The Tax Preparation Blog

Archive for December, 2008

Question: EA vs. CPA?

Hey everyone! I had posted a question not too long ago re: tax preparation. The EA position did sound kind of intriguing to me. I was just wondering if one might be better than the other? I’ve got a Bachelor’s in another field with at least 120 cr. hours, and I know it looks like most CPA Exam requirements are 150. Would it be advisable to look at an associate’s or certificate program to cover that? Or for the EA, is there a good study program or courses to look at? I’d really like to pass since each portion of the test is like $97 :-S.

Answer: I’m not sure about CPA’s, but I am an EA. A CPA is not necessarily an expert in taxes, where as an EA only specializes in taxes, (though they can specialize in different areas, such as gift tax, trusts, estates, etc) A CPA can do many things regarding accounting such as audit and certify financial statements, mergers, etc.

EA’s are certified by the IRS. They get their authority to represent taxpayers by the federal government. CPA’s and Attorneys are granted their authority by the states’ boards of accountancy or bar association. All three groups are governed by Circular 230 “Rules Governing the Practice before the Internal Revenue Service”

Because CPA’s are regulated at the state level, the amount of taxation continuing education can vary from state to state.
EA’s are required to take 72 hours of continuing education every 3 years to maintain their certification.

I have a BS degree in Psychology. I took 24 credit hours in accounting. My plan was originally to enroll in a Master of Science of Taxation (MST) degree to get the required hours to sit for the CPA exam in Massachusetts.

So my opinion is that the EA is better if you want to specialize in taxation. If you want to pursue other areas of accounting, the CPA is better.

Incidentally, if you are an EA or CPA and have a client that has criminal matters before the IRS, A tax attorney is better to represent the client because they attorney/client privilege which covers criminal matters. CPA’s and EA’s have privilege that is limited to civil matters and has other limitations.

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Experts: Uncertainty, Lack of Communication Over Guardianship Can Spell Trouble for Children With Disabilities and …

Raiya Ellsworth may be only 5, but she already faces an immense responsibility: some day, she will become the guardian and caregiver of her brother, Ryan, 7, who has autism.

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Tax credits aid solar, wind companies

Sens. Jeff Bingaman and Tom Udall say two New Mexico energy companies in Santa Teresa and Albuquerque will receive $5 million in federal tax credits.

What an agency must consider when using an Umbrella service

Question: HELP! How to determine Deferred tax liability?

I am in college studying Accounting and am currently taking a condensed summer Intermediate Accounting course. We are learning about income taxes, I am so confused, and the book doesn’t seem to help at all!!
My question is: Tower corp. recognizes revenues from all sales under the accrual method, however, in its income tax returns, Tower reports qualifying sales under the installment method.
In yr. 2023, gross profit under the Accrual method is $1,600,000 and under the installment method is $600,000. In yr. 2024, GP under accrual method is $2.6M and $1.4M under the installment method. Tax rate is 30% for 2023 and future years. There are no other permanent or temporary differences. In its Dec. 31, 2024 balance sheet, what amount should Tower report as a liability for deferred income taxes?

Thanks for the help!

Answer: to figure deferred income tax you do this. For 2023 take 1.6 million under installment method and subtract the 600,000 under accrual, you have 1,000,000 favorable deferral of income, 30% tax rate means deferred taxes of $300,000. For 2024, take 2.6 and subtract 1.4, with 1.2 million of deferral of income (I am assuming 2023 reversed itself for 2024). deferred taxes should be $360,000.

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How to pick a tax preparer: Steps to take to protect yourself

If you ask your barber for a trim and end up with a buzz cut, your hair will grow back in a few months. But if an inept tax preparer makes a hash out of your tax return, the repercussions could haunt you for years.

Jarl Moe Tax Accounting Cyprus part 30 of 32

Question: Please guide?

Dear Friends,
Please inform what is the last date for filing Income Tax returns in INDIA ???
Also please inform what are the penalties for late submission for the annual income of around 5 Lakhs ?

Answer: 31st July is last date of return filling in case of individual.
No Idea about penalties.

Income-Tax Appellate Tribunal orders on penalties under the Indian Income-tax act, 1922 and Income-tax act, 1961 …

Civil and criminal sanctions under the Indian income tax act (Madrid Conference on the Law of the World, September 16-20, 1979) …

Penalties and prosecutions in income-tax: Being a most comprehensive and self-contained tax hand-book lucidly embracing almost every conceivable … prosecutions under the Income-tax Act, 1961 …

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Indian Income Tax Department goes after Indian Board of Control of Cricket calling it a commerical fiasco and anything …

The BCCI is exercising complete control over the revenue of tournaments and is not interested in the promotion of cricket : I-T oreder. The BCCI’s net income for 2006-2007 was Rs 274.86 crore.