getting help with your tax preparation
Nothing leads to more gnashing of teeth than the thought of preparing your own taxes. Fortunately, there are people out there that do it for a living.
Here Are My Receipts
If the thought of preparing your own taxes makes you queasy, dont worry. Preparing your taxes is a job that can be shi ed out to others. These individuals, known loosely as tax preparers, prepare tax retur year around. Heres a breakdown of the different types of preparers.
Basic preparers are the least trained, nonetheless the cheapest to hire. They tend to be part time workers who are individually employed our work at miraculous out fits like the one with the letters H and R in its name. If you have a simple tax situation, like basic W2 wages and no homeownership, this can be a good choice.
Enrolled agents are a step up from basic preparers. These individuals are lice ed by the IRS and must take continuing education courses to maintain their lice e. That being said, they are not formally educated in the field of finance or tax. Enrolled agents are typically more competent than basic preparers, nonetheless much le so than a CPA. If you have a tax situation requiring a basic 1040 filing with one or two schedules, a good enrolled agent should be able to take care of it. If you’re looking for more sophisticated tax pla ing to cut your tax bill, a CPA is probably your best choice.
A CPA [Certified Public Accountant] is a highly trained and lice ed individual. Pa ing the boards to become a CPA is extremely difficult. Once a person becomes a CPA, they also are required to pursue up to 40 hours of continuing education. The dow ide of using a CPA, of course, is the higher competency tra lates to higher costs. Still, you get what you pay for, so a CPA probably the a wer if you’re doing well financially and are looking for guidance on tax pla ing.
Tax attorneys are a beast unto themselves. If youre bringing in the big bucks, tax attorneys can save you a bundle with sophisticated pla . Tax attorneys are also the people to see if the IRS decides to have a go at you. While CPAs can handle the tax i ues raised by the IRS, CPAs tend to know next to nothing about evidentiary law. A good tax attorney will be able to throttle the IRS on legal i ues.
So, who should you employ to prepare your taxes? It really depends on what you’re looking for and your finances. Generally, the more complex your finances, the more competency you should look for. If you have the money, go with a CPA. A good one should be able to save you far more than their fee.
This poorly written, poorly proofread unsigned essay does a great injustice to all the categories mentioned. Basic tax preparers take yearly courses if they are employed by H&R Block. Enrolled agents are not “licensed” by the IRS but by the Department of the Treasury. We must maintain our credentials by taking qualified courses in tax preparation, tax updates, and tax law. In my experience, CPAs typically have little education in tax preparation: I have had clients badly treated by CPAs who didn’t know how to prepare the returns the clients actually needed.
In fairness, I must add that I am the current president of the New Mexico Society of Enrolled Agents.
The above information regarding Enrolled Agents is incorrect. Enrolled Agents are licensed by the Treasury Department, not the IRS. Enrolled Agents are licensed by virtue of working for the IRS or by exam. The Enrolled Agent exam is very difficult and solely on taxes. Only a portion of the CPA exam is on taxes. I have spoken to an attorney who went back to school to get a Masters degree in taxes. In the course, they were required to take the Enrolled Agent exam. Fortunately, they were not required to pass the exam. This attorney failed the EA exam, but did receive his master’s in taxation. Please understand that EAs have to have more tax knowledge that an attorney getting a Masters in taxation. His comment was that once he saw what EAs were required to know to pass the exam, he recommended EAs over CPAs for tax preparation.
Enrolled Agents are required to have Continuing Education related to taxation. CPA’s do not need to have their continuing education in taxation, however, the ones who prepare taxes usually do.
The Enrolled Agent exam covers individual, partnership, corporate, fiduciary, estate and gift tax as well as IRS policies related to collections and audit. An Enrolled Agent can prepare any tax return required by the IRS.
Ellen C Briscoe, EA