Tax Preparers Explained

February 27, 2018

Once you have your tax information up together with all the necessary paperwork and documentation, you’re ready to start preparing your taxes. Some people choose to tackle this alone, while most seek professional help to ensure that they get the best from their money. So, who can you turn to when getting ready to prepare your taxes? 

Tax preparers: 

In theory, anyone can help you prepare your taxes – especially if they have access to tax software - but it’s always best to seek professional help and ideally from someone who specializes in preparing taxes. If you find an official tax preparer, that individual must possess a ‘Preparer Tax ID Number, or PTIN awarded by the IRS, and it’s best to ask for evidence of this before you enter into a paid contract with them. 

Enrolled Agents can help you to prepare your tax returns; these are individuals who have been given the privilege of practicing before the IRS. They know how to prepare and file documents to meet IRS requirements, communicate with them on an official level and represent taxpayers in IRS matters such as audits. However, they are not permitted to represent you in tax court. 

Certified Public Accountants or CPA’s, are accounting professionals who have passed an exam that enables them to give licensed accounting and tax advice and guidance to both individuals and businesses. CPA’s tend to specialize in certain areas, so it’s best to seek one who deals mainly with taxes if you want to use them to help you prepare yours. 

What exactly do they do? 

There are several roles that a professional tax preparer must fulfil along with the most obvious of which is to help you prepare your taxes:

  • Be a tax advisor 

    Tax preparers are also permitted and capable of serving as tax advisors, too, and they can help guide you with making all manner of tax related planning decisions.

  • Represent you with the IRS 

    If you get audited by the IRS, then your tax preparer should be able to represent you, both before the IRS and in tax court if necessary. Not every tax preparer will be able to do this, so it’s best to check beforehand and then select a preparer who can represent you, otherwise you’d have to hire another one should you be audited. It also makes the whole process a little simpler of the person who prepared your taxes, can be on hand to detail their work directly to the IRS. 

The final word on tax preparers: 

It doesn’t matter who you employ to help you prepare your taxes,ultimately, they are your responsibility and you must take ownership of the tax return and its’ accuracy and completeness. If there are errors or important information is omitted, you will be the one who pays the penalties, and while a reputable tax preparer will minimize the risk of this happening, it’s wise to ensure that you select someone with proven credentials, to lower the chance of mistakes being made.

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