Limits to our expertise

[SaraEA]

Reading the posts on this and other blogs, I wonder if some of us are trying to be all things to all people and not recognizing our limitations.  Some questions are so basic that you wonder if the poster should even be attempting such a return.  And some topics are so out of my league that I am grateful that I am not doing such a return.  I believe the most important thing I learned during months of study for the SEA is that there is a heck of a lot I don't know, and probably never will.

I have shunned some returns that I felt I could not complete correctly.  I am not comfortable with foreign citizens with US income unless they are on the most basic visas, because I know they can be deported if I check the wrong box or rely on certain treaty provisions.  I have done a few nonprofits but I am never certain if I am listing their raffle proceeds in the right places.  I've done corps too, but I don't like them and am unsure of whether I did them right.  Fortunately, I work in an office where I can pass these on to someone else.  (In the case of foreigners and foreign trusts, we pass them on to somewhere else.)  We also refer new EITC clients elsewhere.  The due diligence standards have become so demanding that these clients are better served by preparers with appropriate training. 

We all know that the tax code is wildly complex.  My hunch is that each of us who prepares tax returns will eventually have to come to specialize--whether it be regular individual returns, small businesses, certain professions, corps, trusts and estates, investments, partnerships, noncitizens, whatever.  We gravitate to what we like, take our coursework there, and should be willing to acknowledge that certain returns are over our heads and decline to do them.  (Works best if we have a large enough network so we can refer these rejects to someone rather than show them the door.)  Thoughts?

[JohnH]

I agree completely. Learning when to say "no"'is extremely important. I haven't always made the best decision in this area and have taken on work from time to time which I should have declined. In recent years I have gotten better at passing on some projects, but it's a never-ending process.

Just had a conversation this weekend with someone over preparing a return with a large casualty loss as a result of a house fire which they claim was only partially insured. After looking over the scope of the project and potential  size of the loss, I decided to tell them they need someone who is more familiar with this type of return and has deeper pockets if they make a mistake. 

As I see it, the decision to decline work can be based in several factors. It might be a matter of not being up to speed on the particular issue. It might also be a matter of not being willing to invest a lot of time on a type of return you don't see very often. Or it could be a simple decision to mitigate preparer risk. 

[Randall]

I agree.  I'm trying to limit my work, especially new clients.  No more businesses with multiple owners (unless two spouses), just sole shareholder or smllc types.  No business startups with heavy debt, things like that.  No prior year returns (I have a couple of existing clients I'm trying to get caught up but no new ones).  I'm getting older and I want 'easy'.

 

 

 

[rfassett]

Not sure I am in total agreement.  When I started my practice, I was committed to doing whatever it took to make it work.  As it turns out, I am that jack of all trades - master of some.  Of course, my starting point was a Master of Taxation degree from a reputable school and experience of several years with one of the big four.  So I was well in my comfort zone to take what came.  Now that said, as time has gone on, I more and more hear that voice in my head stating "a man has to know his limitations".  I can afford that now.  Back when I started my practice, I knew no limitations.  I would take the work and use whatever resources were at my disposal to get up to speed to get the job done.  I appreciate that some of the questions posted on these list servs seem elementary; but so did mine when I was still wet behind the ears.  We are all trying to eke out a living and doing what it takes to get the job done.

Now....all of that said, I still break out in a cold sweat when I am forced to do a 1040EZ.  And I am not in the least joking about that.  I avoid EZ and 1040A s like the plague.  A man has to know his limitations.

[Lion EA]

I prepare ALL individual returns on Form 1040, even those that qualify to file on EZ or A.  It's easier for me, knowing where everything belongs, where to look when proofreading.  And, it doesn't make a bit of difference in efiling or to the IRS.  I, too, make things easy on myself.

I do want to get as far along as Randall.  I'm not sending enough returns elsewhere.  Doing only a handful of trusts, an occasional estate, a few S-corps, etc., slows me down.  But, they come from existing 1040 clients who create a trust or spouse opens a biz or....  I'm old and have a baby granddaughter in another state and want to spend less time on each return, not more.  Gotta work on this!

