How to Choose a Trustworthy Tax Preparer This Tax Season

What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values. How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity, and have been trained to offer biblical financial advice.

To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA. The holidays are behind us, and you know what that means? It's tax season. But do you know who your tax preparer will be?

Hi, I'm Rob West. It's gone largely unnoticed, but there's a nationwide shortage of CPAs and accounting talent in general. Waiting to line up your tax preparer could cause problems, but I'll tell you how to avoid them. And then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions. So first of all, when you hire someone to do your taxes, the odds are that person will either be a CPA, a Certified Public Accountant, or an enrolled agent. Both are qualified to prepare and file taxes for other people, although the CPA requirements are much stricter than those of an enrolled agent. Some attorneys also specialize in tax law. The problem is, right now, there's a shortage of CPAs and enrolled agents.

In particular, not enough young people are choosing those fields. One major firm even started hiring high school interns at $22 an hour to entice them into becoming CPAs. Now, this may become not only an inconvenience to a lot of people this tax season, but a real danger. If folks become desperate to find tax professionals to file their returns, it opens the door to unscrupulous tax preparers who may even be falsifying their credentials. The IRS suggests a number of ways to protect yourself from these fraudsters who come out of the woodwork every tax season to perpetrate refund fraud, identity theft, and other scams. Look for a preparer who's available year-round. If you're audited, you certainly want your tax preparer available to represent you.

So, obviously, you want to avoid fly-by-night operations. When interviewing a tax preparer, ask for their IRS preparer tax identification number, or PTIN. Paid tax return preparers are required to register with the IRS, obtain a PTIN, and enter it on any returns they prepare.

You can check whether a tax preparer has done this by going to IRS.gov and looking them up in the directory of federal tax return preparers. This tool can also help you locate a preparer in your area with the qualifications you're seeking. You should also ask if the preparer has a professional credential, such as a CPA or enrolled agent.

Ask about continuing education classes they've taken. Tax laws are complex and change frequently. Preparers have to stay up to date on tax topics. You can also check on the history of a tax preparer. For CPAs, check with the state board of accountancy.

For enrolled agents, go to IRS.gov and search for verify enrolled agent status. For attorneys, check with their state bar association. Then you also want to ask about fees. Avoid preparers who base their fees on a percentage of their client's refund, or if they brag their refunds are bigger than the competition. Do not give any personal information or documents to a preparer unless you've checked them out and are satisfied that they're legitimate.

All a fraudster needs is your social security number to file a fraudulent return and steal your refund. You also may want to make sure the preparer offers IRS e-file and then ask to have your return filed that way. If the preparer can't or won't file electronically, that's a warning sign. Paid preparers who do taxes for more than 10 clients generally must file electronically.

It's also the safest and most accurate way to file. Next, watch out for a tax preparer who doesn't ask you for records and receipts. Legitimate preparers need those documents and will always ask you for them, so be prepared.

Here's another warning sign. If a preparer says they can e-file your return based simply on a pay stub, head for the door. They're required to use a W-2 and you'll need to provide it. You also need to understand the rules of representation. If you're audited, CPAs, enrolled agents, and attorneys all can represent you before the IRS in any situation. Non-credentialed preparers, including your cousin Bill who's a whiz with numbers, cannot represent you if you're audited.

The next one goes without saying, but let's say it anyway. Never sign a blank check or an incomplete return. Review the entire tax return and make sure it's complete before signing.

Ask questions if something's not clear or looks inaccurate. Also, any refund should go directly to you, not into your preparer's bank account. To make sure, check the routing and bank account number on the completed return. Now, one way you can avoid any potential problem with your tax preparer is to look for a CPA, enrolled agent, or tax attorney with the Certified Kingdom Advisor designation. Just go to faithfi.com and click Find a Professional. All right, your calls are next, 800-525-7000.

We'll be right back. What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values? How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity, and have been trained to offer biblical financial advice.

To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA. Your call is next, 800-525-7000. Thanks for joining us today on Faith in Finance. Well, it's time here in just a moment to begin taking your calls and questions.

That number, 800-525-7000, 800-525-7000. Our team is standing by. We'd love to take your question, get you on the air, try to help you navigate the financial questions and issues in your life, and do that in light of biblical wisdom. Our goal here at Faith in Finance is that you would see God as your ultimate treasure, understanding you have an abundance before the first dollar because of your identity in Christ. But we have a high calling. Once we surrender our lives to Jesus, it's about stewardship and a whole host of areas, time, talent, relationships, God's word, and yes, God's money as well. You see, whatever you have been entrusted, however little or much, the goal is faithfulness.

