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Does it matter if the person who is filing your taxes is certified?

What’s the difference between a CPA, EA or non-registered tax advisor?

Tax season is officially in full bloom. During this time of year, the number one question we are getting right now is: “Do you file taxes?”

And no, our team does not file taxes…nor do we want to.

Tax preparation is another job in and of itself, and we refer that responsibility to the pros who live and breathe taxes all-year long.

So, who should you hire to prepare and file taxes for you? What’s the difference between a CPA, EA, or non-registered tax advisor, anyway?

If you’re looking to hire a professional, here’s a basic breakdown of the designations and whom you should really hire.

CPAs.

Most people are familiar with CPAs (certified public accountants). CPAs are licensed at the state level and can provide accounting, tax, and financial services to individuals, businesses, and other organizations. They can also represent you in front of the IRS.

EAs. 

EAs (enrolled agents) are licensed at the federal level by the IRS and specialize in tax matters – audits, appeals, or tax collection – for individuals and businesses.

Non-registered tax advisors. 

Non-registered tax advisors are people who prepare and file taxes but are not certified or registered with the state or local government and may only prepare tax returns. They are not able to represent clients before the IRS. These are more like “data entry” tax professionals.

All of these tax preparers must maintain an active preparer tax identification number (PTIN).

So, what are some of the most important things to keep in mind when choosing which kind of tax professional is right for you to work with? 

Rob Tamburri, CPA and Managing Partner at Balog & Tamburri, LLC shares his thoughts.

“The big difference between a CPA and an EA is that CPAs are required beyond a higher education level (now 150 hours at college) to do 40 hours of continuing education annually, plus ethics every couple of years (varies by state law). CPAs typically have a deeper depth of knowledge of complex tax and accounting matters. People who are non-registered typically are not available year-round for questions and can’t represent you in front on the IRS whereas CPAs and EAs can. CPAs typically help with tax planning and business consulting, too, which clients find helpful when reviewing their books, etc.”

Additionally, another important thing to keep in mind is that CPAs and EAs are bound by a strict code of ethics, whereas a non-registered tax advisor is not.

THE BOTTOM LINE: 

Not to be dramatic, but the IRS is not someone you want to mess with. They do have the power to garnish your wages and show up at your doorstep to audit you.  So, take tax planning and filing seriously. Even if you have been doing it yourself all these years, it may be time to hire a certified tax professional to take a second look at what you’ve been doing on your actual tax forms. There may be some blind spots or opportunities for additional savings you may be unaware that a professional can help you identify.

The best tax professionals are CPAs and EAs with whom we frequently communicate throughout the year – not just during tax season – on behalf of our clients to make sure everyone is on the same page and up-to-date with tax planning as a major component of their financial plan.

I'm Helen

Having worked in finance for over a decade, I know what matters most to clients. Here, I share with you what you really need to do to stay on top of your money and retire rich.
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