[Catherine]

Sometimes we learn our limitations by doing a (simple for its type!) return.  I did a couple of 1040NR's about a decade ago - for two sisters here on some special learn-and-work visas; I don't really remember the details.  For that type of return, they were dead simple.  I researched and fretted and fumed and went 'round in circles and tied my hair in knots and went nuts with them.  Got them done; clients were happy and went back to Taiwan happy.  I was and am as certain as I could have been at the time that they were correct.  And never again will I touch a 1040NR.  Great learning experience.  (Had they been *any* more complex I would have handed all the paperwork back with an apology and a good luck wish.)

[Patrick Michael]

I concur, to a degree.  During tax season I try to stick with what I know, as I do not have the time to do extensive research.  But after tax season, I enjoy the challenge of doing the research and learning new things.  I have declined returns after researching the subject and deciding that the situation was too complex for me.  Most clients appreciate my honesty when I tell them I don't have the expertise to deal with situation and come back the next year for their "normal" return.  I have had a few that were mad they had to go elsewhere and pay the higher fees that most "specialists" charge.  As a one man show, I really appreciate having forums like this where tax pros with more experience and knowledge are willing to share that knowledge and experience with those of us who want to learn and grow.

[RitaB]

I agree with at least part of what everybody has said.  I like to take on new things.  But I will sure as ^&*% wear out the Pubs and Google before I will post a question.  There are some people who should not prepare taxes.  In an EA exam study group, I recently saw a participant struggle because there was no % key on her calculator.  She had no idea how to cope with that.  I almost cried.  I have seen others answer a question incorrectly that had already been answered correctly.  IN THE SAME THREAD.  RIGHT BELOW THE CONFIRMED CORRECT ANSWER.  WITH THE "YIPPEE, YOU GOT IT, CONGRATS"  RIGHT THERE.  That hurt me.  I wanted to hug them.

[Possi]

I agree with you, Rita. Some people should not prepare returns. If I am not comfortable doing a return for a client, I send them away. I like my "off season" best when it is not colored with letters and errors coming back at me.

I do basic 1040's with every aspect. I'm plenty busy with that. The "simple 1040's" are no longer "simple" because if they truly WERE simple, those people don't pay to prepare them.

When a new client says it's simple, it isn't.

[FDNY]

I agree with Sara and rfassett that when a return is out of your league and you know your limitations it is time to pass it on.   I remember my first (easy) SCorp.  Before I tackled it I took a short SCorp course just to be sure I had the basics down pat.  But what happens with many clients they grow and get more complicated, now it becomes tricky, do you stay on (because they want you)  or move on for the client's benefit.  You really need to know those limitations, do what is best for the client.   Like Rita, I will research and Google and learn as much as I can about a subject I don't know, then make the decision to say, this is not for me, which I have done at times.   This is better for your own peace of mind.  We don't need more stress, we already have ACA for that.

And Lion, you're not old, I think mature and wise.  How else would you know that your baby granddaughter is more important than all of this.   You just made me remember there are things more important than work, life is short, let's make the best of it.

[Pacun]

I agree with SaraEA that we should know our limitations but If you start doing returns and you limit yourself to do returns only that match your ability, you will never learn and you will never make a living out of this profession. I have noticed that the best is to have honest people as clients. When they come with a new additions to their return, don't let them go.... but rather adjust yourself to the new challenge and you will learn a lot from your research.  That's what I do for my clients and since they already trust me, I tell them "Since this year, you have X item that is new on your return, I will need a couple more weeks to do some research because I want to make sure we start correctly with this new addition to your return. I will call you later on and ask you a few more questions".

I was happy when the IRS was going to match skills with the kind of returns we could prepare. That was going to force us to take extra courses and pass new tests. That was the idea behind preparer's examination that thanks to the Love case is on hold.

What do you think about my motto: "If my EA credentials, some how, authorize me to prepare American Airlines return, then the sky is the limit"

I never understand (I am sorry if I sound harsh), why if someone has been preparing taxes for 10 or more years, he/she cannot pass the EA exam? I do want to hug those people.

[SaraEA]

These opinions uncover the real reason most of us are still in the profession:  The opportunity to learn something new everyday.  It could be a basic Sch A that forces us to look into the rules on 50%/30% charitable contributions, or an odd household formation that makes us review the finest details of filing status or dependency exemptions.  Like others, I love the research into pubs, rev rulings, court cases, and the code itself to assure that I'm doing whatever it is right.  I love to take courses too.  Way back when I was at Block, I'd sometimes take 100+ hours.  Now that I have to pay for CEs, I could never afford that many.

