‘He didn’t seem very alert’: Our CPA said we owe the IRS $443, but we’re actually due a refund of $637. Do we fire him?
Short answer: maybe—but not before you verify the numbers and give him one fair chance to fix his work at no additional cost. Then decide based on his response, the cause of the error, and his overall professionalism.
Here’s a practical path.
First, make sure your “refund” is real
– Get the full tax package from your CPA: the filed return (or draft), all schedules, and his workpapers or a summary of how he arrived at your tax due.
– Reconcile line by line. The swing between owing $443 and getting a $637 refund is $1,080. The most common culprits:
– Withholding or estimated payments not entered (Form 1040, lines for federal withholding and estimates).
– Missed refundable credits (child tax credit, earned income credit, premium tax credit, American Opportunity credit, recovery rebate reconciliation).
– Filing status or dependent errors.
– HSA, IRA, or retirement distributions entered without basis or with wrong codes.
– QBI deduction or itemized deduction mistakes.
– Confirm your inputs. If you used DIY software to get the $637 refund, make sure every W‑2/1099 is entered, basis is correct, and no income was omitted. A return can look better simply because something important was left out.
– Pull IRS transcripts (optional but powerful). With Form 8821 (information authorization) or your IRS online account, check wage & income and account transcripts to confirm what the IRS has on file for your year: W‑2s, 1099s, mortgage interest, etc.
Then, give your CPA one chance to make it right
– Ask for an explanation in plain English. A competent pro should walk you through what changed year over year and why a balance due flipped to a refund.
– If he erred, ask him to:
– Correct the return promptly (or file Form 1040‑X if it was already filed).
– Waive any fees for the correction.
– Reimburse penalties and interest caused solely by his mistake. Pros carry E&O insurance for this; they don’t cover additional tax that was always due.
– Watch the response. A good CPA owns the issue, fixes it fast, and documents the correction. Defensiveness, vague answers, or blame‑shifting are red flags.
How to decide whether to fire him
Keep him if:
– This is a one‑off clerical mistake, he explains it clearly, fixes it at no charge, and improves his process (for example, adds a reconciliation checklist for withholding and estimated payments).
– Communication is timely and respectful, and his prior work has been accurate.
Replace him if you see a pattern or serious lapses:
– Repeated or material errors; missed credits or payments you clearly provided.
– Poor communication, last‑minute scrambling, or missed deadlines.
– Refusal to explain line items or share a copy of the full return.
– Ethical red flags: no PTIN on the return, unwillingness to e‑file, fees based on refund size, promises of “bigger refunds,” or data‑security sloppiness.
– Health, bandwidth, or alertness issues that visibly impair quality. It’s not personal—you need reliable, timely work on a legal document you sign under penalties of perjury.
If you switch, do it cleanly
– Ask for your client file: prior‑year returns, depreciation schedules, basis and carryforward schedules (capital loss, charitable, foreign tax credit, AMT, QBI), and current‑year workpapers. You’re entitled to your records; the CPA may keep his internal notes.
– Have the new CPA file Form 8821 (or Form 2848 if representation is needed) to pull IRS transcripts and verify inputs.
– If the original return was filed wrong, get the amended federal and state returns e‑filed. Federal 1040‑X e‑filing is allowed for most years; refunds from amendments can take weeks to months.
– Clarify fees. If the prior CPA’s mistake caused the amendment, you shouldn’t pay twice.
Protect yourself next year
– Read before you sign. Ask, “What changed from last year?” and “Why do I owe/get a refund this year?”
– Provide a complete organizer and a simple life‑events list (marriage/divorce, job change, RSU exercises, new home, dependents, education, HSA, ACA marketplace coverage).
– Reconcile withholding and estimates against final paystubs and canceled checks.
– Compare this year’s return to last year’s side by side, especially credits, carryforwards, and Schedule 1 add‑backs.
– Vet a new CPA by asking:
– What’s your review process to catch missing withholding/estimates?
– How do you handle amendments and who pays if you make an error?
– Turnaround times and communication standards.
– Security practices for document exchange.
– Whether they sign the return with their PTIN and e‑file.
What about payment or complaints?
– If the return was materially wrong and you decide to move on, ask for a fee reduction or refund tied to the error. Keep communications professional and in writing.
– For serious misconduct, you can report to your state board of accountancy, the AICPA (if they’re a member), or the IRS Return Preparer Office. For damages limited to penalties/interest, many disputes resolve directly or through the CPA’s insurer.
Bottom line
You’re the final reviewer of your tax return, but you pay a pro to reduce risk and save you time. Verify the numbers, give him one chance to remediate at no cost, and judge him by his response and track record. If he can’t explain or correct a basic discrepancy like missing withholding or credits—or if quality or communication is slipping—thank him for past work and move on. You’re not firing a person so much as upgrading a control in your financial life.
