Types of Professionals Who Prepare Tax Returns
Tax return preparation could be time-consuming, complex, and simply frustrating. When there is other work to be done, taxes seem to never get erased from of the to-do list. Nevertheless, getting such taxes filed is a need, and the safest way around it is to hire a tax professional. Remember, even small mistakes can be costly and troublesome, working with an expert however helps you prevent them.
The question is, which expert should you hire? There are various types of professionals out there who are can help you with your taxes. Below is a quick rundown of the most popular designations you will see:
Certified Financial Planner (CFP)
A CFP should meet particular education requirements, pass a test, be experienced in finance, and satisfy other specific qualifications. Some CFPs are knowledgeable about filing taxes, but not all are. If you are considering someone with this designation, know more about their tax filing background before working with them.
Certified Public Accountant (CPA)
As the designation indicates, a certified public accountant is an individual who has been certified by the state to act as a public accountant. It is the sole licensed qualification in accounting. Depending on certain state requirements, most people need to meet certain educational requirements besides passing a number of exams. Covered under CPA services are financial planning, business evaluation, auditing, and of course, accounting. Some CPAs are exclusive tax specialists.
Enrolled Agents (EA)
An enrolled agent is a person who has passed an IRS exam or was employed by the IRS employee in the past. 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 credential the IRS can award a tax preparation professional.
JD (Law Degree) and LLM (Master of Law)
Anyone who has these degrees may have a specialty in taxation, but this is not the case all the time. If you are planning to work with a lawyer or any other legal expert, ensure that the focus of their practice is taxes, rather than a whole variety 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
VITA volunteers are tax preparers IRS-trained in tackling basic returns. However, if you are a business owner, this is often not the best person to approach.
Finally, looking further, you will find that a lot of bookkeepers, accountants and unlicensed tax professionals who do a great job but have no formal qualifications. This does not mean they should not be considered. But you may have to spend more time learning about their tax preparation-related education and experience.
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