Even with an EA, though, there are just some things I am not comfortable doing.  Sure I can memorize the instructions and read the rulings with their wonderful examples, but if I'm still dizzy it's better for the client if I just say No.  Some things are best done under a mentor, or at least someone to look it over.  If you don't have such a person available, maybe it's better if you don't learn by practicing on a real client.  And some rules change so dramatically it might be best to step aside, e.g.,the ACA rules for employers.  Even if you've attended a million seminars and read the ever-changing rules a million times, I for one am still confused.  We are deferring to payroll companies more and more.  Like I said, unless congress really simplifies the code, we will eventually be better off becoming specialists in this or that area of code, not unlike physicians who now specialize in various parts of the body.

The tough part is when an established client presents us with something like a trust, estate, new partnership, whatever, that is not something we have done before.  We don't want to turn them away because they've relied on us for everything tax.  Some preparers can do it--I've had some clients come to me for entity returns because their regular preparer can't do them, and they take the K-1s I prepare back to him or her for their individual return.  I also have a couple of clients whose accountant does their partnership returns but will not do individual returns, so I'm the one who gets their K-1s.  I even have a client who has me prepare his Sch C every year--nothing else!  He then takes it to his preparer.  I give that preparer credit for knowing what he doesn't know.

[jklcpa]

Thanks for the interesting topic, Sara.

I agree with a lot of what's been said already. I don't think it's a bad thing to take on work that will be a stretch of our abilities as long as we are confident in the end of arriving at the correct result, but if in doing research and studying the topic, we find that the path is not 100% clear or over our heads, then we need to be honest with ourselves so that we don't do a disservice to our clients and leave ourselves open to claims and penalties in the end. In those cases, I agree that a better course would be to either turn that work over to someone more qualified or arrange a paid consult with an expert in that area.

One thing that you mentioned in your original post that only RitaB addressed is the wide range and level of questions asked here and on other forums. I have mixed feelings at times on this topic of seeking help on online forums.  As in life, there are those that will expend all effort to do things themselves, and then there are others that frequently look to others for help.  I'll say that my first steps are always to research first through all my available means before posing a question, because I feel that is what I'm being paid for, not for someone else to do the work for me. With that being said, I think some people really know the answer and are only looking for reassurance since many of us are solo practitioners that don't have someone in the next office to bounce an idea off of or ask "am I on the right track?" 

As for the level of questions posed, I do scratch my head at times when the answers are easily found in a form's instructions, and my first reaction to that is to think that the person probably spent more time typing the question here, and possibly duplicating it on other forums, than if he or she took the time to open the instructions.  From that end of the spectrum, we also see the other end of it with questions that are very complex in nature (like some on trusts and estates), or that the member is asking so many how-to questions (liquidating a partnership comes to mind), that they are almost beyond the scope of help that can be provided here or on any online forum.

With both issues on the questions, those that don't do their homework before asking for help and those questions that are either overly simplistic or overly complex, that is the nature of on an online forum and it is what it is. It also stems somewhat from the diversity within our membership, with some fairly new to tax preparation and others whose careers are winding down.  At least we are a forum that doesn't help the general public! 

One thing that really bugs me about the way some people use online forums is when the exact same question is posted within minutes across multiple forums.  Those that are doing that should realize that many of us are on here and are also on those others forums too. It shouldn't come as a big surprise that this is the forum where I spend most of my time, and there have been multiple occasions where I and others have taken time out of our day to help someone only to visit another forum and find that the question has already been answered, or it has an ongoing discussion, and I don't think that is exactly fair to those that have taken the time to help. 

My last thought is that I want to express to you all that I think this is a really terrific group of people that are always willing to take the time to help a fellow member and share information freely.  There aren't many days when I visit that I don't learn something new or realize there is more to an issue than I'd previously considered. 

/rambling, disjointed post

[Terry D EA]

I totally agree with everything that has been said here. There is nothing wrong with telling someone the return they want you to prepare is out of your league. Done it several times. I have had clients insist they want me to do it regardless of my limitations but I still refuse. Yes, I have taken on challenges but like Rita said, burn up google, the pubs and whatever other references I have available before proceeding. Just to add to Rita's % key, I had an ATX support rep tell me he thought he had heard it all until a lady who I am assuming was a tax preparer had asked where the "any" key was. Several years ago but still funny

[JohnH]

Well, I think that's a really good question. I've been staring at my keyboard for quite a while and I can't find the "any" key. There isn't one on my iPad or Mac either. 

