Tax Law (Questions About Taxes)/Hiring a CPA
Good afternoon. After many years of preparing our tax returns using Turbotax software, my wife and I have decided to hire a CPA to prepare our tax returns for the current tax year and into the future. We made this decision because our financial situation got more complex with lots of new and different types of income that we never had previously and because we will have tax returns for multiple states for the current tax year. What are questions that I should ask a CPA that we are considering hiring? When shopping for a CPA to prepare our complex tax returns, what are the considerations and issues that I should be aware of and ask the CPAs whom we are considering hiring? Thanks!
Whether you hire a certified public accountant (CPA) or an enrolled agent (EA) to help you with your tax needs depends on your specific situation.
Certified Public Accountants’ (CPA), who are state licensed, specialize in accounting and may or may not choose to specialize in taxes. They are experienced in maintaining business and financial records. Unlike attorneys and CPAs, all enrolled agents specialize in taxation.
Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are given unlimited representation rights before IRS.
An IRS enrolled agent (EA) is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. All candidates are subjected to a rigorous background check conducted by the IRS.
Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Because of the expertise necessary to become an enrolled agent and the requirements to maintain the license, there are less than 50,000 practicing enrolled agents worldwide.
Enrolled agents, like attorneys and certified public accountants (CPAs), are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. Learn more about enrolled agents in Treasury Department Circular 230.
The big advantage that you get by using an EA to do your tax return is that the same team that handles the preparation of the return can represent you if you are audited. This can be a big advantage if your return is at all complicated.
As far as choosing a CPA or EA, most taxpayers rely on a variety of factors:
• Referrals from friends and family or testimonials/recommendations from existing clients
• Research and/or consultation with CPA or EA and comfort/confidence level with the professional
If you have no referrals from others, I recommend starting with a basic google search on firms that specialize in areas of your return that have become more complex and ask questions about their background and/the pressing tax questions that you may have to determine their experience.
Randall Brody, EA
Expatriate and Individual Tax Returns