked for the year you are filing.

Why ask it

Very little can be altered once the year closes, which is why this conversation belongs in autumn. Answers worth having are specific: hold an invoice until January, buy the equipment now, raise a retirement contribution, sell an investment that is down.

Why ask it

This matters most in a year when income jumped or changed shape: a raise, a second job, freelance work with nothing withheld. The useful answer is an amount and a set of dates in writing, not a reassurance.

Why ask it

You are asking for a list and a date. Put the date in your own calendar a week early: a brokerage statement or a partnership form that turns up late is a common reason a return slips to an extension, and the firm cannot start on what it does not have.

Why ask it

Say the events out loud: a marriage, a birth, a house, a layoff, an inheritance, a move between states. Your accountant sees the forms, not the year you had, and an event nobody mentioned cannot be planned around.

Why ask it

It works on a new accountant reading another firm's return and on a long-standing one reviewing their own. Listen for something concrete: a missed election, an expense in the wrong category, a deduction taken the harder way. "It all looks fine" can be true, so follow it with what they checked.

Why ask it

Establish the answer while nothing is wrong. Notices carry response deadlines, and the worst outcome is a letter sitting on a counter for three weeks because nobody was sure whose job it was.

Why ask it

This gets you the pattern from many returns instead of only yours. Answers tend to be dull and practical: mixing personal and business accounts, no mileage record, missed quarterly payments. Dull is fine, since those are the ones you can fix this month.

Why ask it

An accountant worth hiring will say so when one job and a standard deduction do not justify the fee. The answer usually changes the year you start a business, buy a rental, sell property or inherit something, so ask which of those would bring you back.

Why ask it

A CPA license comes from a state board of accountancy, and most boards have a public lookup showing whether it is current and whether there has been any discipline, so check after the meeting. If the person turns out to be an enrolled agent or a preparer with no credential, that need not rule them out, but ask what they are allowed to do for you if the IRS comes back with questions.

Why ask it

Years alone say little. A CPA can spend a career in audit or corporate finance and be new to personal returns, so listen for how much of the time went on work like yours. Someone newer who prepares your kind of return all day can be the better choice, especially with an experienced reviewer behind them.

Why ask it

Practices range from return-only shops to firms that keep books, run payroll, prepare statements for a lender and advise on estates. You are mapping what you could bring here later, so a more complicated year does not mean starting over with a stranger. Ask which of those services are done in house and which are referred out.

Why ask it

Flat fees, hourly rates, per-form pricing and monthly retainers are all in use, and none is better in itself. What matters is whether you can predict the total. Hand over last year's return for the quote, and ask to be told before the bill goes past the estimate.

Why ask it

Work is often passed to a junior preparer with a partner reviewing. That is normal, but you want to know who to call in August and whether the person you are impressed by will actually see your file.

Why ask it

The answer should be a list: federal, each state, any city or local return, and anything separate such as a gift tax return or a report of foreign accounts. A form nobody named is a form nobody files, and you tend to find out from a notice long afterwards.

Why ask it

Preparing a return looks backward and planning looks forward, and many firms price the two separately. If planning is not on offer you have hired a preparer, which may be all you need, but it is better to know that in June than to assume the advice comes with the fee.

Why ask it

Fees follow complexity: a new rental, a second state, a brokerage statement that runs to forty pages, a box of unsorted receipts. Hearing the triggers lets you count the preparation cost into a decision, and shows which of them you could avoid by being better organized.

Why ask it

Neither answer is wrong, but it should match your own tolerance, since the return goes in under your name. Ask for an example of a claim they talked a client out of and one they were willing to defend. A preparer who promises a bigger refund before seeing your documents has already told you which way they lean.

Why ask it

State boards generally require continuing education to keep a CPA license, so "I take courses" is the floor. More telling is how a change reaches clients: a letter in the autumn, a call to the people affected, or nothing until you sit down in March. Ask for one recent change they contacted clients about.

