It usually takes two tax seasons for a preparer to feel confident in their ability to handle returns. This includes a feeling of comfort with their technology and the data entry work involved in this profession.

While many people choose to file their own taxes, some prefer the reassurance of having a professional assist them. There are four types of professionals to consider for this service:

1. Non-Credentialed Preparers

The IRS does not regulate non-credentialed preparers; therefore, they are at greater risk of errors or fraud. Many are unfamiliar with the intricacies of tax law and have limited knowledge of tax codes and regulations. They may also have trouble keeping up with changes to the tax code and forms each year. The IRS warns that unregulated preparers can face penalties if they fail to file returns, submit inaccurate information, or make other errors.

In most states, the vast majority of preparers are non-credentialed. Many work for large tax preparation companies like Jackson Hewitt or H&R Block. Others operate independent businesses. These preparers typically offer seasonal service between January 1st and April 15th, which appeals to retirees, students, or stay-at-home parents looking for additional income. Some may choose to participate in the IRS Annual Filing Season Program, a voluntary program that encourages continuing education and filing season readiness. In return, the IRS issues a Record of Completion that helps them stand out in the marketplace and differentiate themselves from other non-credentialed preparers.

The AFSP requires 18 hours of training, including a 6-hour Annual Federal Tax Refresher Course and a comprehension exam. In addition, participants must complete 10 hours of courses focusing on federal tax law and 2 hours focused on ethics. Unlike credentialed preparers, non-credentialed preparers cannot represent their clients before the IRS, so they are likely to seek the assistance of an attorney when facing an audit or other problems with the IRS.

As with all professionals, it’s important to find a preparer with the right qualifications and experience. Be sure to check the preparer’s PTIN (Preparer Tax Identification Number) and look for credentials on their website. Then, be sure to interview them and ask questions. Choosing the right preparer can significantly impact your financial situation, and they should be someone you plan to work with long-term. In addition to ensuring that your returns are accurate and filed on time, the best preparers will be knowledgeable, responsive, and work well with you.

2. Enrolled Agents

Unlike non-credentialed tax preparers, enrolled agents (EAs) are licensed by the IRS to represent taxpayers before all government agencies. EAs are experts in various tax situations and can handle the most complex issues, including those involving trusts, estates, and businesses.

EAs must pass a rigorous test administered by the IRS to obtain their license. The exam covers federal and state tax laws, ethics, and practice management. Continuing education requirements are also in place to ensure that EAs remain current on changes to the tax code.

In addition to their technical knowledge, enrolled agents are also skilled in communicating complex tax issues in ways that can be easily understood. As such, a taxpayer who works with an EA can be confident that they are getting high-quality service and representation that is focused on making the tax code fair and reasonable for all taxpayers.

An enrolled agent is prepared to assist with any type of tax matter, including audits, appeals, and collection matters. They can handle any federal tax issue, whether they involve individuals, corporations, partnerships, or trusts. In fact, EAs are often the most trusted professionals in the tax industry because they can help their clients through any kind of difficult or complicated situation.

While non-credential tax preparers may offer lower fees, the peace of mind that comes with working with an EA is worth the extra cost. Not only are they experts in their field, but they are dedicated to helping their clients save money and avoid costly mistakes.

In addition, an enrolled agent is available year-round to help with all tax-related matters, not just during filing season. In general, an EA will be able to save clients more money than a non-credentialed tax preparer. They can also provide guidance on tax planning strategies and advise on the impact of specific financial decisions. Plus, an enrolled agent will be there to answer any questions or concerns you might have, not just because it’s their job but because they truly care about their clients. That’s the kind of professionalism you can’t put a price on.

3. Certified Public Accountants

CPAs are licensed at the state level to prepare taxes for individuals and businesses. They are required to take rigorous courses and pass a rigorous exam to qualify for the profession, and they must adhere to a strict code of ethics. CPAs must also stay current on current tax laws and regulations to ensure their clients file accurate returns, avoid costly penalties, and take advantage of all available deductions and credits.

In addition to their accounting expertise, CPAs often have strong interpersonal skills. Whether they’re working with small or large businesses, they must be able to communicate clearly and concisely. For example, if a client has a misunderstanding about their taxes, it’s the preparer’s job to explain complex issues in an easy-to-understand way.

Because CPAs have broad financial knowledge, they often work in a variety of settings, including public and private accounting firms. They may specialize in areas such as auditing, governmental accounting, or financial planning and analysis. Many CPAs choose to become entrepreneurs and open their own practices, but some work in larger firms where they can advance rapidly to partner or controller positions.

EAs and CPAs have unrestricted representation rights before the IRS, which means they can represent their clients on any matter, including audits, payment, collection problems, or appeals. Return preparers who aren’t CPAs or EAs have limited representation rights and can only represent their clients in front of IRS agents, customer service representatives, or similar employees at the IRS Field Office.

Choosing the right tax professional for your needs depends on several factors. When interviewing potential preparers, check their credentials with the California Board of Accountancy for CPAs, the Internal Revenue Service Return Preparer Office of Enrollment for EAs, and the State Bar of California for attorneys. Ensure the preparer you choose will be available to answer questions and deal with any notices that might arise throughout the year.

Non-credentialed preparers may charge less than CPAs or EAs, but they don’t have the same level of expertise. If you have a relatively simple tax filing, you might find the cost savings worthwhile. However, a CPA or EA may be a better choice if you have a more complicated situation or business.

4. Tax Attorneys

A tax attorney is a licensed professional who can represent individuals and businesses in disputes with the IRS. They can also help people with tax-related planning and financial decisions and minimize taxes penalties. Attorneys must graduate from college and law school and pass their state’s bar exam. The cost of a lawyer varies depending on location, years of experience, tax law specialty, and workplace (such as a law firm or tax relief agency).

When choosing a preparer, look for one with credentials, such as an EA or CPA, who has passed a background check and is registered with the IRS. Ask about their experience with your type of situation and the types of returns they typically prepare. If they are not familiar with your type of case, they may be able to refer you to someone else who is.

Credentialed tax preparers usually work year-round, and their busiest time is during the tax filing season in April and May. They complete tax forms for their clients, review income statements, and advise them on reducing their tax liability. They also provide accounting, bookkeeping, and payroll services.

In addition to the required training and education, those who prepare taxes must complete a suitability check with the IRS and obtain a PTIN and EFIN before starting their business. This includes a criminal background check and a check for previous non-compliance with IRS e-file requirements. They must also pass a competency exam.

Tax lawyers must have extensive knowledge of tax regulations and policies to counsel their clients on complex transactions. They must also be able to anticipate the potential tax outcomes of various transactions, such as a sale of a business or transferring property to beneficiaries. Many tax attorneys focus on a particular area of practice, such as corporate tax, estate planning, and tax litigation.

When choosing a tax attorney, research their background and reputation. Finding a qualified lawyer with a track record of successful cases, good client reviews, and an active license is important. Be wary of a lawyer who demands a large retainer upfront or who claims they can resolve your issue in just a few meetings.