Different Types of Tax Return Professionals
Tax return preparation can be time-consuming, complicated, and downright exasperating. When there is other work to finish, taxes seem to never get removed from the to-do list. Still, those taxes getting filed is a necessity, and the safest method of doing it is hiring a tax professional. Take note, even minor mistakes can be expensive and troublesome, but working with an expert helps you avoid them.
The question is, which expert will it be? 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 should pass an exam, fulfill certain educational requirements, obtain experience in finance, and meet other specific qualifications. Some CFPs are knowledgeable about filing taxes, but not all are. 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 indicated by the designation itself, a certified public accountant is a person who has state certification to act as a public accountant In accounting, this is the sole licensed qualification. Depending on certain state requirements, most people need to meet certain educational requirements besides passing a number of exams. Accounting, financial planning, business evaluation and auditing are they key services provided by CPAs. 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 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. An attorney who can help you with a car accident or divorce is probably not your best choice when it comes to 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. If you are a business owner, however, this individual may not the best person for you 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. This does not mean you have to rule them out. But you may have to look deeper into their tax preparation knowledge and experience.
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