CPAs vs Licensed Tax Preparers

Individuals solely interested in tax preparation, audits, representation, and tax planning may prefer the SEE. Candidates may even first pursue EA tax preparer vs cpa certification, then become a CPA later on. Enrolled agents do not need any particular degree or educational credentials. Instead, they usually gain enrolled agent status by passing a rigorous three-part exam issued by the IRS. They can acquire the knowledge needed to pass the exam through professional experience, or by completing a postsecondary degree or program in accounting or a master’s in taxation.

Pre-requisites for a CPA License

First, tax preparers enrolled for the IRS Annual Filing Season Program (AFSP). This program aims to encourage tax preparers to enhance their knowledge and prepare for a particular tax year. It can range from taking a basic accounting or tax course to passing a state exam or nothing.

• Which one you choose will vary based on your current business needs.
• So, let’s dig deeper into the world of tax preparers and CPAs to understand what sets them apart and what makes each profession unique.
• Some tax clients may prefer a more versatile approach to the tax-filing process rather than a more specific one or vice versa.
• They assist in financial planning, budgeting, and forecasting, ensuring their clients’ financial wellbeing.
• However, you must have an active IRS Preparer Tax Identification Number (PTIN) to be authorized to prepare tax returns.
• As long as a CPA or tax preparer has their preparer tax identification number (PTIN), they can help prepare and file your taxes.

How Can You Prepare for Certified Tax Preparer Exams?

Hence, the career opportunities in the public accounting domain itself are pretty large. Both AICPA and NASBA offer a framework to develop, award, assess, and report CPE programs. You can either choose from their thousands of hours Accounting for Churches of free and paid CPE courses or opt for self-study. Let us know what type of degree you’re looking into, and we’ll find a list of the best programs to get you there. Explore programs of your interests with the high-quality standards and flexibility you need to take your career to the next level.

What’s the Difference Between a CPA and a Licensed Tax Preparer?

So if a client’s taxes have been audited, the Enrolled Agent or the CPA can communicate with the IRS on the client’s behalf. Tax preparers gather business information and review previous returns to help you file for this year. A tax professional also offers general counsel and will keep updated on tax laws, regulations, and other information that can lower your business tax liability and maximize your deductions. That all helps reduce your overall tax bill or increase your refund. 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 from representing clients on matters of appeals or collection issues.

During this period, aspiring CPAs work under the guidance of experienced professionals, gaining valuable hands-on experience in various accounting functions. Tax attorneys must complete law school and pass a rigorous examination issued by a state-level bar association. They can satisfy educational requirements with either a juris doctor (JD) or master of laws (LLM) degree.

• Tax preparers with unlimited representation rights can take new clients regardless of who signed their tax returns.
• While CPAs are licensed professionals offering a wide array of expert accounting services, tax preparers are non-licensed and specialize in only tax preparation.
• They also provide valuable advice on tax strategies, helping individuals and businesses minimize their tax liabilities.
• The participants receive a Record of Completion after fulfilling all the requirements.
• So while tax preparers may seem more budget-friendly, it’s essential to consider the potential long-term financial benefits that a CPA’s comprehensive services can bring.

• Let’s discuss the difference between a general tax preparer and a CPA to help you decide if you need either for your business.
• On the other hand, a tax preparer is more suitable for taxpayers seeking assistance in simple tax matters.
• Now, let’s talk about the qualifications required to don the CPA cape and enter the epic realm of accounting superheroes.
• CPAs prepare tax returns for individuals and organizations but, because they are accountants, their role typically encompasses much more.
• Just like an Enrolled Agent, a CPA is qualified to provide tax services and to represent clients before the IRS.

While tax preparers primarily focus on preparing and filing tax returns, CPAs handle a more comprehensive range of financial services. They serve as advisors, auditors, and planners, which allows them to provide a holistic approach to their clients’ financial needs. CPAs have the expertise to analyze financial data, identify areas for improvement, and provide strategic recommendations to enhance financial performance. CPAs prepare tax returns for individuals and organizations but, because they are accountants, their role typically encompasses much more.

CPA: Education and Licensing Requirements

The participants receive a Record of Completion after fulfilling all the requirements. For instance, they can represent the clients whose tax returns they have prepared before IRS employees. However, they don’t have the right to represent them for collection issues or appeals. This ensures that CPAs have real-world knowledge and practical skills to serve unearned revenue their clients effectively. The experience requirement varies by state but generally ranges from one to two years.

Do You Need to Recertify as an Accountant?

However, you must have an active IRS Preparer Tax Identification Number (PTIN) to be authorized to prepare tax returns. This PTIN requirement applies to all tax preparers (including tax attorneys, CPAs, and enrolled agents). IRS-issued PTIN is valid for one year and has to be renewed annually.