When it comes to preparing your tax return, you have several options. The type of tax preparer you choose depends on your specific needs, the complexity of your tax situation, and your comfort level with their expertise.
Types of Tax Preparers
Here’s a breakdown of the different types of professionals who can help:
Certified Public Accountants (CPAs)
A CPA is a licensed professional who has met rigorous education, experience, and examination requirements set by their state’s Board of Accountancy. They are uniquely qualified to provide a wide range of services, including:
- Tax return preparation
- Tax planning
- Financial recordkeeping
- Auditing and financial statement review
- Business consulting
- IRS representation for audits, appeals, and payment or collection issues
👉 Pro Tip: Not all CPAs specialize in tax preparation, so it’s important to ask about their specific experience with individual or business tax returns.
Enrolled Agents (EAs)
EAs are federally licensed tax practitioners who specialize in taxation. Unlike CPAs and tax attorneys, EAs are required to demonstrate comprehensive knowledge of tax law, representation, and ethics before the IRS grants them unlimited rights to practice.
What EAs can do for you:
- Prepare and file tax returns for individuals, businesses, estates, and trusts
- Represent taxpayers in IRS audits, collections, and appeals
- Offer expert tax planning advice
EAs are a great choice for those who want specialized expertise in taxation combined with the ability to handle IRS-related issues.
Tax Attorneys
Tax attorneys are lawyers with advanced training in tax law. They’re particularly suited for complex legal matters involving taxes, including:
- Estate tax planning
- Resolving tax disputes with the IRS
- Advising on international tax issues
- Assisting with tax debt resolution
Many tax attorneys also draft contracts or legal documents to help clients achieve favorable tax outcomes. If you have a complicated legal situation or a significant tax issue, a tax attorney may be the right choice.
Non-Credentialed Tax Preparers
These are individuals who prepare tax returns but do not hold professional credentials such as CPA, EA, or tax attorney licenses. Examples include:
- Seasonal tax preparers at retail tax chains like H & R Block
- Volunteers in the IRS Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs
What they can offer:
- Preparation of basic tax returns
- Answers to routine tax questions
Limitations:
- They cannot represent you before the IRS unless they have completed the IRS Annual Filing Season Program, which grants limited representation rights under specific circumstances.
- They typically lack the expertise to handle complex tax situations.
How to Choose the Right Tax Preparer
To determine the best fit for your needs:
- Assess your tax situation: Simple returns may only require basic assistance, while complex matters might call for a CPA, EA, or tax attorney.
- Check qualifications: Verify their credentials and experience in handling returns similar to yours.
- Ask questions: Don’t hesitate to inquire about their areas of expertise, fees, and ability to represent you before the IRS if necessary.
By understanding the differences between these tax preparers, you can make an informed decision that ensures your taxes are handled accurately and efficiently.
