What is the different
Tax Preparer
A tax preparer is a professional that is qualified to calculate, file and sign income tax returns on behalf of individuals and businesses. They can also represent the taxpayer during IRS examinations of tax returns. There are various types of job titles these professionals may have, as well as various certifications and educational levels; individuals need to choose which type of tax professional will best suit their situation.
More than half of taxpayers hire a professional tax preparer when it’s time to file a tax return. Taxpayers trust these professionals with the most personal and sensitive details of their financial life - their marriage, their income, their children and their social security number.
People and companies have to file tax returns every year. There are various types of tax preparation professionals, along with various levels of experience and appropriateness to an individual's personal tax situation. The Internal Revenue Service (IRS) requires registration for all paid tax preparers. Tax preparation professionals must obtain a Preparer Tax Identification Number (PTIN) and include it on all returns they sign.
The following is an overview of the various types of tax preparation professionals:
Enrolled Agents
These professionals are licensed by the federal government, and have either been a former IRS employee (for at least ten years), or have passed an IRS exam. They also complete required credit hours every year in tax regulations and accounting methods. They are experts in tax planning and the preparation of tax returns. Many enrolled agents specialize in a specific tax area, and can represent an individual with the IRS and state tax agencies if there are any questions about their return.
Certified Public Accountants(CPA)
These professionals can guide an individual through complex financial situations. For example, if an individual has recently retired, started or closed a business, gotten divorced, or had any other significant lifestyle changes that have impacted their financial situation, a certified public accountant may be their best option. Certified public accountants can configure an overall tax plan for an individual and can also represent them before the IRS. In a mid-sized to large firm, the initial work is done by a staff person who has up to a few years of experience. A more experienced person will review the work. The senior people in the firm tend to concentrate on issues such as planning (the tax laws are complex and there are different ways to do things that can reduce the taxes) and making decisions on more complex issues.