If you’ve ever filed your tax returns on your own, you know that it can be a complicated process, especially if you’re itemizing deductions. That’s why many people turn to tax preparers or financial advisors to help them navigate the morass of forms and exemptions.
But not all tax professionals are created equal. Depending on the specific certification, the tax preparer you work with may have restrictions on who he or she can represent. One type of tax professional who doesn’t have to worry about these restrictions is an enrolled agent (EA). Enrolled agent status is the highest credential you can receive from the IRS, and gives them unique powers when it comes to the tax preparation process.
What Does an Enrolled Agent Do?
An enrolled agent is a tax professional with authorization from the federal government to represent taxpayers before the Internal Revenue Service (IRS) at all levels. Enrolled agents have unlimited practice rights. This means they can advise and represent individuals, corporations, trusts or any other entity required to file taxes.
An EA can prepare your tax return for you as well as advise you on any tax-related concerns. Furthermore, if you need to deal with the IRS in any capacity – for instance, in an audit – an EA can represent you, providing you with an expertise you wouldn’t otherwise have.
Enrolled Agent vs. Other Tax Professionals
One of the major differences between an EA and other tax professionals is the certification process. To become an EA, you can follow two different paths. One is to work for the IRS in a position that requires you to interpret the tax code. The other is to pass the Special Enrollment Exam (SEE) and a background check. The SEE is a three-part exam the IRS administers. It covers tax concerns for individuals and businesses as well as other practices and procedures.
Another major difference is the unlimited practices that an EA has. EAs can represent anyone on any matter relating to taxation, collection or appeals. The only other professional with representation ability like this is a certified public accountant (CPA). EAs also have federal licenses, which means they can practice in any state.
How to Become an Enrolled Agent
To become an enrolled agent, you must work at the IRS for a minimum of five years. You can also earn EA status by passing all parts of a test called the Special Enrollment Exam (SEE). EAs also have continuing education requirements. To maintain EA status, you must complete 72 hours of continuing education every three years.
How to Find an Enrolled Agent
You can find an EA near you a few different ways. The National Association of Enrolled Agents (NAEA) has a searchable, sortable directory on its “Find a Tax Expert” website. If you’re looking for an exhaustive list, that’s a good place to start.
Popular tax preparation companies like H&R Block or Liberty Tax Service also have many enrolled agents on staff. So if you have a company that you normally work with, you should be able to find an enrolled agent there as well.
You can also check your local yellow pages or a local business directory like Yelp. You can also find some financial advisors who are enrolled agents.
Who Should Get an Enrolled Agent?
If you’re looking for representation outside of the traditional tax filing season, or you need representation before the IRS for an audit, appeals or collections matter, then an enrolled agent could be a big help to you. However, your tax return may be fairly straightforward and you might just want some reassurance that you’re calculating everything correctly. In that case, you may be better off looking into an online filing service instead.
If you work with an EA, you can also rest easy knowing that he or she is qualified to handle any concerns that may come up with your returns. EAs must prove their competence in every area of taxation before they can receive certification. That competence makes them a great advocate should you ever need one.
Tax Season Tips
- If you don’t want to work one-on-one with an enrolled agent, but you also don’t want go through tax season by yourself, then you may want to consider a tax filing service like Turbotax or H&R Block. Using a service like this can help ensure the accuracy of your return and give you some peace of mind.
- If you’ve got a particularly complicated tax situation, or you want financial advice that goes beyond taxes, you should work with a financial advisor. SmartAsset’s advisor matching tool can pair you with up to three qualified advisors in your area who can help you through the tax process and all other areas of your finances.
- Are you receiving big refunds from the IRS every year? You may need to adjust the withholding information on your W-4 form. Adjusting could allow to keep that money and invest it rather than lose it and get it back later.
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