How to choose the right tax accountant


A quality tax preparing accountant saves you time and money. In today’s post, we look into how you can pick the best accountant for your business or personal tax needs.

Ask For Recommendations

Many of your peers have accountants. Ask them where they go. Why?

Because, like any professional, most accountants have particular niches. They might specialize in helping freelancers with their taxes or focus on sorting the finances of a larger corporation.

Asking your peers is the easiest way to sort through the clutter to find an accountant. Imagine you wanted to find a doctor for your foot pain. You likely want a doctor that specializes in foot pain instead of one that specializes in hands.

It’s no different with accountants. Ask around; the best recommendations come from satisfied customers that have a similar set of needs as your own.

Prioritize Location

You want someone who understands your tax situation and can handle everything you may throw at them.

This is easier if you can communicate with them face to face. Sure, you could work with someone remotely and they might be able to help you figure out your taxes, but especially for freelancers and those in similarly complicated tax situations

Find Out If They’re Qualified 

So how do you find out your potential accountant’s qualifications?

Start by asking for a Preparer Tax Identification Number. Anyone who prepares or assists in preparing federal tax returns for money must have a PTIN. Not only does this help you determine your potential preparer’s qualifications, but also, that number is required in order for the accountant to file your taxes on your behalf.

Now, it isn’t that hard to get a PTIN, so you’ll want to ensure that your potential tax preparer has one of the following qualifications:

  • CPA – Certified Public Accountant

  • Law license

  • Enrolled agent designation

Be sure that your accountant, at a minimum, has a Certified Public Accountant (CPA) license. Even though it is technically not a requirement, the process of getting a CPA license is reasonably strict and requires that your accountant have a bachelor’s degree to even sit for the exam. If you happen to get audited, you’ll need a tax preparer with one of the above qualifications  for them to represent you if you get audited

Beyond the  PTIN number, degrees, and certification, you’ll also want to know how many years of experience they have filing taxes.

If you have a simple return, you require less experience. For those with complicated or unclear tax returns, you’ll want someone who has been navigating the system for longer.

Find Out How Much It’ll Cost You  

The average accountant can cost between $100 and $175 an hour.

That can be a lot for a small business owner or freelancer. There are some things you’ll want to ask about before meeting with an accountant. In 2018, the average fee for preparing a tax return including an itemized Form 1040 with Schedule A and state tax return was $294.

Most of the best accountants charge an hourly rate but will look over your prior year’s taxes for free, or offer you a free consultation to start. Take these offers, as they will help you select the right fit for your tax needs.

Also, note their hourly rate if you get audited. You can expect to pay a qualified accountant $150/ hour to represent you if you’re audited.

Ensure They’ll E-File  

This is simple. Every accountant should be e-filing at this point. The IRS requires any paid preparer to e-file if they do more than 10 returns. If they aren’t e-filing, maybe they’re not as experienced as you would like.

IRS Announces 2017 Filing Season Date

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

2016 Year-End Tax Planning


Download our 2016 year-end tax planning guide for free! 

By Tax News

The Internal Revenue Service (IRS) has announced that the next US tax season will begin on January 23, 2017, and reminded individual taxpayers claiming certain tax credits to expect a longer wait for their refunds.

More than 153m individual tax returns are expected to be filed in 2017, and the agency expects more than four out of five will be prepared electronically using tax return preparation software.

Many software companies and tax professionals will be accepting tax returns before January 23 and then will submit the returns when IRS systems open. While the IRS will begin processing paper tax returns at the same time, it was stressed that there is no advantage to filing tax returns on paper in early January instead of waiting for the IRS to begin accepting e-filed returns.

The IRS said it anticipates issuing more than nine out of ten refunds in fewer than 21 days, but reminded taxpayers that it is now required to hold refunds claiming the earned income tax credit and the additional child tax credit until February 15.

In addition, the IRS said it will take several days for these refunds to be released and processed through financial institutions. Factoring in weekends and the President’s Day holiday, the agency cautioned that many affected taxpayers may not have actual access to their refunds until the week of February 27.

“For this tax season, it’s more important than ever for taxpayers to plan ahead,” IRS Commissioner John Koskinen said. “People should make sure they have their year-end tax statements in hand, and we encourage people to file as they normally would, including those claiming the credits affected by the refund delay.”

The filing deadline to submit 2016 tax returns will be April 18, 2017, rather than the traditional April 15 date due to a weekend and a holiday.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Protecting taxpayer confidentiality

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

Protecting taxpayer confidentiality

Lawyers are held to higher standards than CPAs. Above, actor Bob Odenkirk, who stars as Saul Goodman in Better Call Saul, promised confidentiality to his client Walter White in Breaking Bad. Amanda Edwards/Getty Images

Fans of television’s favorite ethically challenged criminal lawyer Saul Goodman know that despite his many questionable actions, he definitely respects attorney-client privilege. He told Breaking Bad’s meth-making kingpin Walter White upon their first encounter, “Put a dollar in my pocket” to become a client and ensure that anything said between the two remained confidential.

