When it comes time to file your taxes, you need to make sure everything is done right. Mistakes and oversights on your tax return may end up costing you money in the form of missed credits or deductions. Even worse, inaccurate or poorly-prepared returns may increase your audit risk. So, if you don’t want to end up on the wrong side of an IRS auditor’s desk, you should make sure the tax professionals you’re working with are properly qualified.
Every return filed by a Happy Tax client has been personally reviewed by a licensed Certified Public Accountant (“CPA”). Our talented team of in-house tax experts ensure that all possible credits and deductions are claimed, making sure that Happy Tax clients save as much money as they can on their tax bills. And since Happy Tax customers all get tax preparation and planning assistance from licensed CPAs, they can rest assured that everything on their return is done right.
Unfortunately, not all of the companies in the tax preparation and planning market live up to Happy Tax’s standards of professional quality. This is particularly true when it comes to tax service bureaus.
CPAs and Enrolled Agents
When filing taxes, it is important to look at the professionals that will be handling your finances. Tax preparers working for tax service bureaus do not always have the same educational background as a CPA. Generally, a tax service will hire Enrolled Agents rather than CPAs. While both of these certified tax professionals are legally eligible to file taxes, there can be vast differences in the quality of services provided.
Enrolled Agents are legally recognized tax practitioners regulated by the federal government. To become an Enrolled Agent, someone either needs experience working as an IRS employee or pass a three-part IRS exam that covers individual and business tax returns. Anyone that completes these exams and other supporting requirements becomes an Enrolled Agent, which makes the requirements to become an EA substantially less burdensome than those required to become a CPA.
CPAs Have Tax Training and Expertise
On average, a CPA will have a relatively high level of education. A bachelor’s degree and a background in finance, along with a wide range of accounting skills, is typically required before applying for licensure. But that’s not all that’s required to become a CPA.
Before CPA licensure is awarded, a financial professional must pass an exam encompassing several branches of finance and accounting. The CPA licensure exam covers everything from performing audits to dealings in a range of business regulations, as well as preparing financial statements for government entities, non-profits, and businesses. A CPA will stay up to date on these regulations by completing continuing education courses, which is required to maintain their licensure. They also must have a working knowledge of corporate governance structures and stay current on business regulations.
Benefits of Working With a CPA
CPAs are usually more informed on the details of tax preparation than Enrolled Agents, and they typically have extensive knowledge and experience in bookkeeping. This makes them a strong commodity to anyone looking to save money on their taxes. CPA’s are also qualified to assist in a range of accounting and financial matters, so taxpayers looking for long-term tax or financial planning may find the CPA’s at Happy Tax to be particularly helpful.
While they are qualified to file tax returns, an Enrolled Agent may not have the education and expertise to handle accounting or tax issues that CPAs are often presented with. And often, tax bureaus will hire Annual Filing Season Program Participants (“AFSPP”) during tax season. These participants are only required to have completed a number of training hours and are not required to have any other credentials pertaining to accounting or tax preparation. In this regard, working with a tax service bureau is very similar to what someone would do if they were to file their own taxes through an online tax preparation software, such as E-file, Turbo Tax. The only real difference is that working with a tax service bureau will cost substantially more money than doing your taxes yourself.
When it comes to tax planning, relying on a tax service bureau or tax software may not offer you the support you need. Working directly with a CPA allows taxpayers a chance to sit down with a professional and discuss future financial decisions, ask questions, and help prepare for or improve the taxpayer's financial situation. For example, a CPA may be helpful in deciding whether or not to itemize or take the standard deduction. In the event that neither of those options works for the taxpayer, a CPA may offer some ideas on bundling finances and making a financial plan that encompasses several years.
Working with Happy Tax gives you the opportunity to work with a CPA at tax time, but our talented team of licensed tax professionals are available year-round for advice, additional planning, and support. Among our competitors, this level can be very costly, if even offered at all. Tax service bureaus typically offer limited levels of service, since they mostly rely on Enrolled Agents and ASFPPs. While these professionals do possess the minimum qualifications necessary to file tax returns, they often the up-to-date and specialized knowledge necessary to capture all of the savings possible on your return.
All in all, if you want your return prepared right, you need the best assistance out there. While tax service bureaus or other bargain-basement tax prep options may seem like a good deal, they may end up costing you in the long run. To make sure you’re saving as much as you can on your tax bill, work with the licensed CPAs at Happy Tax. To learn more about what Happy Tax can do for you, contact your local franchise representative.