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Key Differences between CPAs and Tax Preparers

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When filing your taxes, you have a few different options available to you to get the job done. Your first option is to file your taxes yourself. While this may be a sensible choice for those with very simple tax returns, if you have more than a W-2, things can quickly get complicated and require the help of a professional. This leads you to your remaining two options: a CPA, or a non-CPA tax preparer. Here are some key differences between the two, and why one is clearly the better choice.

Tax forms, money, and calculator

When filing your taxes, you have a few different options available to you to get the job done. Your first option is to file your taxes yourself. While this may be a sensible choice for those with very simple tax returns, if you have more than a W-2, things can quickly get complicated and require the help of a professional. This leads you to your remaining two options: a CPA, or a non-CPA tax preparer. Here are some key differences between the two, and why one is clearly the better choice.

Training and Expertise

When filing your taxes, you have a few different options available to you to get the job done. Your first option is to file your taxes yourself. While this may be a sensible choice for those with very simple tax returns, if you have more than a W-2, things can quickly get complicated and require the help of a professional. This leads you to your remaining two options: a CPA, or a non-CPA tax preparer. Here are some key differences between the two, and why one is clearly the better choice.

While there are a few different types of non-CPA tax preparers, most of them are not required to have any kind of background or education in accounting. They do have to study for and pass the IRS’s competency exam if they want to charge for their tax preparation services; however, most of this particular exam is largely based on simple memorization. It is not an accurate measure of critical thinking skills or the ability to solve real-life problems on real tax returns. Additionally, many lesser-known tax laws and uncommon tax situations are not covered on this exam.

CPAs, on the other hand, have an extensive background and specialized education in accounting. To receive this level of certification, a CPA must first receive a Master’s degree in accounting. Then, they must pass a series of exams, each of which tests their knowledge in a different area of accounting.

Of course, a CPA can choose to specialize in a different field of accounting, so not every CPA is going to be the best choice for you. However, if a CPA has a focus on tax accounting, they are going to have much more in-depth knowledge of tax law, and as a result, will be better equipped to handle any unusual tax situations. They’ll also have a deeper understanding of the best ways to handle every tax return to minimize your taxes every year.

Representation in an Audit

Another significant difference between basic tax preparers and CPAs is that tax preparers are not legally able to represent you if the IRS should choose to audit you. The one exception to this is if the tax preparer has taken the extra steps to become an Enrolled Agent; in these cases, they can offer audit representation in addition to tax preparation services. However, if the non-CPA tax preparer you choose to use is not an Enrolled Agent, you will be on your own if you’re audited.

CPAs, however, are always able to provide audit representation for their tax clients. This can give you a lot of peace of mind in a situation rife with stress for taxpayers. While the audit still won’t necessarily be an enjoyable experience, it is much easier, less stressful, and more manageable when you have a CPA assisting you. Be sure to ask any CPA you work with if they offer audit representation, as different businesses may only provide this for a separate cost, while others will include in their tax preparation fees.

Financial Partnership for Other Matters

As we’ve already mentioned, CPAs study and understand far more aspects of accounting than just taxes. They’re often equipped to handle other financial matters like business audits, variance analysis, budget forecasts, bookkeeping, and more. Many taxpayers (especially those with businesses) find themselves in need of more than just tax preparation help. If you’re in this boat, why work with a non-CPA tax preparer for your taxes, then work with a separate accountant for other financial matters?

A CPA can become a partner in all of your financial matters, providing for easier tax preparation and more seamless financial services. They’ll have a better understanding of your financial situation when they’re preparing your taxes, because they’ve been working with your finances all year. A non-CPA tax preparer simply isn’t able to do this.

Stability and Consistency

Most non-CPA tax preparers work for a larger tax preparation business, and they’re seasonal employees. This means you’ll likely work with a different tax preparer every year—someone who knows nothing about your financial situation and how to best help you. But a CPA works year-round in the accounting business, and they’ll be there year after year to help you with your taxes.

As you can see, a CPA is simply better equipped to handle your taxes, as well as other financial needs. They have greater knowledge and experience, can back you in an audit, and can become your partners in all of your financial matters. To work with an experienced tax CPA, contact us today and schedule an appointment.