We want to manage the Master's resources according to biblical wisdom. Our hope and objective each day is to help you do that on this program in a way that's theologically sound, that's expert, that's even empathetic. Understanding that, you know what, we make difficult choices along the way. Some of us have made some decisions we wish we could change in our financial lives. And yet we can leave all of that at the foot of the cross and move forward, seeking to be found faithful with the daily spending decisions we're making, recognizing that they're one of the most tangible and even visible expressions of what we ultimately have placed our trust in.

Hopefully that's trust in the Lord as provider, allowing money to become a tool to accomplish God's purposes. That's at least our goal to help you do that each day. So what's your question today? Give us a call. We've got some lines open, perhaps one just for you.

Questions on any financial topic, 800-525-7000. We're going to begin in Oregon today. Betty, go ahead.

Thank you for taking my call. My question is, as I turn 70 and a half, is it advantageous for me to start doing my charitable giving from my IRA or wait until 73 that you have to do the required minimal distribution? Yeah, it's a great question, Betty. I like the qualified charitable distribution a lot. So as you point out, it's coming from an IRA directly to a 501 C3 not for profit. The benefit, although you can take it at 70 and a half, you're right with the required minimum being pushed out to 73. And with the qualified charitable distribution, being able to satisfy that a lot of people take that at age 73 and beyond, because often they don't need the money, but the IRS is making them take it out. So they might as well give it away.

So your question, why would you do it at 70 and a half? Well, especially if you itemize or excuse me, if you take the standard deduction, and you don't itemize, it can be a great way to do the same giving you were already going to do with after tax money. So giving coming out of your checking or savings account, but instead do it out of your IRA, because the qualified charitable distribution starting at age 70 and a half is the only way to get that pre tax money out of that IRA without ever paying tax on it. Every other way of, you know, taking money out of that IRA except the qualified charitable distribution is going to result in you adding the amount of the withdrawal or what's called the distribution to your taxable income for that tax year. The only way to avoid that is when it goes straight to a charity. So what a lot of people do is they say, Okay, I was going to give X amount to my church and, you know, you total up all they're giving, which they would typically do out of after tax dollars sitting in a, you know, an investment account or checking or savings, and they just switch it and do it out of the IRA instead, thereby getting the money out, not adding it to their taxable income. So although you don't get a deduction on it, you don't ever have to add it to your taxable income, which is a big win. Does that make sense?

It does. Yeah, that's a better way to do it because I'm going to be making the donation anyway, I might as well take the tax advantage of it. Exactly right.

Yeah. So rather than taking money that you've already paid tax on and giving that away, let's do it from your IRA, never pay tax on it. And then a couple of years from now, once you have that required minimum, you just keep that practice going.

And now not only are you getting the benefit of getting that money out, getting it into the kingdom without paying tax, but now you're satisfying your your required minimum at the same time. Perfect. Perfect. Thank you for explaining that. And God bless your day. Thank you. Thank you, Betty. I appreciate your generous heart. Let's go to North Carolina. Hi, Anna. How can I help you?

Yes, sir. So I have $10,000 in the savings account with my local bank, and it's only like 10 cents in interest a month. And I never invested before. So I'm really kind of interested in putting that money somewhere else. We're going to create some extra availability of money. Yeah, yeah, very good.

I do, I'd be happy to. So I think there's two roads you could go one would be where you're just looking to maximize the return. And you know, interest rates are still very attractive right now. I mean, we're, I'm looking at high yield savings accounts right now with, you know, four and a half and five star out of five rated banks, you know, with no fees, and maybe a minimum deposit of anywhere from $100 to $5,000, where you can get right now. Where you can get four and three quarters percent right now 4.6% four and a half. So, you know, I think the idea that you could get four and a half percent on your money is very realistic in high yield savings. And that would throw off $450 a year, which is, you know, not an enormous amount of money, but it's better than a few 10 cents a month.

So $1 20 over the year, I'd rather have 450 for sure. So you're probably going to need to go with an online bank. Now, I don't have any problem with online banks, personally, I mean, they have the same FDIC insurance, they have the same, you know, regulatory environment, they have the same reserve standards. I think the difference with an online bank is only that you don't have the brick and mortar operations.

