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Using Estimates in Tax Prep

Can an accountant use estimates (as opposed to precise actuals) from the taxpayer when preparing and signing a tax return? Per the AICPA Statement on Standards for Tax Services No. 4 an accountant MAY accept estimates from a client as long as such use is not prohibited by law or regulation.

Disclosing that an estimate was used is generally not necessary.


An accountant should not provide the impression that an estimate Is more precise than it actually is; for example, advising the client to not use round numbers.

Estimates may be used when exact data is impractical or unavailable so long as the estimate seems, to the accountant, reasonable.

The accountant may advise the client on the use of estimates, but the taxpayer must be the one to provide said estimates.

If you would like to find out how Wander CPA can help you save on taxes, email info@wandercpa.com.



Source: https://www.aicpa.org/content/dam/aicpa/interestareas/tax/resources/standardsethics/statementsonstandardsfortaxservices/downloadabledocuments/ssts-no.4-use-of-estimates.pdf

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