What Kinds of Tax Preparers Are There, And What Do They Specialize in?

In April of each year, everyone starts rushing to finish and file their taxes. Even though many people do their taxes, anyone who owns a business or has many assets and investments should hire professional tax preparers. There are many different kinds of tax preparation services and people who help with tax planning. Some of these people are Enrolled Agents, CPAs, or lawyers. What’s the difference between an Enrolled Agent and a tax preparation service?

Services for Making Tax Returns

Most people know about places like H&R Block and Jackson Hewitt that help people pay taxes. For a fee, these services will help you fill out and file your annual tax return. They may also offer refund advance loans. All over the country, there are many more minor services like this. Most of the time, they hire certified professionals like accountants to work there, but some may also hire experienced non-professionals or accounting students. If you use tax preparers who aren’t certified, be careful because they might need to learn the tax code better and miss deductions.

CPA’s

CPAs are the most common way for people to get certified as tax preparers, but there are other ways. To become a Certified Public Accountant, you must go to high school and earn an accounting degree. They are licensed by their state and must take classes yearly to stay certified. Accountants don’t just do your taxes; they also help you plan your finances, business, and taxes. Some CPAs work full-time or part-time for tax services. It is suggested that big businesses hire a CPA to work for them. Any CPA should show their most recent credentials or be willing to give them to anyone who asks.

Tax Lawyers

Just like doctors, lawyers can specialize in a particular area of the law. Some people go into tax law, which can be a very profitable field. Tax attorneys help their clients with tax disputes, setting up tax shelters, paperwork for corporate tax measures, and more. They need to improve at filling out tax forms. A tax attorney is a good person for a more significant business to keep on retainer because they know the tax code well and can advise on how to invest and what deductions might be best for the company. Check with the local Bar Association to see if the lawyer you’re hiring is good.

Enrolled Agents

The job duties and training of an Enrolled Agent (EA) are different from those of a CPA. The IRS gives EAs permission to stand in for taxpayers. They don’t have a set training program, but they do have to pass an exam and keep learning. An EA is a tax expert who can help with audits, investigations, and tax preparation. Unlike most tax preparers, they have to protect the privacy of their clients. An authorized agent is the only person the federal government has chosen to speak for taxpayers. In the US, there are only about 49,000 EAs, and they should be proud to show their credentials.

Different Fields of Knowledge

CPAs know everything there is to know about money. Their test to get certified has 1000 questions, but only about 250 of them are about taxes. Most accountants spend most of their time doing basic accounting and only work on taxes during tax season. Their advice and direction are essential to run a business well. An Enrolled Agent, on the other hand, only does taxes. Their test covers the whole tax code but doesn’t cover accounting or business basics. They had to pass a tough test to become an EA in the first place, and they had to take classes and tests every year to keep their skills up to date.

How It Works in Real Life

A company should keep a CPA on retainer all year long to get advice on business issues and taxes. Their services are essential to running a business and making money from it. An Enrolled Agent will charge a little less than a CPA, but that offfewerany services. If your business has a specific tax problem, consider calling all an enrolled agent instead of a CPA. They have to protect the privacy of EA clients and have a lot of experience with tax issues, especially audits. Corporations and people with a lot of money should hire a tax lawyer to take proactive steps to protect their income.

All kinds of tax professionals can work for services that help people do their taxes, and they do. When it’s time to choose a tax planner, you should first figure out how big your needs are. A tax service or CPA will work just fine if you are a single person with a simple tax return. Hire an enrolled agent if you worry about being audited or need exceptional help with the IRS. Tax lawyers can help you with legal tax issues. These financial advisors can do their job within the limits of their specialization, but they are sometimes different.