Types of Professionals Who Prepare Tax Returns
Tax return preparation may be time-intensive, challenging, and downright maddening. When there is other work to be done, taxes seem to never get erased from of the to-do list. Still, those taxes getting filed is a necessity, and the safest method of doing it is hiring 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 one must you hire? There are various types of professionals out there who are can help you with your taxes. The following is a quick list of designations most common today:
Certified Financial Planner (CFP)
A CFP should meet particular education requirements, pass a test, be experienced in finance, and satisfy other specific qualifications. There are CFPs who know a lot regarding filing taxes but not all of them do. If you are looking at someone with this designation, research more about their experience as a tax preparer prior to hiring 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. CPA services include accounting, financial planning, business evaluation and auditing. 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)
Any person with these degrees may have a taxation specialty, but this is not true in all cases. 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 did a great job with your car accident or divorce may not be your best option for your taxes!
Volunteer Income Tax Assistance Volunteer
A VITA volunteer is a tax preparer who has been trained by the IRS to handle basic returns. However, if you are a business owner, this is often not the best person 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 spend more time learning about their tax preparation-related education and experience.