Does the same apply to accountants? The question came up after the New York Times talked with Donald Trump’s apparently chatty former tax accountant.

Follow the (tax) code

Technically, accountants do not have the same legal constrictions, or protections depending on your point of view, as lawyers when it comes to client privacy.

But the Internal Revenue Code specifically says it is illegal to disclose a taxpayer’s information without that filer’s consent.

Section 7216 of the code says that as a general rule, any person who is “in the business of preparing, or providing services in connection with the preparation of, returns of the tax” is prohibited from “knowingly or recklessly” disclosing “any information furnished to him for, or in connection with, the preparation of any such return.”

Costly penalties for violations

That code section then notes that if a tax professional uses such taxpayer information “for any purpose other than to prepare, or assist in preparing, any such return,” that person has committed a federal misdemeanor and could, upon conviction, be fined as much as $1,000 or a receive a jail term of up to 1 year or both, plus court costs.

In addition to the criminal sanctions for improper disclosure of a person’s tax info cited in Section 7216, the U.S. Code also covers civil treatment of such releases in section 6713.

Under this section, improper use of tax info could bring a penalty of $250 for each such disclosure, with a maximum penalty per year of $10,000.

Specific CPA guidance

The American Institute of Certified Public Accountants, or AICPA, is the primary member association for the accounting profession. As such, it sets ethical standards for its members.

When asked about its member CPAs’ nondisclosure responsibilities to clients, the AICPA cites the U.S. code sections that address this issue.

The AICPA also has established its own ethical standards for the profession.

Its code of professional conduct specifically states that “a member in public practice shall not disclose any confidential client information without the specific consent of the client.”

Keep your mouth shut

Of course, such a stance does not, notes the AICPA, affect in any way an accountant’s obligation to comply with a validly issued and enforceable subpoena or applicable laws and government regulations.

But basically, when you share your tax information with an accountant and it’s all above board, you should expect that information to remain between just you and your accountant.

Or, as Amit Chandel, a CPA in Brea, California, told me: “We may not have attorney client privilege, but we have ethical standards to uphold and a fiduciary duty to keep our mouth shut most off the time.”

Are you comfortable sharing your tax details with your tax pro? Would you consider switching your tax preparation tasks to an attorney to get tighter client confidentiality coverage?

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Most taxpayers want paid preparers licensed

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate


Is a tax preparer helping you file your taxes this year? If so, are you comfortable with that person’s abilities?

Apparently, most of us are at least a bit concerned about the abilities of tax preparers, at least in general if not about our own tax adviser, according to a new national poll.

A Consumer Federation of America, or CFA, poll released Jan. 20 finds that 80% of taxpayers believe that paid tax preparers should be required to pass a competency test.

Another 83% say that paid tax preparers should be licensed by the state where they practice.

The cost of tax pro errors

The reason for more oversight is the usual one: Money.

Tax return filing represents for most people their largest financial transaction of the year.

“Errors on tax forms put consumers at risk of fines and lost tax refunds,” says Tom Feltner, director of financial services at CFA.

However, notes CFA Senior Policy Advocate Michael Best, only 4 states — California, Maryland, New York and Oregon — regulate tax preparers who aren’t otherwise covered under other professional credentialing programs.

A growing problem

CFA says that multiple rounds of mystery shopper tests over 3 years found instances of tax preparer incompetence and even fraud. The nonprofit group found problems in 24% of the tax returns in a 2008 test, 44% of returns in a 2011 test, and 93% of returns in a 2015 test.

The dramatic increase in issues with tax returns is in part because of new and changing tax laws over the years. Also, the focus on earlier investigations was the price charged for preparing tax returns rather than the accuracy of the filings, according to Chi Chi Wu, staff attorney at the National Consumer Law Center and co-author of 4 tax return testing reports.

Still, other studies also indicate tax return accuracy problems among paid preparers.

Government Accountability Office undercover investigators in 2014 went to 19 randomly selected tax preparer offices. Only 2 of the 19, or 11%, of the returns had the correct refund amount.

State vs. federal oversight

The Internal Revenue Service has tried in recent years to implement more oversight over paid tax preparers who aren’t already receiving training and credentials from other professional groups.

Those efforts, however, were struck down by federal courts that ruled only Congress could grant the IRS authority to regulate tax preparers. Now the IRS is relying on a voluntary education program for tax professionals.

And while there has been some sporadic movement on Capitol Hill toward giving the IRS the ability to set stricter tax preparer rules, that effort has stalled. So the CFA and other consumer groups now are focusing on state-by-state tax preparer regulations.

Eventual IRS oversight is a possibility, says Best, “but the timeline is extremely uncertain. It behooves us to focus on state levels.”

In the meantime, if you don’t live in a state that regulates paid tax preparers, it’s up to you to make sure the tax pro you hire is up to the task.

Do you get professional tax help? Have you ever had a problem with your tax pro?

