Even a CPA can goof up, but it's still your tax return


Try to ascertain that the preparer isn't straying from expertise

March 05, 2000|By Liz Pulliam Weston | Liz Pulliam Weston,LOS ANGELES TIMES

We had a professional tax preparer, a certified public accountant, do our 1997 income tax return. In August, we received a letter from the IRS that we owe more tax plus interest because the CPA failed to notice that I was not eligible for a child-care credit because I had a cafeteria plan from my work to pay day care for our son. If the CPA made a mistake, isn't she obligated to at least pay the interest the IRS charged us? We hired a CPA because we wanted to make sure that our income tax return was done correctly.

Legally, no. She's not required to pay the interest. That's your signature on the tax return, and you're ultimately responsible for what's on it, which is why it's important to carefully review your returns and ask questions.

Your CPA could argue, perhaps convincingly, that she shouldn't pay the interest because you owed the extra tax in any case; her error gave you an interest-free loan of the money that should have been paid to the government. Because you had the benefit, why should she pay?

Other tax preparers, however, might cough up the cash. Some do so to retain a valued customer; others would feel vaguely guilty that they didn't ask a fairly obvious question. After all, dependent-care benefits are fairly common, and they typically reduce or preclude taking a child-care credit.

Everyone, even highly paid professionals, can make mistakes. But mistakes are more likely in areas that are unfamiliar -- if, for example, your CPA does mostly corporate work or deals largely with small businesses and then tries to tackle a return outside her specialty. That's why it's important to interview your tax preparer before employing her; you can find out if she handles other clients like you. If you can't work something out with your CPA, take your business elsewhere. But make sure to discuss in advance who will pay for what if another mistake is made.

You recently responded to a woman who was concerned because her ex-husband could qualify for Social Security benefits based on her work record. But wouldn't those benefits end, or not be available in the first place, if the ex-husband remarried?

Absolutely. Of course, it doesn't affect the woman who wrote either way, because her benefit isn't reduced or enhanced based on what her ex-husband does. As I explained, any former spouse who was married at least 10 years can receive as much as half of the ex's benefit amount if both members of the erstwhile couple are at least 62. The ex's benefit amount is not reduced to provide this sum, however, but stays the same. As you note, the ability to draw such benefits ends if the person who is getting the benefit based on an ex's record gets married again.

Had the ex-husband written instead of the ex-wife, I would have mentioned the loss of benefits with remarriage.

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