Why You Deserve An Enrolled Agent

Have you seen the new TurboTax commercial about how awesome you are?  It’s a great commercial.  And yes, you are totally awesome.

 

Turbo tax says that you are so awesome that you can do your own taxes.  To be quite honest, lots of people can. Some people shouldn’t. Here’s a video of someone who shouldn’t have.

Tim Geitner explaining his tax problems to Congress.

 

Here’s the thing.  Can you do your own taxes as well as I can do them for you?  No—probably not.  (Sorry, that sounds snobby but I’m really good at what I do.)

 

But can you do them well enough?  Maybe you can.  Pretty much, if you only have W-2 income and don’t itemize your deductions then you’re probably fine doing your own taxes.   There are some tax situations where no matter how good I am at taxes; I’m just not going to get you any more money back than you’d get for yourself.   (My mother would say, “You can’t bleed a turnip.”  Yes, my Mom said some weird stuff.)

 

Now,  you’re a “do it yourself” kind of person, and you don’t have complicated taxes, you can go straight to my 1040.com web-site and do it yourself from here:  https://fileonline.1040.com/1040/Home/?did=95443 It’s an alternative to Turbo Tax and it’s a little less expensive.  You can try it for free and see how you like it.  You don’t have to pay unless you actually file your return there.

 

But—if you are self-employed, have investment income, retirement income, rental income, education expenses, are divorced with children, are a high income earner, have cancelled debt, going through bankruptcy or a number of other issues—you can really benefit from the services of a qualified tax professional.

 

Here’s a couple of things that I don’t like about Turbo Tax:

  1. There are 4 ways to claim an education expense on your tax return.  TT doesn’t always give you the best one for you.  It usually does, but not always.
  2.  

  3. TT categorizes you:  home owner, business owner, someone who owns stock or rental property, or someone in the military.  Many people fit into more than one category and I’ve got a couple that could claim “all of the above”.  A tax professional won’t pigeon-hole you.
  4.  

  5. TT is not made for splitting a child’s exemption between divorced parents.  That’s a matter for an Enrolled Agent.
  6.  

  7. If you’re a high income earner subject to Alternative Minimum Tax (AMT), TT will just compute the tax, it’s not equipped to help you find ways to reduce the AMT like an EA can.
  8.  

  9. Here’s the biggest one:  most of the audit cases that I handle during the year come from people who prepared their own tax returns using Turbo Tax.  I appreciate the business, I really do, but taxes are complicated.  They shouldn’t be, but they are.  And sometimes you need help.
  10.  

When I was a kid, my dad had a whole list of things I had to be able to do before I was allowed to go away to college.  One of those things was to be able to change a tire.  I can change a tire all by myself, thank you very much.  But, awhile back, I got a flat on Higway 44 during a snowstorm.  It was cold and blowing and the trucks were whipping past me at 70 miles an hour.  I was very grateful that I had signed up for AAA.

 

An Enrolled Agent navigating complicated tax rules is kind of like the AAA guy changing your tire for you during a snowstorm.  I kind of like changing a tire.  I know that sounds silly but I do.  But I’m also smart enough to know when I need help.

 

You’re awesome, you truly are.  You are so awesome, I think you deserve an Enrolled Agent.

What Can an Enrolled Agent Do for Me that I Can’t Do Myself?

Horse

Photo by T M Tonmoy Islam @Flickr.com

 

The other day at a networking meeting I was asked the question, “What Can an Enrolled Agent Do for Me?”  I really had to think about that.  You see, I had two different answers:  The first one was, “nothing” and the second one was, “everything.”   Both answers are right.  Let me explain.

 

An Enrolled Agent is someone who is licensed by the Department of the Treasury to represent taxpayers like yourself in front of the IRS.  Let’s say you are getting audited, you can hire an Enrolled Agent to help you through it.  If you have an Enrolled Agent, you don’t have to talk to the IRS at all; the EA can do all the talking for you.   That’s probably one of the biggest advantages.

 

You can represent yourself, but most taxpayers really should not try to represent themselves during an IRS audit.  You’ve probably heard the saying, “The defendant who tries to represent himself in court has a fool for an attorney.”  It’s pretty much the same in an audit.  Honest, intelligent people can get themselves tripped up by the IRS.

 

For example:  one taxpayer was trying to represent herself when the IRS denied her refund claim on an amended return.  She had made numerous phone calls and written letters to the IRS explaining her claim, but was getting nowhere.  When she called me in, I discovered that she had been responding to what she “thought” was the problem, not what the IRS was asking for.  It’s actually a fairly common mistake—talking to the IRS can be confusing.

