Wholesaler · San Jose, CA · Member since 2017 · 29 posts · 10 votes
Hello bp!
So I just finished doing my taxes with my tax man that has been doing them for the past 5+ years. I am currently a w2 employee and have very minimal income coming in through a house hack. I started going to him because he is the person recommended by my parents.
After bombarding my tax man with many vetting out questions I learned that he is not a CPA but he is an enrolled agent instead. Having never heard of an enrolled agent I ask more and more questions which brings me back to BP.
Has anyone worked with enrolled agents?
Do you prefer to work with enrolled agents?
What are some major/minor differences between the two?
Is a CPA a better option for real estate investing in the long term?
He said that he currently works with investors so I’d like to continue doing my taxes with him.
Thank you for reading
Mike
Another EA here. The short answer: there's no meaningful difference between CPAs and EAs when they specialize in real estate taxation.
Now, details. CPAs are trained and licensed in accounting, and federal taxes are a small part of that. Some CPAs never touch taxes in their life, and others do tax returns only. EAs are trained and licensed in federal taxation only. So CPAs have a much broader area of expertise, while EAs are taxation specialists.
That said, many CPAs choose to specialize in taxation that makes them even with EAs. Both EAs and CPAs have the same rights when it comes to representing clients before the IRS. EAs are rumored to be less expensive than CPAs on average, but I don't think it's the case in specialized areas like real estate.
I'm an Enrolled Agent. I do a ton of representation work. Someone shared this. I specialize in taxation. It truly is a six of one half a dozen of the other unless you need an audited financial statement. In which case the person preparing it cannot audit it anyway. If you want a referral to an EA/JD in your area I can refer you to one happily.
Another EA here. The short answer: there's no meaningful difference between CPAs and EAs when they specialize in real estate taxation.
Now, details. CPAs are trained and licensed in accounting, and federal taxes are a small part of that. Some CPAs never touch taxes in their life, and others do tax returns only. EAs are trained and licensed in federal taxation only. So CPAs have a much broader area of expertise, while EAs are taxation specialists.
That said, many CPAs choose to specialize in taxation that makes them even with EAs. Both EAs and CPAs have the same rights when it comes to representing clients before the IRS. EAs are rumored to be less expensive than CPAs on average, but I don't think it's the case in specialized areas like real estate.
Another EA here. The short answer: there's no meaningful difference between CPAs and EAs when they specialize in real estate taxation.
Now, details. CPAs are trained and licensed in accounting, and federal taxes are a small part of that. Some CPAs never touch taxes in their life, and others do tax returns only. EAs are trained and licensed in federal taxation only. So CPAs have a much broader area of expertise, while EAs are taxation specialists.
That said, many CPAs choose to specialize in taxation that makes them even with EAs. Both EAs and CPAs have the same rights when it comes to representing clients before the IRS. EAs are rumored to be less expensive than CPAs on average, but I don't think it's the case in specialized areas like real estate.
Hi Michael,
I would be interested in getting your recommendations for an EA or CPA who is also an investor in the SF Bay area. I am in San Mateo County. Many thanks!
I would be interested in getting your recommendations for an EA or CPA who is also an investor in the SF Bay area. I am in San Mateo County. Many thanks!
Another EA here. The short answer: there's no meaningful difference between CPAs and EAs when they specialize in real estate taxation.
Now, details. CPAs are trained and licensed in accounting, and federal taxes are a small part of that. Some CPAs never touch taxes in their life, and others do tax returns only. EAs are trained and licensed in federal taxation only. So CPAs have a much broader area of expertise, while EAs are taxation specialists.
That said, many CPAs choose to specialize in taxation that makes them even with EAs. Both EAs and CPAs have the same rights when it comes to representing clients before the IRS. EAs are rumored to be less expensive than CPAs on average, but I don't think it's the case in specialized areas like real estate.
Hi Michael,
I would be interested in getting your recommendations for an EA or CPA who is also an investor in the SF Bay area. I am in San Mateo County. Many thanks!
As Steven and Michael said, an EA is licensed federally and is a tax specialist. All they do is tax.
A CPA has training in 4 areas, tax, business law, accounting and audit. Only a CPA can audit a company's books and provide an opinion as to their accuracy. A CPA is licensed by each state instead of federally, but they can still provide tax services across the country.
A CPA who specializes in tax brings a whole wealth of knowledge to the table. Because of the training in business law, we're able to easily read legal documents, such as Operating Agreements and purchase/sale contracts to get to the meat of the issues that affect the accounting and tax. We are not lawyers and don't (or shouldn't) pretend to be. We can't write legal documents and we can't issue opinions on liability protection, validity within the law, etc. But we can dig into the documents for the financial aspects. As audit specialists, we also understand what documentation is necessary to prove certain positions. We're also pretty good at sniffing out fraud.
Also, as accounting specialists, I feel like it gives us a real edge when completing business tax returns and understanding Capital and Book/Tax adjustments. Some EAs I know don't touch entity tax returns because they don't understand the complexities involved in some balance sheets.
That said, EA vs CPA always comes down to an individual. There are highly competent CPAs and EAs that are absolutely the best of the best with no discernable difference in talent and knowledge base. There are also EAs and CPAs who barely passed the exam, are completely incompetent and should probably go into another business. Just like every profession. There are terrible "professionals" who should step away and absolute rock stars.
And, to be fair, I've known some tax preparers who are uncredentialed who are amazing as well.
Just like a doctor, a lawyer or a contractor, vet your potential professional to make sure they know what you need them to know.
Can you recommend someone to go over my tax returns that also owns multiple rental properties themselves? I figure they will know most of the rules if they manage/rent/sell rentals.
Hello bp!
So I just finished doing my taxes with my tax man that has been doing them for the past 5+ years. I am currently a w2 employee and have very minimal income coming in through a house hack. I started going to him because he is the person recommended by my parents.
After bombarding my tax man with many vetting out questions I learned that he is not a CPA but he is an enrolled agent instead. Having never heard of an enrolled agent I ask more and more questions which brings me back to BP.
Has anyone worked with enrolled agents?
Do you prefer to work with enrolled agents?
What are some major/minor differences between the two?
Is a CPA a better option for real estate investing in the long term?
He said that he currently works with investors so I’d like to continue doing my taxes with him.
Thank you for reading
Mike
Honestly a CPA may be completely worthless depending on their area of activity. For example a CPA may have zero tax background-someone who audits pension plans is pretty much useless to you despite having a CPA.
I wouldn't focus so much on the designation as much as the ability. Judge a tree by the fruit it bears.
Some of the best accountants I've ever worked with weren't CPA's or EA's. A designation's purpose really is to establish some base level of competency in the marketplace. But as for something as specialized as real estate, it really doesn't guarantee anything.