[Gail in Virginia]

This has been an interesting topic.  I try to know my limitations, and not to ask questions that two minutes of research will answer, but sometimes in the heat of tax season, my brain gets a little fried and I can barely remember my name.  I actually had another preparer in our small town refer a client to me on April 14 because the other preparer was not comfortable doing foreign returns.  The return was a New Mexico return.

And as far as Pacun's comment about people who have been preparing returns for years not being able to pass the EA exam, I can understand that.  Some people just don't test well - they have the knowledge but in a testing situation they cannot communicate that knowledge. 

But thanks to everyone for being here and putting up with me when I lose my mind. 

[RitaB]

20 minutes ago, Gail in Virginia said:

I actually had another preparer in our small town refer a client to me on April 14 because the other preparer was not comfortable doing foreign returns.  The return was a New Mexico return.

My FB friend said it's a shame we can't make the path to citizenship easier for them. 

And, yes, I have been guilty of missing the obvious, too.  Judy showed me the directions to a form one time.  I had been everywhere except there. 

[jklcpa]

Hey, keep asking the questions if it helps; we all have those brain freeze moments. I didn't mean to discourage anyone, and I almost never get to the point of wanting to Rita-hug anyone.  We don't need everyone prefacing posts with "I did all this research and still can't find the answer" type of statements. 

Actually, I think we get some good thought provoking questions and darned good answers given on here considering we are a pretty small group compared to other forums.

I'm as nervous as everyone else during the height of the season with those wondering thoughts of if I'm thinking through the tax issues properly.  I don't know about the rest of you, but I get kind of nervous processing my own simple return. It's not the numbers because I know those are all correct, it's that moment when I send the e-file.  Why?  WHY? 

 

[Pacun]

12 minutes ago, Gail in Virginia said:

This has been an interesting topic.  I try to know my limitations, and not to ask questions that two minutes of research will answer, but sometimes in the heat of tax season, my brain gets a little fried and I can barely remember my name.  I actually had another preparer in our small town refer a client to me on April 14 because the other preparer was not comfortable doing foreign returns.  The return was a New Mexico return.

And as far as Pacun's comment about people who have been preparing returns for years not being able to pass the EA exam, I can understand that.  Some people just don't test well - they have the knowledge but in a testing situation they cannot communicate that knowledge. 

But thanks to everyone for being here and putting up with me when I lose my mind. 

Tax preparation is not what it used to be when you could use credit card interest as an itemized deduction. It is far more complex and if a person has been doing this for 10 years and cannot pass the EA exam, I want to give that person a hug. My best teacher used to tell us: "if you know, you remember... if you remember, you know."

I understand that dome people get nervous when they are going to take an exam. My teacher used to say that we get nervous when we are not prepared and when we know we don't know. He used to ask us: "Do you get nervous when you brush your teeth? Do you get nervous when you wash your hands? Why don't you get nervous on those events, he would ask? The answer is simple, it is because you know how to brush your teeth and you know how to wash your hands.".

As Sara said, when you take the EA exam, you go like "wow, I have been doing taxes without knowing a lot". The exam itself is easy but shows you how much you don't know.

For the simple questions asked here, I like them. If we start embarrassing people when easy questions are asked, no one will ask questions and the forum will die. I have no issues answering simple questions when someone is new... I have more issues when a 10 years experienced tax preparer leave crucial information such as "how much money are we talking about".  Yes, please ask questions no matter how simple they are... that's why we have this forum. During tax season, I take 10 minutes to see what's going on on this forum, If at that moment, I remember a simple question, I ask it instead of researching it.... I am here anyways. I am pretty sure some people know the answer because they researched it and they have and they are ready to share it.

[Jack from Ohio]

24 minutes ago, Pacun said:

As Sara said, when you take the EA exam, you go like "wow, I have been doing taxes without knowing a lot". The exam itself is easy but shows you how much you don't know.

I would dare say Pacun, that you have not taken the EA exam in the past 10 years.  Am I correct?

The tests I took did not in any way match what you just stated.  The amount of useless information I had to memorize to pass the tests was ridiculous.  In the real world, I will use less than 10% of the information in the questions for all three parts. 

I initially took tests in 2011.  Passed them all Jan. 2014.  Been preparing taxes since 1997.  Your theory does not hold water.  Failing part 2 of the test in 2011 was the first test I ever failed in my entire life.  I am not exaggerating.  I have had some low test scores in my life, but never failed one.  Including school.

