This big myth has been around a long time. CPA firms have done an amazing job at promoting their services and convincing taxpayers that they need a CPA to prepare their tax return. While there are many very competent CPAs that specialize in tax preparation, not all CPAs do. Did you know that there are about two dozen different things a CPA can specialize in? So, if you are going to hire a CPA, find out their area of expertise.
In addition, if you are considering a CPA firm, you should ask if a CPA will be doing the actual work or if it will be done by someone else in the office. Many times, another person within the firm will actually prepare the tax return, and then the CPA will simply review it and sign off on it. Yet, the price tag may still be higher, simply because a CPA reviewed your return.
If I don’t need a CPA to prepare my tax return, who DO I need?
Many times, all you really need is a competent tax preparer with experience who keeps up with the tax law changes each year. After all, tax is not accounting, it’s law. But if you are looking for an expert in the tax field, you should consider an Enrolled Agent (EA).
What is an Enrolled Agent (EA)?
An Enrolled Agent (EA) is an IRS-authorized tax practitioner who has technical expertise in the field of taxation and is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the IRS, including examination, collection, and appeals. In addition to taxpayer representation, Enrolled Agents often provide tax consultation services and prepare a wide range of federal and state tax returns. An EA can handle very complicated tax returns and any tax issues that may arise.
And did you know…
Must pass a three-part exam to become an EA. All three-parts cover tax.
- Part 1 – Individuals
- Part 2 – Businesses
- Part 3 – Representation, Practice & Procedures
Must pass a four-part test to become a CPA. Only one part of the test covers tax, and it’s corporate taxation.
- Auditing & Attestation (AUD)
- Financial Accounting & Reporting (FAR)
- Regulation (REG)
- Business Environment & Concepts (BEC)
So, the next time you are looking for a tax professional, be sure to consider ALL of your options. You may simply need a competent tax professional who keeps up-to-date with the tax law changes. But if you think you need more than that, be sure to ask the right questions, so you get exactly what you are paying for.
Peoples Tax has many competent tax professionals on staff, including EAs and CPAs. In addition, our tax professionals keep up-to-date with their ongoing tax training needs through our sister company, The Income Tax School, a tax industry leader in online tax education.