Every year, consumers face a choice: rely on an individual to prepare your income tax return, or choose to work with an established company? Making the right decision about who to trust for your needs can mean the difference between successful filing and potential audit problems and fines.
Exploring The Individual Tax Preparer
There are a number of criteria that an individual must meet in order to maintain a business helping people file returns. Most commonly, people involved in this kind of business will either be lawyers, Certified Public Accountants (CPAs), or Enrolled Agents with the IRS. Lawyers who specialize in tax issues will sometimes agree to prepare returns, but they generally will avoid it in favor of helping people whose returns have been audited or fined by the IRS. They are qualified to represent individuals in disputes against the IRS.
CPAs and Enrolled Agents are more likely to handle individual filing needs. CPAs are trained in a variety of different accounting practices. They are capable of doing much more than answering questions about returns or filing the paperwork. However, this diversity can sometimes be a downfall: their training is not specifically focused on taxes, which means they may not have the depth of knowledge that a specialized tax preparer would command.
Enrolled Agents are a hybrid between a CPA and a lawyer. They are very specialized and focused strictly on income tax. They have taken a test to display their competency before the IRS, and as such are also permitted to represent citizens before the IRS. However, they are not lawyers, and they don’t have the advanced trial experience common with lawyers. Their specific training makes them a generally wise choice for individual filing.
What About A Preparation Office?
If you choose to have your return done at an office, you’ll likely find a very different situation. The majority of the people working there are not Enrolled Agents, CPAs, or lawyers. Instead, they’re trained to assist customers, probably with most of that training coming from the company they are currently working with. Their experience is not likely as extensive as a typical CPA or EA.
However, there is one major advantage of working with one: the company they work for almost certainly provides a guarantee of their work or a strong plan to back up and support what they offer. No one can guarantee a totally flawless return – there is always the chance of a mistake or a misunderstanding that could be brought out in an audit. If something does happen, having the support of a major business is very valuable. They will likely leverage some of their extensive resources to help you with your case, especially if they promise to do so as part of the guarantee.
Making The Call
Which is right for you? Ultimately, it’s a question of trust. You might find a few more deductions working with a solo professional EA or CPA. However, you’re probably increasing your audit risk and taking a chance that you won’t need any kind of protection during IRS proceedings. For most people, that kind of risk isn’t acceptable, and they choose a business over an individual tax preparer.