Why ask it

A tax file holds Social Security numbers, bank details and birth dates for the whole household. A secure portal is the answer to hope for. If the process is PDFs going back and forth by ordinary email, ask what the alternative is before you send anything.

Why ask it

A common arrangement is that the firm pays the penalty its mistake caused while the tax itself stays with you, since you owed that either way. Practices differ on interest and on the cost of the fix, so ask where the policy is written down instead of relying on a spoken promise.

Why ask it

Availability between February and April tells you nothing about availability in July. Settle the channel and the expectation now so a mid-year question does not sit unanswered.

Why ask it

Some firms decline on confidentiality grounds, which is reasonable, so ask what they can offer instead: published reviews, or an attorney or banker who refers work to them. If you do get a name, ask that person how the firm behaved when something went wrong.

Why ask it

An honest answer is usually about your bookkeeping: cleaner records, earlier documents, a conversation in the autumn instead of the spring. It also tells you whether they want that relationship or just the return.

Why ask it

Keep it for the last minute of a first meeting. You cannot see the gaps in your own tax picture, and this hands them to the person best placed to spot them. If nothing comes back, try again once they have read your documents.

Why ask it

Have the two returns laid side by side and go to the lines that differ. The cause is usually one of a few things: income rose, withholding did not keep pace, a credit shrank or ended, a child passed an age limit. Knowing which one tells you whether it will repeat, and whether a new W-4 or an estimated payment would fix it.

Why ask it

Tax agencies match your return against the forms that employers, banks and brokers send them, and a mismatch is a routine reason for a letter. Have the income documents that were entered read back to you and check them against your own pile. The usual gap is a small savings account or a brokerage form that arrived late.

Why ask it

Cash jobs, payment app transfers, things sold online, a room rented out, digital assets: no form does not mean nothing to report. Say all of it out loud. Some of it may turn out not to be taxable at all, and that is worth hearing from a professional instead of assuming.

Why ask it

For most married couples a joint return comes out lower, but not for all. Filing separately can make sense around income-based student loan payments, heavy medical bills, or a spouse's tax trouble you do not want to share. Ask to see both totals, not only the winner.

Why ask it

Divorced parents, an adult child with a job, a parent you support: these are the cases where two returns claim one person and the second one filed can be rejected. Bring the custody agreement and a rough account of who paid for what, because the tests turn on those facts.

Why ask it

The second half is the useful part. If you are near the line, ask whether putting two years of charitable gifts into one year would tip it. If you are nowhere near, you can stop saving receipts for things that will never count.

Why ask it

Bring the actual list instead of asking in general: the phone bill, the trip that was half work, the laptop the kids also use. Mixed-use items tend to come down to a reasonable split and a record of how you got there. Notice where your preparer's own line sits between cautious and aggressive, because you are relying on it.

Why ask it

Remote work across state lines creates filing obligations that surprise people, and the rules differ by state. Bring a count of the days you worked in each place. You want a list of returns to file and an explanation of how credits stop you paying twice on the same income.

Why ask it

The United States has separate reporting for foreign accounts and assets above certain balances, and the penalties for missing it can be out of all proportion to the tax involved. Mention any account, pension or gift from overseas and ask which thresholds apply to you.

Why ask it

For a federal return an extension gives more time to file, not more time to pay, and interest runs on whatever is short. Ask for the estimate as a figure and how it was worked out, and whether your state follows the same rule or needs its own form.

Why ask it

The instinct is to delay filing until the money is there, which usually makes things worse: the federal penalty for filing late is generally much steeper than the one for paying late. Go through a payment plan, what the interest would add up to, and what the state expects, since it runs its own collection.

Why ask it

You sign under penalty of perjury whoever did the typing, so ten minutes on where the income is totaled, what came off it and how the tax was worked out is fair to ask for. A figure your accountant cannot explain in plain words is the one to stop on.

