Are you in an unintentional uncommunicative relationship with your tax person? Most of my clients have “been with” their tax person for years and feel like it may be time to move on. This could be a relationship that you started as a single person just starting out, and now your needs have changed.

No one seems to really know whether their tax person is doing the best they can for them, which makes them think they could do better. But can they?

Relationships are about trust, and they require communication. You need to trust your tax person to do the best they can for you, follow IRS rules and help you pay as little in tax as possible. But this relationship is a two-way road. Do you have open, honest and frequent communication with your tax person?

Here are some tips to help you have a healthy relationship with your tax person:

  1. State your objectives clearly. For most, objective #1 is to pay as little in taxes as possible. You may also value: filing on time, ensuring no large unforeseen tax bill, or making sure your withholdings are accurate with changes in your life (marriage, babies, house, etc.). It is up to you to tell your tax person your objectives, so that they can understand what matters most to you.  
  2. Pro-actively communicate. Sometimes life is predictable and you don’t need to contact your tax person during the year. However, Fall is the best time to check in with him/her with updates for the current tax year. It gives them time to crunch the numbers on projected taxes versus withholdings and recommend adjustments before the year is over.
  3. Listen to your tax person’s advice and communicate your position. As mentioned above, one main goal of your tax person is likely to save you money in taxes. Sometimes that advice may require you to do something, like open up a retirement account, make a contribution or form an S corp. They are trying to save you money in taxes, but in doing so this may tie up your money in a way that doesn’t help you achieve your financial goals. It’s okay to listen to the advice and say no.  While it would be great to make a contribution to an IRA and save on taxes, you might be already on track for retirement and prefer to renovate a bathroom. Saving on taxes isn’t your only financial goal.
  4. Dump him and move on. If you feel disappointed and frustrated every year when doing your taxes, it’s time to move on. Getting referrals is the best way to find a new tax person, and timing is important. If you try to find someone new in February, you’ll be out of luck. Start your search in the fall, but also realize that tax people are busy until October 15th when those with extensions need to file their taxes.

I have been in the financial services industry for 18 years, and I still feel like taxes are somewhat of a mystery. I appreciate my tax firm, LS Tax in San Anselmo, for their communication and efficiency. Their philosophy is that “management generates tax savings, tax savings generate investments, and investments generate personal and financial security.” Each year I know they are doing the best they can for me, which is comforting and makes the tax season less dreaded.