Types of Tax Return Preparers
Tax return preparation could be time-consuming, complex, and simply frustrating. When there is other work to do, taxes seem to never get stricken off of the to-do list. In any case, filing those taxes is necessary, and the safest way to do it is hiring a professional tax preparer. Take note, even minor mistakes can be expensive and troublesome, but working with an expert helps you avoid them.
The question is, which one must you hire? There are many different types of professionals out there who are more than happy to help you with your taxes. Here’s a list of the most common designations you will encounter:
Certified Financial Planner (CFP)
A CFP has to meet specific education requirements, pass an exam, acquire experience in finance, and satisfy other particular qualifications. There are CFPs who know a lot regarding filing taxes but not all of them do. If you are considering someone with this designation, know more about their tax filing background before working with them.
Certified Public Accountant (CPA)
As indicated by the designation itself, a certified public accountant is a person who has state certification to act as a public accountant It is the sole licensed qualification in accounting. Depending on the particular state requirements, majority must meet certain educational requirements apart from passing a set of exams. CPA services include accounting, financial planning, business evaluation and auditing. Some CPAs specialize purely in taxes.
Enrolled Agents (EA)
An enrolled agent is an individual who has worked in the IRS before or has passed a three-part IRS exam. EAs need to complete continuing education courses in order to stay up to date on changes in tax laws, and should adhere to particular ethical standards. This is the highest IRS-awarded credential a tax preparer can have.
JD (Law Degree) and LLM (Master of Law)
Anybody with these degrees can have a taxation specialty, but not in all cases. If you must work with any legal professional, make sure they focus their pratice on taxes and not a whole range of areas. The attorney who helped you with your divorce or personal injury case is most likely not the best choice for your taxes!
Volunteer Income Tax Assistance Volunteer
A VITA volunteer is an IRS-trained tax preparer who prepares basic returns. If you own a business, however, this is probably not the right individual to approach.
Finally, If you look further, you will find that there are also many bookkeepers, accountants and unlicensed tax preparers out there who are good but do not have formal qualifications. It does not mean you should not consider them. But you may have to look deeper into their tax preparation knowledge and experience.