When it comes to your divorce, taxes will almost always play a large part in your settlement agreement. Many people hire bookkeepers & CPAs as their services & technical skill is well known. But when it comes to enrolled agents, or EA’s, – most people scratch their head as they’ve never heard of one before. If you’re facing a divorce, having an EA on your side could be extremely beneficial.
One of the most beneficial services an Enrolled Agent can provide in your divorce is representation before the IRS. Enrolled Agents can speak with the IRS on your behalf regarding any tax issues. This can be extremely helpful when your spouse may have kept you in the dark regarding your tax status.
The most common tax issues we see surround filing statuses, child tax credits & past-due IRS tax liabilities.
From the IRS
An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service by either passing a three-part comprehensive IRS test covering individual and business tax returns, or through experience as a former IRS employee. Enrolled agent status is the highest credential the IRS awards. Individuals who obtain this elite status must adhere to ethical standards and complete 72 hours of continuing education courses every three years.
Enrolled agents, like attorneys and certified public accountants (CPAs), have unlimited practice rights. This means they are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can represent clients before. Learn more about enrolled agents in Treasury Department Circular 230 (PDF).
It’s important to remember that only the custodial parent can normally file as Head of Household. This is not a filing status that can be rotated from year to year. Additionally, the custodial parent generally will sign & deliver IRS form 8332 to the non-custodial parent. This release of the child tax credit does not need to be sent to the IRS. It should be given to your tax professional & retained with your tax records to ensure that you can legally claim the child tax credit.
It also goes without saying that your EA can prepare & file your tax returns. This can be helpful when divorcing couples may not agree on the tax matters of the divorce. Hiring a professional can help eliminate many arguments.
So, what can an Enrolled Agent do for you?
- An EA can represent clients before the IRS. Clients sign power of attorney for an EA to represent them before an IRS audit, negotiate installment contracts, offers in compromise, etc.
- EAs prepare tax returns – Individual, partnership & corporate returns. As an EA is licensed to practice before the IRS – it only goes that they can & do prepare tax returns.
- A lot of EAs act as bookkeepers & perform accounting services. However, depending on the state you reside in, they may or may not be able to hold themselves out as accountants & bookkeepers.
As tax & financial experts, we are uniquely qualified to assist clients through their divorces. Contact us today to learn more.