And so because they're able to cut costs and keep overhead low, they're able to pass that on in the form of higher, you know, more benefits, higher interest rates, no, you know, higher rates. You know, fees, no other kind of expenses related to to opening the account. The place that I would go and if you want to start to do some investigation would be bank rate.com bank rate.com. Right there at the top of the page, you will see a button that says high yield savings. And you can start to scroll through the high yield savings accounts, you know, that are offering the very best rates bank rate as an independent five star rating system. So you can see how they stack up whether or not they have FDIC insurance, any minimum balance to earn that annual percentage yield, and then any ongoing fees.

So I would start there. The second option I would consider if instead of just looking at the rate, if you also want to be with a banking partner that shares your values, that's where I would check out our friends at Christian Community Credit Union, you can go to join Christian community.com join Christian community.com. What we're finding is more and more believers are wanting a banking partner that shares their values where they're not taking any of the corporate profits and supporting things that you don't agree with. In the case of CCCU, they're even taking part of the money they earn as a credit union and supporting Christian ministries.

It's a wonderful partner of ours. And again, you can learn more at join Christian community.com. They have what they call their harvest high yield savings. And it has an exceptional rate of 5% APY for balances up to 5000. And that would be lower beyond that. But that could be a great option for you. Is that helpful, though?

Oh, yes, sir, it certainly is. Okay, very good. Again, that website if you want to check out Christian Community Credit Union, join Christian community.com. The only requirement is that you are a Christ follower in terms of joining that credit union. Thanks for your call today. Folks, we've got lines open, we're ready for you. We'd love to tackle your financial questions. The number to call 800-525-7000. That's 800-525-7000. This is faith and finance helping you apply God's wisdom to your financial decisions and choices.

We'll be right back. If you enjoy this radio program, you're going to love all of the many different resources waiting for you at faithfi.com and the faith five app, you'll find powerful wisdom, free podcasts, articles, videos and more from leading voices such as Randy Alcorn, Howard Dayton, Ron Blue and our own Rob West. Grow in wisdom and knowledge. By connecting with a community of thousands of Christians striving to be good and faithful stewards at faithfi.com or by downloading the faith five app. We're grateful for support from Timothy plan for more than 30 years. They've served clients on a biblically responsible journey to invest in a way that honors God and gives dignity to people's lives. More information is at timothyplan.com. The investment objectives, risks, charges and expenses are contained in the prospectus and summary prospectus available at timothyplan.com.

Mutual funds distributed by Timothy Partners Ltd and ETFs distributed by Foresight Fund Services, LLC. Great to have you with us today on faith and finance. We're taking your calls and questions today.

800-525-7000. Let's head right back to the phones. James, tell us what's going on in your life and how I can help.

All right. So about a year ago, I had a landscaping company. I kind of ran it into the ground because you know, I took my foot off the gas and I took my eyes off Christ. So about a year, about almost a year has passed back following Christ daily and devoted my entire life to him again, and then devoted my brand new handyman company to him as well. But I need help with trying to figure out how to manage the money in my company. And I'm just looking for resources to better be, to be a better steward of my money or God's money that he's allowing me to manage in this company.

I just don't know what direction to go in. Well, I appreciate that. First of all, I'm delighted to hear about your walk with the Lord and you rededicating your life there. I hope you're a part of a Bible believing and teaching church that you can get plugged into and really engage in. I think perhaps even just looking for a community of other business owners that you could maybe be a part of. You know, there's a lot of different organizations that provide, you know, whether it's a monthly or a weekly basis. You know, there's a lot of different organizations that provide, you know, whether it's a monthly small group that you might meet with or just some other folks in your same season of life and and position in terms of operating a small business that you could learn a ton from just being alongside others who are really asking the same questions and trying to do the same thing.

You are just for encouragement in terms of, you know, how you need to think about your finances. The biggest issue that I run into with regard to, you know, maintaining a profitable and stress free small business is, first of all, just separating your personal and business finances. So you're going to want to make sure that for that handyman business, you've got a separate business bank account, dedicated checking account for all business income and expenses.

You know, perhaps get a business credit card that you're only using exclusively for, you know, business related purchases just to keep everything separate. So primarily, for tax purposes, you're able to clearly delineate and defend before the IRS, what is truly a business expense and what isn't. This is also going to be important for you to figure out, you know, how the business is doing and really evaluate, you know, whether or not it's something that is ultimately going to be sustainable for you financially.

And, and having those those good books will really be key. Obviously, establishing a budget both on the personal side and the business side, projecting monthly income based on the average job size and frequency and accounting for fixed costs like insurance and licensing or variable costs like, you know, fuel and materials, you know, perhaps setting profit goals, all that would be a part of it. And then perhaps using a fairly simple but effective accounting package, some software like QuickBooks, or, you know, FreshBooks are one of those.

