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CPAs vs Licensed Tax Preparers

certified tax preparer vs cpa

Alternatively, a CPA might advance their competency in a specific type of accounting, focusing on tax issues, forensic accounting, attestation, advisory services, or a wide range of other possibilities. With tax season underway in the United States, millions of businesses—and even more individuals—will need to properly file their taxes with the Internal Revenue Service (IRS). You can become an enrolled agent without professional experience by passing the three-part Special Enrollment Exam (SEE) issued by the IRS. This path requires you to have a minimum of five years’ experience working for the IRS in any capacity that involves interpretation of taxation statutes. Note that most states do not specifically require CPAs to hold accounting degrees.

The Financial Implications: Cost of Hiring a Tax Preparer vs a CPA

Look to a CPA to identify the credits and deductions you qualify for to increase your tax refund and help lower your tax bill. However, the benefits of hiring a tax preparer go beyond just simplicity. These professionals often stay up-to-date with the latest tax laws and regulations, ensuring that your tax return is accurate and compliant. They can help you identify potential deductions and credits that you may have overlooked, maximizing your tax savings. They can also assist in tax planning, ensuring that you take advantage of all available deductions and credits while remaining compliant with tax laws.

Required Education and Certification for Tax Preparers

Once the paperwork is organized, the tax preparer dives into the nitty-gritty details. They carefully review each line of the tax return, making sure that all income sources are accounted for and that deductions and credits are properly applied. It’s a delicate balancing act, as they strive to maximize their clients’ tax savings while staying within the boundaries of the law. When you partner with a CPA, there are boards, rules, and licensing standards which are required for your local accounting professional to meet. Certified public accountants are regulated by each state’s Board of Accountancy. The Board of Accountancy sets the standards for certified public accountants and issues licensure for the state.

What Are Certified Tax Preparer Exams?

certified tax preparer vs cpa

On the other hand, CPAs undergo an extensive educational journey to become certified. Additionally, CPAs must pass the rigorous CPA Exam, which tests their knowledge in various areas of accounting and business. So the next time you sit down to gather your tax documents, remember the hardworking tax preparers who are there to guide you through the process.

  • CPAs must demonstrate broad financial knowledge to earn the designation, so they tend to work in a variety of settings.
  • Business owners must often file tax estimates for their designated businesses in addition to filing their personal tax returns.
  • When it comes to qualifications, tax preparers typically have less formal education and certification requirements compared to CPAs.
  • Ellen Chang is a freelance journalist who is based in Houston and writes articles for U.S.
  • The best tax preparers are also lifelong learners, constantly seeking new knowledge and honing their skills.
  • 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.

certified tax preparer vs cpa

However, insiders commonly note that earning professional experience as a paralegal, legal assistant, law clerk, or researcher can help. State bar examinations are very difficult, and insights gained from professional experience may improve your chances of passing. Kemberley Washington is a tax journalist and provides tax preparer vs cpa consumer-friendly tax tips for individuals and businesses. She has been instrumental in tax product reviews and online tax calculators to help individuals make informed tax decisions. Her work has been featured in Yahoo Finance,, SmartAsset, Black Enterprise, New Orleans Agenda, and more.

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

certified tax preparer vs cpa

Many EAs are also members of the National Association of Enrolled Agents, which has even higher standards for continuing education, as well as its own Code of Ethics. Some international candidates qualify for the shorter international qualification examination instead of the standard CPA exam. Explore programs of your interests with the high-quality standards and flexibility you need to take your career to the next level. But aside from being knowledgeable, you want to hire someone you feel good about working with. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.

What is a CPA (Certified Public Accountant)?

  • Explore programs of your interests with the high-quality standards and flexibility you need to take your career to the next level.
  • Enrolled agent (EA) status is the highest credential awarded by the IRS.
  • Tax return preparers who have PTINs but are not listed in the directory may provide quality return preparation services, but choose any return preparer wisely.
  • Becoming a CPA involves a rigorous educational journey, including the completion of a bachelor’s degree in accounting or a related field.
  • Her byline has appeared in national business publications, including USA Today, CBS News, Yahoo Finance MSN Money, Bankrate, Kiplinger and Fox Business.
  • Licensed tax professionals must pass the three-part Special Enrollment Examination (SEE) and complete 72 CPE hours every three years in order to represent a taxpayer.

If you have the available time and resources, it may be best to opt for an MAcc (Master of Accounting). It will be another excellent credential to have on your resume alongside your CPA. However, you don’t necessarily need an accounting degree to take the exam.

  • You expect your preparer to be skilled in tax preparation and to accurately file your income tax return.
  • Individuals looking to work as tax professionals can either become a CPA or an enrolled agent.
  • During this period, aspiring CPAs work under the guidance of experienced professionals, gaining valuable hands-on experience in various accounting functions.
  • You’ll continue to hone your accounting skills and take your career to the next level.
  • They carefully review each line of the tax return, making sure that all income sources are accounted for and that deductions and credits are properly applied.

Do you need quick, streamlined tax filing support or broader expertise and planning? If you have a complex tax situation and you feel that you need added value knowledge and service, you are better off using a CPA. EAs and CPAs are both knowledgeable, experienced professionals who are required to maintain high ethical standards.

Running your own business is something that appeals to many individuals. While it might be tempting to jump into the first opportunity that presents itself, taking the time to thoroughly evaluate the… Let’s discuss the difference between a general tax preparer and a CPA to help you decide if you need either for your business. EA candidates can take any part of the exam four times in each testing window (typically May to February). Individuals can retake the CPA exam as many times as needed, but most states expect candidates to pass each section within 18 months. Always shop around and get pricing upfront from a potential tax preparer.

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