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Choosing a tax professional Internal Revenue Service


certified tax preparer vs cpa

While tax preparers are essential for many individuals and small businesses, there are instances when the expertise of a certified public accountant comes into play. CPAs have a broader scope of knowledge and can provide more comprehensive financial advice beyond just tax preparation. They can assist with audits, financial planning, and even offer guidance on complex tax strategies for high-net-worth individuals and corporations. They can specialize in tax preparation or focus on financial advisory and accounting. Other certified tax preparers — like enrolled agents — focus exclusively on tax preparation.

certified tax preparer vs cpa

Requirements for the CPA exam

“Unfortunately depending on the firm and the complexity of the tax return, the cost can be several hundred dollars to several thousand dollars,” she says. A good tax preparer can ensure you receive all the credits you qualify for and can help you avoid filing an extension or amendment, or paying penalties and interest. CPAs often charge higher fees to represent taxpaying individuals before the IRS.

Which Type of Tax Professional Is Right for You?

CPAs are best for broader accounting needs and identifying credits and deductions to increase your tax refund or lower your tax bill. When it comes to tax preparers, the cost can vary depending on factors such as the complexity of your tax situation, location, and the preparer’s experience and qualifications. Generally, tax preparers charge a fee based on the number of forms they need to complete and file. When your financial universe becomes more complex, a CPA’s expertise can save the day.

certified tax preparer vs cpa

CPA vs. Tax Preparer: Which Is the Best Choice for Your Business?

They can only represent clients for whom they’ve prepared and signed tax returns, and only in front of revenue agents, customer service representatives, and similar IRS employees. They’re also barred tax preparer vs cpa from representing clients on matters of appeals or collection issues. Regardless of which category you belong to, Intuit will provide additional resources to support your professional development.

A CPA has to obtain a proper degree, pass a complicated exam, obtain professional experience, and face regulation by a state board. Without completing the proper degree, tax preparers will not have the basic accounting skills required to prepare business tax returns. Additionally, simple items like loss carryovers from prior years can be omitted on your current year’s tax return due to a lack of understanding. The tax preparer category generally includes non-licensed professionals who are subject to minimal regulation, if any at all.

certified tax preparer vs cpa

Frequently Asked Questions About Tax Preparer Certification

certified tax preparer vs cpa

They are the unsung heroes of tax season, ensuring that your tax returns are accurate, compliant, and optimized to save you money. Enrolled Agents (EAs) must pass a comprehensive three-part exam administered by the IRS, covering federal tax planning, individual and business tax return preparation, and representation. They must also complete 72 hours of continuing professional education (CPE) every three years. You can also check the professional organizations many tax preparers belong to. Like CPAs, enrolled agents (EAs) are entitled to unrestricted taxpayer representation. Unlike CPAs, EAs’ expertise is limited to tax matters, making them extremely well versed in their specialty.

  • There are several specialties under the umbrella of accountants that may require their own special licenses.
  • To become a CPA, candidates must pass a four-part exam and comply with education and experience requirements.
  • Your employer (or client) may require you to obtain the license in the same place where you conduct business.
  • Getting referrals from your co-workers, friends or family members is another option, but they likely are facing a different tax or financial situation from you.
  • If you need help with an IRS issue, such as a collection problem or an audit, then an EA might be your best bet.

Furthermore, most states require CPA candidates to fulfill specific experience requirements, typically involving the completion of a certain number of supervised working hours in public accounting. This ensures that CPAs have real-world knowledge and practical skills to serve their clients effectively. The experience requirement varies by state but generally ranges from one to two years. During this period, aspiring CPAs work under the guidance of experienced professionals, gaining valuable hands-on experience in various accounting functions. Tax preparation and certified public accounting are two different professions that often get confused with each other. While both involve working with taxes and finances, their roles, responsibilities, and qualifications differ significantly.

How Do You Qualify for a Tax Preparer License?

  • Those that specialize in tax preparation can also typically help you with tax and financial planning, accounting needs, and most other financial tasks that you might have.
  • Review your tax situation and see whether you only need a tax preparer to input your information to tax software; or if that is not enough, then you need a CPA or CPA firm.
  • Additionally, if you have broader accounting needs — for instance, your bank requires a reviewed financial statement to comply with loan covenants — then working with a CPA can be beneficial.
  • This license grants them the authority to practice public accounting and offer their services to clients.
  • They spend hours meticulously reviewing financial documents, crunching numbers, and ensuring that every i is dotted and every t is crossed.
  • While the IRS encourages non-credentialed tax preparers to increase their knowledge through continuing education, doing so is optional.
  • They know about your marriage, your income, your children and your social security numbers – the details of your financial life.

Delving into the Profession of a Certified Public Accountant (CPA)

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