When you are dealing with complex tax issues, your first thought may be to reach out to a well known tax preparation company. While the individuals who work for companies like this are effective at handling simple tax problems, they are not the best option for more involved tax needs.
Instead of looking for a tax relief company, seeking the help of an individual tax preparer may be your best option. There are different levels of tax preparers, with Enrolled Agents (EAs) coming in at the top. This is because EAs have more freedom to communicate on your behalf and represent you throughout the tax filing process.
An enrolled agent, or EA, is a kind of tax professional who focuses narrowly on managing tax arrangements for business or private entities. EAs boast a wide range of knowledge in such tax-related subjects as income, estate, gift, payroll, levies, returns, inheritance, non-profit and retirement taxes.
Once EAs have passed their qualifying exam, the federal government recognizes them as tax specialists. Typical EA responsibilities include representing business or individual clients in tax audits, tax appeals and tax collections. Additionally, EAs can also provide tax advice, tax return filing and more.
An EA is the highest credential the IRS awards. A professional with this designation typically makes between $15,000 and $20,000 more than CPAs annually. You’ll want to seek out an EA for any and all tax-related issues. In fact, the IRS says they are uncontested experts on such topics.
What Is a Certified Public Accountant (CPA)?
Certified public accountants, or CPAs, have a more flexible and expansive repertoire than EAs. States approve CPAs, while the federal government approves EAs.
CPAs typically do most of their work for public accounting firms of all sizes. They could be specifically licensed as auditors, financial planners, corporate and executive accountants and tax consultants. So CPAs could assist in all accounting, tax and financial services for the businesses, individuals and other organizations they may represent.
CPAs help clients set and achieve financial goals through money management and financial planning. These goals could include anything from putting down a payment for a home to opening a new branch of business across the country.
EA vs. CPA: Which One Should You Work With?
When deciding between an EA or a CPA, you will see that both types of professionals are well-qualified. They can both deliver the financial guidance you may need for your taxes. However, which one you should consult depends largely on which issue you’re looking to resolve.
EAs could help you work through an IRS audit or a collection problem, and they can also perform bookkeeping services that could be useful for businesses when preparing tax returns. CPAs, however, are more adept in meeting your financial planning and accounting needs; and when it comes to tax planning, they can also help you identify tax credits and deductions to lower your tax liability.
Both types of professionals are equally qualified to perform similar tasks, but there are differences in the range of services offered. CPAs can provide a much wider scope of tax services than an EA can. What’s more, general population demand is greater for CPAs than EAs.
If you have accounting needs with a micro focus, working with an EA could be the perfect fit for you. On the other hand, if you are interested in accounting practices that have nothing to do with taxes, such as auditing, then the CPA option may be best.
Why Join TxSEA?
TxSEA makes it easy for enrolled agents in Texas to stay on top of the credits they need to maintain their licensing, as well as provides an opportunity for networking with other EAs in their local area. This can provide helpful information and leads to tax professionals working as enrolled agents today.