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Tax Pro vs. File Your Own? Take Our Quiz!

Get What You Pay For: 3 Types of Tax Preparers

Did you know that the IRS does not currently have any guidelines for who can prepare your tax returns? That can make it a challenge for the 56% of American taxpayers who hire someone to prepare their income taxes. How can you know you’re getting the expertise you’re paying for?

Tax Prep Chains a Step Above Software?

This time of year, the big-name tax preparation chains flood the airwaves with ads telling you how fast and easy it is to work with them and that they can get you your biggest possible refund. Seems like an easy call, right? Not if you’re looking for expert tax advice.

Although you can find highly trained tax experts who work for these chains, most of their tax preparers are seasonal workers who have a few weeks of training in how to fill out tax forms. Many simply enter your data into a form—that’s really just a small step above do-it-yourself tax filing software.

And even this simple task can often go wrong. In a Government Accountability Office study, GAO staff posing as real taxpayers worked with different tax prep chains to gauge their accuracy. In all 19 of their visits, the tax preparers made errors—some that would have cost the taxpayer $1,700 of his refund. Other mistakes led to refunds that were $2,000 too much.

If these mistakes had been made on actual taxpayers’ returns, many of the preparers would have been subject to penalties for negligence and willful or reckless disregard of tax rules.

You Have Better Options

That seems like a pretty big risk to take just for the sake of convenience, especially when there are better choices available:

  • Enrolled Agent: An Enrolled Agent is a tax specialist for people looking for professional tax return preparation and tax advice. They are also licensed by the IRS to represent their clients if they’re audited. Enrolled Agents must pass a suitability check and a three-part special enrollment examination. This is a comprehensive exam that covers individual and business tax laws as well as representation issues. Enrolled agents are also required to complete 72 hours of continuing education every three years in order to maintain their licenses.
  • Certified Public Accountant: Certified Public Accountants also undergo extensive training and testing. CPAs are licensed by their states and must pass the Uniform CPA Examination. CPAs must meet ethical and continuing education requirements as well. They can offer a range of services, and many specialize in tax preparation and planning. The more complicated your taxes are, the more a CPA can help by providing advice on tax strategies to take or avoid based on your circumstances.

You Don’t Have Time to Take Chances!

With less than a month to get your taxes filed, you need to make an appointment with your tax professional right away! We can put you in touch with an experienced tax specialist Dave recommends in your area. And the best part is all of Dave’s tax Endorsed Local Providers (ELPs) are either Enrolled Agents or CPAs. Contact your tax ELP today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.