The Difference Between A Tax Preparer & A CPA

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Although a tax preparer and a Certified public accountant (CPA) may both have experience completing tax forms, there are important differences between the two. As the name “Certified Public Accountant” indicates, CPAs are qualified to complete many accounting and financial tasks besides tax preparation.

During the first CPA examination conducted in New York in December of 1896, only three people passed this initial exam. Practicing accountants had begun efforts to create a certification system as early as 1884, when the Institute of Accounts issued certificates to members who passed an examination. Tax preparers are not members of a professional group and do not need to pass a certification test to prepare tax returns.

In addition to passing a certification test, CPAs must also meet the state-mandated education requirements. State Boards generally require prospective CPA’s to complete a total of 150 semester credits at a state-accredited university or college. They must also earn at least a bachelor’s degree and take a specified number of accounting courses and business courses. Unlike CPA’s, tax preparers do not have to meet formal education requirements although firms that hire tax preparers may set their own education standards.

According to the U.S. Department of Labor, four (4) basic types of accountants can earn the CPA designation. Public accountants do accounting, taxes, auditing and consulting work. Management accountants keep track of funds earned and spent by a specific firm. Internal auditors review files and bookkeeping to make sure records are correct and no one is stealing. Government accountants and auditors check government account records, as well as the records of firms doing business with the government. By contrast, tax preparers simply gather information to prepare tax returns for companies and individuals.

The U.S. Department of Labor expects the accounting professions to grow much faster than the average professional field through 2018. They also expect more private companies to need accountants, and note that CPAs and certified management accountants should have the easiest time finding a job.

When hiring a professional to prepare your taxes, you must consider the complexity of your personal tax situation. In simple situations, an experienced tax preparer with good references should be able to prepare your tax return without any problem. More complex tax situations may require a CPA whose educational background and successful completion of the CPA exam proves that she understands the intricacies of accounting and taxation.

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4 Responses to The Difference Between A Tax Preparer & A CPA

  1. josim camoro says:

    In choosing between a tax preparer and a CPA, always think in account what you need and want to be done. Check both backgrounds carefully and choose options the right man for the job.

  2. josim camoro says:

    A CPA is a certified public accountant while a tax preparer can be both a CPA or one who has undergone any business or management related course.

  3. josim camoro says:

    Both are professionals but the difference might be in the area of study they have mastered. They both are knowledgeable in taxes but might have different methods in preparing them.

  4. Russel says:

    Tax Preparer is often strictly focused on tax preparation while a CPA is often well versed in all aspects of accounting . Thus, selecting one or the other will often provide the same result for tax purposes.

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