Real estate CPA or Enrolled Agent? How investors should choose

What each credential means

Enrolled Agent (EA). Enrolled to practice before the IRS. EAs pass a suitability check and a three-part IRS exam covering federal tax planning, individual and business tax returns, and representation. They complete 72 hours of continuing education every three years.

Certified public accountant (CPA). Licensed by a state board of accountancy after passing the Uniform CPA Examination and meeting education and experience requirements. CPAs offer a range of services, and some specialize in tax preparation and planning.

Attorney. Licensed by state courts or bars. Some attorneys specialize in tax.

Where they are the same

All three have unlimited representation rights before the IRS. Any of them can represent you on any matter, including audits, payment and collection issues, and appeals.

Anyone paid to prepare your return needs an IRS preparer tax identification number (PTIN), whatever their credential.

When you need a CPA

Audits and reviews of financial statements are reserved for licensed CPAs working through CPA firms. If a lender, fund investors, or a partner requires audited or reviewed financial statements, that work goes to a CPA firm.

Tax preparation and tax planning are not reserved for CPAs. That is the work most rental owners are searching for.

What matters more for rental owners

The credential tells you someone met a standard. It does not tell you whether they know real estate. For a rental portfolio, ask about the work itself: real estate professional status, short-term rental rules, cost segregation and depreciation, entity choices, and multi-state filings.

Our guide to choosing a preparer for a growing rental portfolio lists the questions to ask.

Which professional fits your situation

• A W-2 earner with three rentals who wants the return done and to know whether REPS or the short-term rental rules apply. This is tax preparation and planning. An Enrolled Agent or a CPA with rental experience can do it.
• A sponsor raising money from outside investors who expect audited financial statements. The audit goes to a CPA firm. The partnership return and investor K-1s are tax work, which an Enrolled Agent or a CPA can prepare.
• An investor whose rental losses are being examined by the IRS. This is representation. An Enrolled Agent, a CPA, or an attorney can represent you before the IRS.

Where Bellamy Tax fits

Bellamy Tax is led by Tanner Bellamy, an Enrolled Agent, and works with real estate investors in all 50 states. We do not audit or review financial statements.

How to check any preparer

The IRS publishes a directory of federal tax return preparers with credentials, including Enrolled Agents, CPAs, and attorneys. For a CPA license, check with the state board of accountancy.

Informational only, not tax advice.