Why ask it

The tax agency's own refund tracker is the first stop, and your accountant can tell you what its status messages mean. Common hold-ups are an identity check, a mismatch with a form on file, or a refund applied to another debt. If a letter came, bring it, because the way through is usually to answer the letter.

Why ask it

The list depends on what you claim: someone taking the standard deduction needs far less than an itemizer, and self-employment income needs the most. Ask what form they want it in, since a folder of phone photos is welcome at one firm and a headache at another. Find out too whether a card statement is enough for a given expense or whether they want the receipt behind it.

Why ask it

It depends on what is in the box. Returns and their backup are one question; records showing what you paid for a house, shares or equipment are another, and those are needed until well after the thing is sold. Check whether your state keeps a longer window than the federal one before anything goes in the shredder.

Why ask it

Estimated payments, an extended due date, state and local deadlines and the last day for certain retirement contributions rarely fall together. Get the ones that apply to you as a list you can paste into a calendar, and find out which the firm will remind you about and which are yours to remember.

Why ask it

The marginal rate is what your next dollar is taxed at, so it is the one for judging overtime, a side job or a deduction. The effective rate is the average across everything, useful for budgeting and little else. Get both as figures, with state tax included.

Why ask it

Timing is the main lever most households have. A bonus, a large donation, the sale of an investment or a retirement account conversion can often land in the high year or the low one. Your accountant can only plan around a change they have been told about: retirement, parental leave, a sabbatical, shares about to vest.

Why ask it

Raise it before December, not in March: most of what can be adjusted has to happen before the year closes. A good answer covers how long each holding was owned, losses that can offset gains, and which accounts the activity happened in.

Why ask it

Shares that vest are generally taxed as pay, and the withholding taken at that moment is often a flat rate that may fall short of your real one. Bring the grant and vesting statements. Ask too how the cost of those shares gets reported when you sell, because a wrong figure there can tax the same income twice.

Why ask it

Bring what each account offers: an employer match, a Roth option, a health savings account if you have one. A match usually comes first. After that the order depends on your tax rate now against later, which is the part to have worked out for you, along with the deadline for each account.

Why ask it

A conversion adds to taxable income in the year you do it, so the answer rests on your rate now against the rate you expect later, and on whether you can pay the tax from money outside the account. Have it shown in figures, including anything else tied to your income such as health insurance subsidies or Medicare premiums.

Why ask it

The order in which you draw from taxable, traditional and Roth accounts changes the bill, and part of a Social Security benefit can become taxable depending on your other income. The age at which withdrawals become compulsory has been changed more than once, so ask what applies to your birth year.

Why ask it

Giving cash is the simplest way and often not the most efficient. Depending on your age and what you own, giving shares that have risen in value, or giving straight from a retirement account, may do more for the same gift. Find out which applies to you and what receipt the charity has to provide.

Why ask it

The treatment of education savings plans varies by state: some give a deduction for contributions, some only for their own plan, some nothing. Ask how it works where you live, and how withdrawals sit alongside education credits, since one tuition bill cannot be counted twice.

Why ask it

Raise it before the closing. Buying can change whether itemizing makes sense, through mortgage interest and property tax, and selling a main home may come with an exclusion on part of the gain if you meet the ownership and residence tests. Bring the closing statement from the purchase and a record of improvements, because those figures set the gain.

Why ask it

Depreciation taken along the way comes back into the sum on sale, and money spent on improvements is treated differently from money spent on repairs. Get a copy of the depreciation schedule with each year's return. A sale year that starts with reconstructing a decade of figures is slow and expensive.

Why ask it

Often the inheritance itself is not income to you, but what it earns afterwards is, and inherited retirement accounts come with their own withdrawal timetable. For property and shares, record the value at the date of death while it is easy to establish, because that figure is usually where your gain is measured from. State rules differ, so ask about yours.

Why ask it

The beneficiary named on a retirement account or insurance policy generally decides who receives it, whatever the will says, and those forms are often years out of date. A CPA will not draft the documents, but can show what heirs would owe and tell you when it is time to bring in an estate attorney.

