Different Types of Tax Return Professionals
Tax return preparation may be time-intensive, challenging, and downright maddening. 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. Keep in mind that even minor errors can be costly and troublesome; but with an expert, you can avoid them.
The question is, which one must you hire? There are many types of professionals out there who are more than glad to help people with their 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. 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 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. Covered under CPA services are financial planning, business evaluation, auditing, and of course, accounting. There are some CPAs who specialize exclusively in taxes.
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 IRS-awarded credential a tax preparer can have.
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 intend to work with a legal professional, make sure their practice is focused on taxes alone, instead of an entire range 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 an IRS-trained tax preparer who prepares 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. 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.
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