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Updated over 4 years ago on . Most recent reply presented by

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77
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Todd Groom
  • Rental Property Investor
  • Tampa, FL
42
Votes |
77
Posts

Enrolled Agent? CPA? Tax Attorney?

Todd Groom
  • Rental Property Investor
  • Tampa, FL
Posted

There are a lot of the above mentioned in here but how does one choose the best agent to go with? I'm sure everyone here is an expert at some level but like all things some are a better fit than others for a situation. From past experience I've learned that one person sometimes just wants to click a few buttons on turbo tax and others live it and know every loophole, tax break etc. 

We are in need of someone who can help in a few areas. Figuring out how to set up this business where I and my business partner get the most out of tax benefits and protections. My business partner also needs to get his taxes for this year prepared and filed. 

So how does one choose the right person to fit? I thought at first a Tax Attorney would be the best person to talk with but then people mentioned EA that I've never heard of. Then everyone seemed to be back and forth, a CPA is better than an EA, an EA is better than a CPA, an EA is cheaper than TA and knows the same stuff. Then I started to see using a different state as the business address may have stronger LLC protections than another like Nevada etc. It tough going the right rout.

  • Todd Groom
  • Most Popular Reply

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    Michael Plaks
    #1 Tax, SDIRAs & Cost Segregation Contributor
    • Tax Accountant / Enrolled Agent
    • Houston, TX
    6,022
    Votes |
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    Michael Plaks
    #1 Tax, SDIRAs & Cost Segregation Contributor
    • Tax Accountant / Enrolled Agent
    • Houston, TX
    Replied

    @Todd Groom

    Different tools for different jobs.

    General tax preparation and tax advice. This can legally be done by people without any license. Among licensed professionals, the choice is between CPAs and EAs. CPAs are licensed in accounting by states - a broad state-specific license. EAs are licensed in taxation by the IRS - a narrow Federal license. Among general practitioners, EAs tend to be somewhat cheaper than CPAs.

    Specialized tax preparation and tax advice. In REI, it's absolutely critical to have a specialist. If you compare a real estate CPA against a real estate EA - you will not find much difference in technical competence, services or prices. There're 20+ accountants actively contributing to this forum. Some of us are CPAs, some are EAs. 

    Bookkeeping/accounting. CPAs have an edge here, because they are specifically trained and licensed in accounting, and certain accounting tasks require a CPA license.

    Defending against the IRS audits and collections. It can be done by CPAs, EAs or attorneys, as long as they specialize in IRS representation. EAs have an edge here because IRS representation is their focus. If your fight with the IRS goes so deep that you are taking the IRS to court - then you need a Tax attorney. Otherwise, they are usually an overkill.

    Setting up a business. This is a job for an attorney licensed in your state. However not a Tax attorney, but a Business or Asset protection attorney - a different specialty. You also need an accountant (a CPA/EA if you want a licensed pro) to advise you on the best tax structure, working in tandem with your attorney.

    Bottom line: you need a business attorney plus either an EA or a CPA, all of them must be REI specialists. This forum is a great place to find and vet these professionals.

  • Michael Plaks
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