 

Another issue is debt resolution.  You might have seen those tacky TV commercials where the little old lady says, “I settled my taxes for pennies on the dollar.”  That’s known as an Offer in Compromise (OIC).  And while that company is out of business now (they used some questionable practices) an Offer in Compromise is something that an Enrolled Agent can do for you.  But there’s a really important thing about preparing an Offer In Compromise in the first place:  it’s knowing if you really need one in the first place.  For example:  I once received a call from a woman who wanted me to prepare an OIC for her because the IRS said she owed them $15,000.  Well, I could have just done the OIC paperwork, but I reviewed her tax returns first and found that the IRS actually owed her $8,000 instead.  An $8,000 refund is a whole lot better than paying anything to the IRS isn‘t it?

 

Enrolled Agents are required to prove their competence in all areas of taxation, representation and ethics before they can practice before the IRS by passing a three-part federal exam.  All enrolled agents specialize in taxation.  This is very different from attorneys or CPAs who are licensed by their respective states and may not specialize in taxation at all.

 

An Enrolled Agent can prepare a tax return, represent you in an audit, and help you settle your IRS debt.  Some Enrolled Agents can even represent you in Tax Court, but only those EAs that have passed a special Tax Court exam can do that.

 

The Enrolled Agent designation was created back in 1884 when Congress passed the Horse Act.  At the time there were lots of dubious claims for Civil War reparations—there were more claims for horses then there were horses lost in the Civil War.   Most of the dubious claims were from agents representing the people with claims as most of the agents were scam artists and con men.  Congress decided that the agents needed to be regulated.  They created a standard which required suitability checks, criminal record checks, moral character, and testing.  When the income tax was passed in 1913, the role of Enrolled Agent was expanded to include claims for relief of citizens whose taxes had become inequitable.  As tax regulations became more cumbersome and complex, the role for EAs kept expanding.

 

As an Enrolled Agent, I can do a lot to help you with your taxes; but, I’m no longer able to get Congress to give you a horse.

 

For more EA information you can check out the McTax Hangout video:  https://plus.google.com/u/0/106432421922678528479/posts/iKYcxFGzZjn?cfem=1

 

A Great Time in Chicago! – The 2013 Midwest in Motion Seminar

Photo by Michael R. Siebert

Hello everyone.  Mike here.  On the way up from the elevator to our office, I overheard two young ladies conversing about their trip to Atlanta over the weekend.  Later on in the day, a CPA on our floor told us about his upcoming vacation to the Philippines—certainly a fun time to be desired.  Near the end of the day, Jan told me she was going to Florida on a business trip with her husband.  At this point, I’m thinking in my head “Oh come on!  Everyone is leaving Missouri except me!”

 

Fortunately in the mail we received an invitation to the 2013 Midwest In Motion Education and Networking For Tax Professionals hosted in Chicago and sponsored by the Illinois and Indiana Societies of Enrolled Agents.  In need of a small vacation, and especially in need of a grasp on the Patient Protection and Affordable Care Act, I went up to Chicago for the two day symposium (Ok you got me, I also needed continuing education credits).

 

Upon my arrival, I was the only RTRP (Registered Tax Return Preparer) in the room full of Enrolled Agents; I felt like a fish out of water at this point.  But as I settled in and conversation naturally bloomed, I could not have felt more comfortable.  Everyone was extremely nice and friendly and I felt like I belonged in the tax industry.

 

The two speakers, James R. Hasselback, PhD, and Robert E. McKenzie, JD, EA, were great and very articulate.  They discussed such topics as the healthcare act, cancellation of debt, bankruptcy, audit reconsideration, and Schedule C hotspots.  It’s hard to stay attentive at an all day seminar and they made it easy.

 

But the real fun was after the seminar.  Karen Miller of Eberhart Accounting Services, P.C. located in Bolingbrook Illinois was kind enough to show me around Chicago.  We took a walk along Lake Michigan and snapped a few pictures.  What a beautiful city.

 

Furthermore, we went to the Navy Pier and rode the big Ferris Wheel.  This was certainly a “Kodak Moment” as the dusking sun created some nice illuminations off the city skyline.

 

For someone who doesn’t get out as much as I should (because I’m too busy reading tax law I guess), a change in scenery was definitely in order to expand my horizons.  I am very young to be in this industry—as I write this I am 24 years of age—and I plan to get my Enrolled Agent license by the end of December 2013.  This event sparked this notion and I am truly grateful to have been a part of it.

 

Thank you again to the Illinois and Indiana Societies of Enrolled Agents and a very special thanks to Karen Miller of Eberhart Accounting Services, P.C.  I would also like to thank Ana G., Bill B., and Jeff S. and the speakers, James Hasselback and Robert McKenzie.