Types of Tax Preparers
A person who prepares taxes for an individual and receives payment for this service is a tax preparer. The cost to hire such an individual to prepare your taxes depends on the level of expertise offered. To choose a preparer, learn the different types and what each can offer.
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Enrolled Agents
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Enrolled agents (EA) have passed an Internal Revenue Service (IRS) examination. Each year, they have to complete courses in methods of accounting and tax regulations to maintain their professional status. These types of tax preparers typically have an area of expertise. EAs are particularly good in several instances: if you have a complex tax return; experienced a change in income due to marriage, divorce, inheritance, retirement or death of a spouse; or have bought or sold a house. EAs can represent you in an audit but cannot conduct one. The National Association of Enrolled Agents (NAEA) lists the certified EAs in the United States.
Certified Public Accountant
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Certified public accountants (CPA) are state licensed and must have an accounting degree or courses related to accounting to take the CPA examination. Look for a CPA with experience handling taxes and current on the latest tax laws. A CPA is the type of preparer you need if there are complex tax matters or a significant change in your life that may seriously impact your tax return. The Association of Certified Public Accountants has a list of members in each state.
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Tax Attorneys
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Tax attorneys are usually the most expensive tax preparers. They are for people with complex corporate tax issues or who want to shelter part of their income. A tax attorney cannot perform an audit but can represent a client under audit, both in and out of court.
National Tax Preparation Companies
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Tax preparation companies are chains that have branches all over the country and charge moderate fees. Tax preparers who work for these companies handle simple returns.
Accredited Tax Adviser or Preparer
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An accredited tax adviser is qualified to prepare tax returns for businesses --- corporations, individuals and partnerships --- owners of closely-held businesses and individuals. This type of tax preparer can handle complex tax issues and can also help with estate planning and retirement plans.
Local Tax Services
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Local tax preparers are not licensed and are typically knowledgeable only about some tax laws. Interview these types of preparers thoroughly to verify their experience and training.
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