Do you remember the episode of THE ODD COUPLE television series where Felix explains to Oscar what happens when you assume (you make an ass out of u and me)?

Making false assumptions when choosing a tax preparer can be costly.

1) Don't assume that because a person has the initials "CPA" after his name he is an expert when it comes to federal and state income taxes!

The CPA designation means that a person took a very difficult test at the beginning of his career, possibly many, many years ago, only a small part of which dealt with federal income tax. It is no guarantee that he is current on federal and state tax law.

Whenever I get a new client I ask to see his or her last three (3) years' tax returns, to make sure I do not miss any carry-forwards and to see if there are any errors that I could correct on an amended return. In my 30+ years of preparing tax returns I have found more mistakes on 1040s prepared by CPAs than by any other class of preparer, including the taxpayer himself.

Some 20+ years ago I was a "para-professional" in the Small Business Services Department of one of the then "Big Eight" accounting firms. While reviewing the prior year's federal and state returns of a client whose current tax returns I was preparing I found a very obvious error on the state tax return, which had caused the client to pay more tax than necessary. Under the firm's policy, the return, which had been originally prepared by a CPA, was reviewed by his "manager" (also a CPA), and signed-off on by the head of the department (a CPA) and a member of the Tax Department (a CPA). None of these CPAs picked up the obvious error!

The only thing you can be sure of with a CPA is that you will be charged twice the price for half the service.

A student in one of the tax planning/preparation courses I taught at local adult schools years ago asked me what was the difference between a tax return prepared by a CPA and one prepared by me (I am obviously not a CPA). My answer was "at least $100.00".

The only initials that have any meaning when it comes to tax preparation are "EA" - Enrolled Agent. The name is misleading. An EA is not an agent of the Internal Revenue Service, but a private tax professional who is "enrolled" to act as a taxpayer's "agent" in proceedings with the IRS and in tax court. To become an Enrolled Agent one must pass a difficult test that is 100% federal tax law. In order to maintain their enrolled status, EAs must have a mandatory number of continuing education credits in taxation each year.

2) Don't assume that H+R Block will charge a reduced, or even reasonable, fee for preparing your tax return!

When my mentor and I got a hold of the H+R Block fee schedule back in the late 1980s we were in complete shock. Henry and Richard ain't cheap! They charge fancy restaurant prices for fast food service! The same answer I gave my adult school student regarding a CPA-prepared return could, with a minor downward adjustment, also to apply to an H+R Block prepared return.

Returns prepared by the employees of Henry and Richard are second to CPAs in terms of errors discovered on 1040s over the years. My mentor always said he wished H+R Block would move next door to our office - we would make a fortune fixing their mistakes!

While it is possible that the best tax preparer, at the best price, for your particular situation is either a CPA or H+R Block employee, it is only because of the education, experience, ability, temperament, and other factors that are specific to that individual preparer.