The Differences Between Tax Experts And Other Options

First you need to know there are different types of tax experts. And not all accountants are CPAs. So, if you’re thinking that a licensed independent CPA and someone at H&R Block or Jackson Hewitt (or your buddy who studied accounting in college) are pretty much the same, don’t count on it.

Basically: An accountant is someone who studied accounting and works in the field. CPAs are
accountants who passed a rigorous examination and must comply with stringent continuing education requirements from their state board on a regular basis. The designation usually requires a degree. Not every CPA specializes in taxes. An enrolled agent, or EA, is a tax specialist who has been certified by the IRS. Being an EA doesn’t require a degree like a CPA does. But it does verify they know the tax law. A tax preparer at pop-ups like H&R Block or Jackson Hewitt is trained on tax software to help taxpayers file their returns. They aren’t required to be CPAs or EAs, but some are very knowledgeable about the tax rules.

Only CPAs and EAs can legally represent you if the IRS challenges your return. There’s nothing wrong with visiting a pop-up preparer like H&R Block if your return isn’t all that complicated, says Cathy Derus, CPA and founder of Brightwater Accounting in Illinois. “It’s when you start generating other income — perhaps you launch a business or own rental property — [or experience a big financial change] when it makes sense to ask for a little extra help,” she says.

Several software programs are available to help you prepare your own return and save money, says Tai Stewart, accountant and owner of Saidia Financial Solutions in Houston. “They’re good for people who have simpler returns — they’re in their first few years of work or single with no kids. The programs ask questions to make it easy to understand the directions and input your data.”

But if you’ve bought a home, it gets more complex, Stewart adds. “That opens you up to special credits and deductions and requires more recordkeeping. If you mess something up or miss out on deductions, it can cost more than hiring an accountant would have.”