That can automate invoicing and expense tracking and financial reporting. And then, you know, you're going to want to save receipts, you can use one of the apps like Expensify or ramp, but you're going to want to scan and organize your expenses by category just to maintain a really effective business and then manage your taxes. This is going to be another, you know, key part as you track your tax deductible expenses, like vehicle expenses, or, you know, tools and equipment, things like that. Set aside money for taxes, so you don't want to get caught not having the money and you're going to want to go and send in those quarterly estimated payments. I think another key piece could be, James is connecting with a CPA or accountant, somebody who's familiar with small businesses that can help you maximize deductions, and ensure you're compliant, they can also help you set up your books and get a good system for, you know, invoicing and managing cash flow. And then I would say, finally, you know, you really want to think about ensuring your business general liability and, and then additional coverage, depending on, you know, the kind of work you're doing. And then once you get all that, you know, in place, and you have some surplus, then we're going to want to get you, you know, putting some money away for retirement.

So a SEP IRA, SCP, or a solo 401k, or a simple IRA could be a way for you to get up and running and start to sock some money away. But, you know, hopefully that gets you pointed in the right direction. Is that helpful, though? Yeah, I just got one more question. Have you ever heard of a pay yourself first system?

Do you think that is a biblically sound system? Yeah, I mean, describe what you mean by that when you say pay yourself first. I think I absolutely do agree, but I want to make sure I understand what you mean. So instead of expenses, plus materials equals profit, so whatever's left is the profit that I keep. And instead, at the beginning, I take the profits first, put them in a separate bank account, and then I run the company off of what is left.

Yeah, yeah. So I have a separate account for taxes that's hidden away at the savings account with 5% interest. Sure, that can be really effective because it prioritizes your well being, which is good. It ensures that your personal and financial expenses are covered.

It establishes kind of some rhythms and some discipline, you know, I think can be really helpful. It's challenging, though, when you have a new small business just because you're trying to get up and running and you've got a lot of, you know, startup costs, and you maybe don't have your clientele in place yet. But I mean, ideally, yes, you would set a reasonable salary, or draw based on your living expenses, you know, establish a separate account for your pay. So you'd transfer your pay into a personal account, just as you would for an like a W two employee paycheck, and you can automate those transfers. And you'd want to, you know, plan around business cash flow. So you'd want to think about any seasonality that you have. So you're setting aside during high revenue months to cover the leaner months, and then you want to account for taxes.

And as I said, ultimately, retirement contributions. But yeah, I mean, if you could get into that, that rhythm, right now, that would be great. In some cases, you may need to give yourself a little bit more time.

The key would be does the business have enough cash flow to cover its operating expenses, and make sure that you're not, you know, incurring any debt or neglecting, you know, any kind of investments in the business, like marketing, but I think if you could get into that rhythm, absolutely, that would be a great idea. Let's do this. Hang on the line. I'm going to send you a book called business by the book.

It's a classic from Larry Burkett. I think it'll get you pointed in the right direction. Quickly to Fort Lauderdale. Steve, we're going to finish with you, sir.

How can I help? Hi, thanks. Yeah, considering Trump 2.0, would it be a good time to sell a house and buy another house thinking of prices and interest rates or to wait? Yeah, it's a good question. You know, I don't think there's anything coming in the next six months that's going to materially affect this, because we're, you know, whereas six months ago, we would have thought this would be the year that interest rates like they rose rapidly might decline rapidly. But now we're not we're not seeing that we think we'll probably find out. We think we'll probably finish the year in the high fives, low sixes, you know, maybe even a bit higher than that. So you're probably not going to see much decrease in the interest rates if you're replacing a mortgage. And you're we don't expect, especially in Florida, you know that the market is going to soften. We may see a decrease in the in the rate of increase of home values, but probably not any kind of decline in home values, broadly speaking.

So I think this is really more about, you know, you finding the home that's right for you, that fits your budget, that meets your needs, and really the timing of when you locate that home versus you trying to time this based on some economic events, because I just don't think in the next six months, you're going to see that anything is going to materially affect us. I hope that helps, Steve. God bless you, sir. Big thanks to my team today. Amy, Taylor, Dan and the incredible Gabby T. We'll see you next time. Bye bye. Announcer This week on Finance is provided by Faith Buy and listeners like you.