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

How and Why I Hired My Tax Accountant


Until I owned my business, I had always prepared my own income-tax returns. No longer. I’m glad to say that I have an accountant.

 Finding the right person wasn’t easy. It took me time and some personal evaluation to decide on the best one for me. Here’s the process I went through.

Scarsdale CPA tax tips

Gambling with your income tax is one move you never want to make

First, I considered doing my own taxes — for about a nanosecond. I had always prepared my tax returns. Since I had only my income, and then my wife’s, to report, the process was straightforward. A couple of hours using tax software, and I was ready to file with the Internal Revenue Service.

That changed when I bought my hobby-and-game store. The complexities of owning a business and all the tax rules that come with it made the job much more difficult.

I realized this after spending hours on the phone with various city and state agencies trying to compile the tax-identification numbers needed to apply for a bank loan. I was astonished by how many taxes a small-business owner has to pay. Assessments may be levied at the city, county, state and federal level, and the rules and regulations change frequently. Complicating matters, a separate identification number is required for each tax. Failing to file just one of the returns triggers a penalty, something I didn’t dare risk.

In short, I quickly concluded this was no job for an amateur. Plus, for small-shop proprietors like me, time is money, and unless I hired a professional, I’d be doomed to taking the latest tax-preparation class instead of focusing on my business.

To find the right accountant, I first considered hiring a friend. I knew one accountant personally. He’s someone I hung out with during college, but he lives in another state. So I initially dismissed the thought of hiring him since I felt it would be better to have someone local.

I then interviewed several firms in my area. These ranged from independents to local offices of the Big Four. My criteria for choosing a firm were the amount of service I’d receive, the fees involved, their general philosophy and approach, and something I’ll call the “personal touch.”

Most of the firms offered similar services, such as federal-tax preparation and filing monthly local and state taxes, with a couple specializing in particular areas such as payroll taxes. The range seemed somewhat dependent on the size of the accounting firm, with the larger firms offering “one-stop” service — they’d do all my tax work — compared to the small outfits, which would do only payroll taxes. But hiring a big firm didn’t necessarily mean I’d be working with the most experienced people. Although I was meeting with the partners of the large firms, I learned lower-level staffers would do the work, and the “senior” accountants would simply sign off on it.

As for fees, I’d be charged by the hour, at rates that also varied by size of the firm. Although I expected some variance in the fees, I was surprised by the disparity. The larger firms charged between $150 and $300 per hour, while smaller ones cost between $75 and $100 an hour. For a small company like mine, paying $300 an hour isn’t an option.

In regard to tax strategies, I looked at how aggressive the firms would be. One accountant asked whether I had children. When I said I’d just had a baby boy, he started to pitch me on a tax shelter for my son. He said he had just read about it, and although the IRS had not ruled on it yet, he told me he thought it would likely get a favorable ruling. While I’m all for accountants being aggressive about seeking deductions, I wasn’t sure that my then-one-month-old son should be involved.

Finally, and most important, there was the personal touch. Financial decisions are touchy. Consider that disagreements over money are among the top reasons for divorce in the U.S. If discussing money is so difficult with your spouse, how are you going to talk candidly about finances with a stranger?

I sensed that my accountant would be my closest business confidant, and that when all was said and done, I needed to work with someone I could trust. I decided to forgo my prior requirement for proximity and hire my friend from college. John Reasbeck (a.k.a. Reas) and I have stayed close since graduation even though he lives in West Virginia and I’m in Kentucky. We’re the same age (32) and at the same point in our professional lives. He has been an accountant since leaving college and consequently has years of experience to offer me.

An accountant can — both directly and indirectly — drastically influence the success of a business. I already trusted and confided in Reas and knew he had my best interests at heart. Never mind that he wasn’t a “senior tax partner.” Those people weren’t going to be doing my work anyway. And the price is right at $100 an hour.

One year later, I know I made the right decision. My accountant-friend is a key member on my advisory team, not someone who just keeps track of my statements and prepares my year-end taxes. We talk by phone once or twice a week, but not necessarily about taxes. Often I seek his feedback on business ideas, such as possible expansion opportunities.

Some might question the wisdom of hiring an accountant from out of state. But West Virginia and Kentucky are adjacent states, so their rules tend to be similar, and my accountant has several other out-of-state clients. Still, if I weren’t comfortable with reading tax documents, I might feel differently, because agencies send notices and coupons directly to me, and I handle some of this work myself. But I have a finance background, and I already take care of tasks like bookkeeping and reconciling bank statements on my own.

I dislike organizing the paperwork (mostly receipts) necessary for me to properly file my taxes. But after seeing the results, I’m more than happy to pay my accountant’s bill because he’s saved me time and minimized my year-end taxes.

Westchester CPA Paul Herman is here to assist you with all of your personal finance needs. Please contact our Westchester accounting firm for all inquiries. We proudly serve the towns of Scarsdale NY, Purchase NY, Larchmont NY, Mamaroneck NY, Katonah NY, Bedford NY and beyond.


Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.