Why ask it

Headlines describe the average household, and yours is not it. You want the two or three changes that reach you, and whether any of them needs action before the year ends. "Nothing applies to you" is a perfectly good answer.

Why ask it

Familiarity shows up in the questions they ask you. Someone who knows your industry raises inventory, contractor payments or sales in other states without being prompted. General reassurance that they handle all sorts is worth less than one concrete example.

Why ask it

A frequent misunderstanding. Many practices quote a price for the return assuming clean books, then bill cleanup separately. Find out what state the ledger has to be in, and by what date, to avoid that charge.

Why ask it

The practical answer is often whatever the firm already works in, because shared access saves you exporting files every quarter. Ask whether they will set up the categories with you and look in during the year, or only open it in March. For a very small operation, a spreadsheet and a dedicated bank account may be all they want.

Why ask it

Cash counts income when the money arrives and accrual when the invoice goes out, so one year can show two different profits. Some businesses are free to choose and some are not, depending on size and whether they carry inventory, so ask which applies to yours. Find out as well what a later switch would involve, since it is rarely a matter of changing a setting in the software.

Why ask it

Most young businesses do this at some point, and the fix is usually an entry that treats the payment as money you put in or are owed back. Bring the receipt and a line on what each cost was for. A card used only for the business removes most of the problem from then on.

Why ask it

An accountant who sees the business once a year sees it after nothing can be changed. A quarterly look, timed with the estimated payments, suits many small companies, and a short one is enough if the books are current. Ask what it costs and which three figures they would go to first.

Why ask it

Asking for the trigger gets you a number to watch instead of a yes or no today. Sole proprietorship, LLC, partnership, S corporation: the sensible choice shifts as income does, and nothing prompts a review automatically. Have them count what a switch would cost to set up and run each year, payroll and extra filings included, not only what it might save.

Why ask it

Reasonable compensation is a well-known point of challenge for S corporations, and the defensible figure depends on what hiring someone to do your job would cost. If nobody will name a range or point to comparable pay data, treat the whole plan carefully.

Why ask it

That depends on how the business is taxed. A sole proprietor or partner generally takes draws and is taxed on the profit whether or not it was withdrawn, while an owner who works in a corporation is generally expected to be on its payroll. Ask what record each transfer to yourself needs, because unlabelled transfers are what make the books slow to close.

Why ask it

The federal test is whether a cost is ordinary and necessary for your trade, and ordinary for a photographer is not ordinary for a plumber. Go through your three largest categories of spending instead of requesting a master list. The second half of the question shows where this accountant draws the line, with meals, clothing and travel as the usual trouble spots.

Why ask it

The rules often allow a choice between writing a purchase off in its first year and depreciating it over time, and the limits on the first option have moved more than once. A full write-off looks best today, but spreading the cost can be worth more if you expect a higher profit later. Bring the invoices and the date each item went into use.

Why ask it

Self-employment income carries income tax plus the Social Security and Medicare contributions an employer would otherwise have split with you, which is how a first freelance year ends in a bill nobody saved for. A percentage found online ignores your state and your other income. Get a figure worked out for you, and move that share into a separate account the day each payment lands.

Why ask it

The distinction decides whether a loss can be set against your other income, and several losing years in a row invite the question. Ask what would support treating it as a business in your case. A separate bank account, proper records and evidence that you are trying to make a profit are the usual answers.

Why ask it

Depending on how the business is taxed, a loss may reduce your other income now, carry forward to later years, or be capped by how much you have put in. Those limits have been rewritten several times, so ask for the treatment in the year you are filing. If next year looks the same, ask what a second loss would change.

Why ask it

Start with whether the deduction is open to you at all, since the federal rules treat employees and the self-employed differently. Regular and exclusive business use is where these claims fail, and a spare room that is also the guest bedroom often does not qualify. Then have them show how the figure would be calculated and which records to keep through the year.

