Why would you pay more for a "better" CPA?

You may think, what’s this nonsense, what do you mean by a “better" CPA?

?We were doing Tax preparation for one of our clients.?As part of that process, we were reviewing his 2021 return to see what I needed to prep for in 2022. Within less than 5 MINUTES we found a crucial error made by his CPA.

No QBI Deduction. This taxpayer probably doesn't even know what that is, but it cost him about $22k of taxes paid to the IRS.?

Within another 5 minutes, we realized he was reporting guaranteed payments of almost double his income passed through from his business. Guaranteed payments reduce the income subject to the QBI deduction - had he taken these as distributions instead, he would have saved another $16k.?

That is almost $40,000 of taxes he unfairly paid to the IRS because his CPA missed the following-?

1) He didn't have a good quality control review in the process to catch such a small but costly mistake.

2) He used a one size fits all approach and didn't bother looking at his client's personal situation to recommend changes to his operating agreement.

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What if this happened to you?

Would you rather pay the IRS an extra $40k, or pay a quality firm an extra $3k?

I know, It’s a rhetorical question ???We would have probably charged him $1,000-$3,000 more than his prior CPA to do this work last year, but I am willing to bet that with all that extra savings, he would have gladly paid us the money to get it done right.

?If you think about the above case, who was at fault here? The CPA or the client? Write to us in the comments below.

Read our blog to learn what they could've done differently.