I agree with your stance about "I don't take tests well."  Our entire job entails answering test questions. 

[Catherine]

12 hours ago, jklcpa said:

I think some people really know the answer and are only looking for reassurance since many of us are solo practitioners that don't have someone in the next office to bounce an idea off of or ask "am I on the right track?" 

BINGO!  Working in a one-person office (or with an assistant who is a wizard at collating returns but not so much what goes IN to those returns) there is no one to bounce those ideas off.  

I also sometimes ask for help for something when I have looked online and can't find what I need.  There is something in my brain's make-up that seems unable to use the right search terms; I use what makes perfect sense to ME to fill the whole in my knowledge.  It rarely gets me what I need. People online have more success in that regard than I do.

I have also found that once I have searched long and hard for an answer - and then give up and post a question - the answer pops up from wherever it had been hiding about ten minutes later.  Like it was just waiting for me to cry "uncle!"  before deigning to allow itself to be seen.

[Pacun]

I took the paper exam (2 exams on the first day and 2 exams the next day) and I passed but I didn't register with the IRS. That was about 2 years before the computer exams came on board. I waited about 4 more years and I took the computer exams. I also felt that I didn't know 90% of the stuff (hence your 10% of useful information) and I had to learn it.

I like the way the IRS used to do their testing. 4 exams in two day (3 hours each) with paper and pencil ONLY. If you didn't pass, you had to wait one year because they tested only once a year.  With the computer exams, it is easier and less effective because by the time you finish with the last exam (exam 3), you don't remember anything from exam 1 or 2.

 

 

Edited August 23, 2016 by jklcpa

[BHoffman]

It's more fun to give a brilliant answer than to ask a dumb question.  Hope nobody's keeping score

Out of all the responses, Catherine's was the one I most identify with.  The forum is my last resort.  It isn't the garden variety stuff that trips me up, it's the weird or unfamiliar situations.  Posting in the forum forces me to make sure the question is clear and easy for others to understand.  Once in a while just getting that clarity with the question leads me to the answer.  

 

 

 

 

 

 

 

[Yardley CPA]

I'm a one person shop who prepares returns after my day job and on weekends.  I've been doing that for 24 years and believe I've gained a good amount of experience during that time.  This board is invaluable though; a great, reassuring resource and I truly appreciate and respect everyone who contributes.  As has been stated above, being a one man shop does not allow me to ask my partner or associate their opinion.  This forum has become my office. 

I normally prepare personal income tax returns, federal and state.  All schedules within those returns are fair game for me.  Some I do repeatedly, others not so much.  But I will investigate what needs to be done and if I can tackle it, I will.  If it's beyond me, I will discuss with the client.  I'm not afraid to let them know I have little experience in certain areas.  We then determine what is the best course of action...either I prepare the return or they seek help from someone with more experience in that area.  I tend to shy away from corporate, partnership and estate returns.  I do have one or two corps and partnerships but I absolutely do not prepare estate returns.  Not sure why I have an aversion toward those. 

In any event, hope everyone enjoys what remains of summer.  Before you know it, clients will start dropping off their information! 

 

[BulldogTom]

1 hour ago, Yardley CPA said:

I'm a one person shop who prepares returns after my day job and on weekends.  I've been doing that for 24 years and believe I've gained a good amount of experience during that time.  This board is invaluable though; a great, reassuring resource and I truly appreciate and respect everyone who contributes.  As has been stated above, being a one man shop does not allow me to ask my partner or associate their opinion.  This forum has become my office. 

I normally prepare personal income tax returns, federal and state.  All schedules within those returns are fair game for me.  Some I do repeatedly, others not so much.  But I will investigate what needs to be done and if I can tackle it, I will.  If it's beyond me, I will discuss with the client.  I'm not afraid to let them know I have little experience in certain areas.  We then determine what is the best course of action...either I prepare the return or they seek help from someone with more experience in that area.  I tend to shy away from corporate, partnership and estate returns.  I do have one or two corps and partnerships but I absolutely do not prepare estate returns.  Not sure why I have an aversion toward those. 

In any event, hope everyone enjoys what remains of summer.  Before you know it, clients will start dropping off their information! 

 

What Yardley Said.  But only 19 years.

Tom
Newark, CA