Why ask it

There are two methods, and the one chosen in a vehicle's first year can limit your choices for that vehicle later. A log kept as you go, with date, distance and purpose, holds up far better than one rebuilt from a calendar the night before the meeting.

Why ask it

It is not settled by what the two of you agree to call it. The answer follows from the facts of the work, such as who controls how and when it is done, and a state can apply a stricter test than the federal one. A wrong label can mean payroll taxes owed for past periods, so ask before the first payment, and ask what payroll would cost to run if the answer is employee.

Why ask it

Paying a contractor more than the reporting threshold creates a filing duty with a deadline early in the year and a penalty for each form missed. Collect a W-9 before the first payment, because chasing a tax number in January is much harder. Ask for the current threshold instead of trusting a figure you remember.

Why ask it

Tax withheld from wages is money you are holding for the government, and a deposit that goes in late carries a penalty of its own. A payroll service files what it was set up to file, which may not include every state or local account. Get the list by agency and by how often each is due, and ask who checks that every deposit went through.

Why ask it

The deduction for premiums has conditions, including whether you could have joined a spouse's employer plan. If you buy coverage through a marketplace with a subsidy, ask how that is squared against your actual income at filing, since a better year than expected can mean paying part of it back.

Why ask it

States set their own thresholds for sales into the state, and passing one can create a duty to register even with no office or staff there. Ask first whether your CPA handles sales tax at all. Many do not, and an honest referral is a better answer than a guess.

Why ask it

An annual report, a franchise or gross receipts tax, a city business license, a property tax return on equipment: which of these exist depends on where the business is registered and where it operates. They are easy to miss because none of them travels with the federal return. Ask which ones the firm files and which stay with you.

Why ask it

Contribution room and administration differ sharply between plan types, and a solo 401(k) often allows a larger contribution at moderate self-employment income while a SEP is simpler to run. Having employees changes the answer entirely, so say so at the start.

Why ask it

Lenders differ in what they accept. Some want only tax returns, others ask for statements an accountant has compiled, reviewed or audited, and each level costs more than the one before. Find out what your bank requires before paying for more assurance than it needs, and allow extra time if the request lands in filing season.

Why ask it

Buyers and lenders ask for several years of clean statements, and how a sale is structured changes what is left after tax. This is a question for years ahead. Raised a month before closing, it comes after most of the useful options have gone.

Why ask it

How returns are selected is not published, so nobody can give you odds. What a preparer can do is point to items that tend to draw questions when they are large against your income or thinly documented: business losses year after year, big cash donations, a vehicle claimed as entirely for work. The follow-up is whether your records would hold the claim up, not whether to drop it.

Why ask it

It turns record-keeping into a question of evidence instead of habit. The answer should be concrete: a mileage log, receipts for the larger items, notes written at the time, bank statements that match the ledger.

Why ask it

Preparation and representation are different services, and not every preparer does both. Find out now, because switching accountants in the middle of an examination is expensive and slow.

Why ask it

There are levels, from a box on the return that lets the preparer answer questions about that one filing to a power of attorney that lets them represent you. Ask which you would be signing, which years it covers, and how you would withdraw it.

Why ask it

Scammers imitate tax agencies because fear works. A real first contact from the IRS generally comes by mail, and no tax agency takes payment in gift cards. Agree that your accountant is the first call before you reply to or pay anything, and ask how to check a notice against your own online account.

Why ask it

For a federal return the usual window is three years from filing, longer if a large amount of income was left off, and open-ended if no return was filed at all. States set their own periods. The answer tells you which old years are truly closed and which could still produce a letter.

Why ask it

Amending is a normal step, and correcting an error yourself usually costs less than having it found. What you need is the size of the exposure, whether interest and penalties attach, and whether that year is still open at all.

Why ask it

Catching up on unfiled years is ordinary work for a tax practice, and the usual order is to pull the wage and income records the IRS already holds, file the missing years, then deal with any balance. Get a fee estimate, and find out whether your case needs someone who specializes in resolving tax debt.