Tax preparers, EAs, CPAs, Attorneys: Who do I need?

Everyone should have their taxes prepared by a licensed individual who has had to prove competency, and you should be well aware of exactly what credentials and rights your tax preparer holds. So let’s take a quick look at the four types of preparers/representatives you will come across.

Tax preparer: Basic tax preparers are not required to take any sort of test or do anything to prove competency in tax matters. Consequently, they may only prepare returns for individuals and are not permitted to represent you in an audit unless they specifically prepared the tax return being audited.

Tax attorney: May or may not be allowed to prepare tax returns. Though even if they can, they do not have to test to prove proficiency in taxation; instead they test only to prove proficiency in law. They are likely an excellent choice if you need representation related to tax matters in court, but when it comes to accounting and tax advice/preparation you might want to look elsewhere.

Enrolled Agents: The only individual who tests and does continuing education specifically on taxation. EAs have unlimited practice rights before the IRS and can prepare any business (entity) or individual tax return. Being the only federally licensed tax agent, EAs are the only ones who can represent you in any state audit, whereas attorneys and CPAs may only represent you in the state wherein they are licensed.

Certified Public Accountants: Geared more toward accounting practices, CPAs test on a wide range of topics including some taxation. CPAs do not do continuing education in taxation, though by far are the most knowledgeable and highly certified in areas of auditing and accounting principles. CPAs are allowed to prepare any business (entity) or individual tax return as well as represent you before the IRS or in the state wherein they are licensed. A CPA may not represent you in other states like an EA can.

So which do you need? Generally you should consider either an EA, CPA or attorney based on your individual needs, but never use a basic tax preparer. While there are no doubt many who are quite competent, not having to prove that competency means you have no way of knowing if you’ve found a good one or not. When it comes to having your taxes prepared, you know you’ll be in good hands with a CPA or EA, and if you find a reasonable one you won’t be paying any more just because they are licensed. In fact, with Azalea City Tax & Accounting your taxes are prepared by EAs or CPAs prices far less than H&R Block or Jackson Hewitt where you’ll only find basic tax preparers.