Benefits of Using Income Tax Preparation Services
There are different types of income tax preparation services, with varying degrees of experience. In fact, since the field is not regulated by the government, anyone with a mind to can print up cards and go into business as a tax preparer. Selecting the right service depends on your tax situation and needs. This article will walk you through the four basic types of income tax preparation services so you can choose the one that’s right for you.
The professionals who work for the national chains or local outlets have been trained to some extent, but the level of their expertise can vary greatly. Most of the tax preparers are earning just above minimum wage plus commission. In fact, during tax season, many folks take on tax preparation as a second job. For simple returns (such as a short form), a tax preparer may be a viable option. However, most tax preparers aren’t intimately familiar with tax laws and probably won’t be able to maximize your deductions. If necessary, a tax preparer can appear with you before the IRS (Internal Revenue Service) or state tax authority to clarify any questions on your return. However, tax preparers don’t have the legal standing to appear in your place or properly represent you.
Licensed by the federal government, enrolled agents are either former IRS employees or have passed a comprehensive IRS examination. Most enrolled agents focus their work on a specific tax area, so you should always inquire about an agent’s area of expertise before engaging his or her services. If there are any questions on your local, state, or federal tax return, an enrolled agent has the authorization to represent you before the tax authorities.
Certified Public Accountant
A certified public accountant, or CPA, has passed a state’s qualifying accounting exam, but may not be an expert on taxation matters. The advantage of CPAs is the breadth of their accounting knowledge. They can work with you to develop an overall tax strategy, as well as guide you through any complex situations that might arise. If your financial situation has recently been impacted by divorce, bankruptcy, retirement, or any other lifestyle change, then a CPA may be your best bet for income tax preparation. Also, a CPA is authorized to represent you before the IRS, should your return be called into question.
If your tax return involves corporate matters or if you are interested in legally sheltering part of your income from taxation, then a tax attorney can definitely help. Tax attorneys are well-versed in tax laws and the latest tax disputes, but they might be less qualified when it comes to the actual preparation of returns. Before selecting a tax attorney, you should inquire about knowledge and experience with regards to income tax preparation services.