When filing your taxes, you have a few different options. The first is to file your taxes yourself; while this may be the sensible option for those with extremely simple tax returns, if your return is more complex than a single W-2, you may want to consider working with a professional. There are generally two types of professionals to choose from for your tax preparation needs: a CPA, or a non-CPA tax preparer. Here are a few key differences between these types of tax preparation professionals.

Knowledge and Experience

There are a few different types of non-CPA tax preparers. However, the majority of them are not required to have any background in accounting. They simply have to do some studying and pass the IRS’s competency exam in order to charge a fee for tax preparation services.

Much of the competency exam, however, is based largely on rote memorization, and doesn’t accurately test critical thinking skills. Additionally, obscure tax laws and unusual tax situations would not be covered by this exam.

CPAs have a much more extensive background of knowledge and experience in accounting. In order to receive their certification, CPAs must receive a Master’s degree in accounting, then pass a series of multiple exams, each of which tests a different area of accounting.

Of course, this does mean that some CPAs will specialize in different accounting fields, and may not be the best option for preparing your return. However, if a CPA focuses on tax accounting, they are likely going to have a much more in-depth knowledge of tax law, and will be better equipped to handle any unusual tax situations that you may have.

Audit Representation

Another important difference between CPAs and non-CPA tax preparers is that most tax preparers cannot offer you representation if you’re audited by the IRS. There is one exception to this; a tax preparer can take a few extra steps to become an Enrolled Agent (EA), and can then offer IRS audit representation in addition to tax preparation services. However, if your tax preparer is not an EA, then you will be on your own in the event of an IRS audit.

CPAs, on the other hand, are always approved to represent their clients during an IRS audit. This can offer a lot of peace of mind at a time that can be very stressful for taxpayers. While an audit will certainly never be fun, they are significantly easier, less stressful, and more manageable when you have representation.

Ongoing Assistance in Financial Matters

As mentioned above, CPAs study and are tested on far more than just taxes. They have knowledge and experience in many areas of accounting, including business audits, budget forecasting, variance analysis, and more. Many people (especially business owners) find that they need more than just tax preparation services. If this is the case for you, why would you work with an accountant for some financial matters, then have a non-CPA tax preparer handle your tax return?

A CPA is able to assist clients with other financial concerns throughout the year. This would also include tax planning services that could help you save on your taxes when it comes time to file. And, because they’re handling more than just a single aspect of your finances, a CPA will have a better understanding of your financial situation to help you get the best outcome on your return.

Because non-CPA tax preparers only focus on taxes, they cannot provide ongoing services in other accounting areas.  

Stability and Consistency

As mentioned above, CPAs work year-round, and can provide ongoing accounting services to their clients. This can offer you stability and peace of mind when it comes to handling your financial matters. Most people who work with a CPA for their tax preparation needs will work with that same person year after year. This allows the accountant to become familiar with your finances, personal situation, and any other matters that might influence your finances and your tax return.

Most non-CPA tax preparers, however, work for a larger tax preparation company and are only employed seasonally. So, it is unlikely that you will ever work with the same tax preparer from one year to the next, even if you go into the same office every year. Some tax preparers do work independently on a seasonal basis; however, there is no guarantee that that person will choose to continue preparing returns next year.

Why You Should Use a CPA

When choosing which type of professional you want to prepare your return, most individuals are better served by a CPA. With our greater knowledge and experience in tax accounting, our ability to assist you with IRS audits, our ongoing services in other accounting areas, and our ability to give you stability and peace of mind, CPA firms like ours are largely the better choice.

Contact us now to make an appointment with a CPA tax preparer.