Today in this article, we will discuss do I need a CPA to prepare taxes? The US Tax Code contains many confusing rules, regulations, and time frames. Although not everyone is required to file a tax return. Most people who earn income are required to file taxes every year. Unless your financial situation is difficult, you can be fine on your own. However many people need the help of a trained tax professional. Such as a certified public accountant (CPA) or licensed tax preparer.
CPA to Prepare Taxes
- A Certified Public Accountant (CPA) is a licensed professional with advanced education and training in many areas of accounting and business.
- A licensed tax preparer does not need advanced degrees for basic tax preparation, but must demonstrate competency through formal examination or employment with the IRS.
- A CPA may be best for taxpayers and businesses with complex tax situations, or those seeking financial planning and consulting services.
- If your tax situation is simple and you just need help and reassurance with filing, it will be much cheaper to hire a licensed tax professional than a CPA.
Business owners often need to file tax estimates for their designated businesses in addition to filing their personal taxes.
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What type of tax professional is right for you?
The CPA is the gold standard of accounting credentials. And many taxpayers prefer the sense of security that the designation provides. CPAs may also be a better option for individuals and businesses seeking a broader range of accounting services as well as tax work. Many CPAs provide financial planning and consulting services and issue financial statements for their tax clients.
A licensed tax preparer has a more limited focus. But can be a great option for taxpayers looking only for tax return services. EA accreditation is issued directly by the IRS, so they often have unique insights into dealing with complex IRS issues.
The hourly rate is usually lower with an EA than with a CPA. This is why it is often the best option for cost-conscious business owners. If your tax situation is straightforward, you may not need to hire a professional.
However, if your tax situation is complex enough to pay for help. Both CPAs and licensed tax preparers are great options for tax preparation.
How much does a CPA cost?
Nobody likes to pay taxes. So having to pay high prices to do your taxes can seem like an insult to injury. But preparing your taxes yourself can be dangerous. Simple mistakes and deductions can cost you thousands of dollars in overpaid taxes or fines and penalties.
For this reason, many small business owners hire a Certified Public Accountant (CPA) to handle their taxes and provide tax, accounting, and business advice.
Actual fees may depend on your location. The CPA’s level of experience, the complexity of your financial situation, and the level of service you require.
What does a CPA do?
CPA is not a job title; it’s a certification and CPAs do a lot of things. Some work as chief financial officers (CFOs) for Fortune 500 companies, some do audited financial statements, and some act as consultants and advisers on many topics, including accounting and tax.
Tax planning and tax preparation.
CPAs can help individuals and businesses with tax planning and filing taxes. This may include state and federal income tax returns, payroll tax returns, and sales and use tax returns. CPAs are required to maintain their tax and accounting knowledge with continuing education each year, so they are aware of the latest tax changes.
Fees for tax preparation services can vary widely depending on the type of tax return you need, the complexity of your return, and other factors. However, based on the National Society of Accountants stats, the average cost of CPA tax services is $174 per hour.
When you need an accountant
In some circumstances, you may find that you prefer to use an accountant rather than attempt to prepare your tax return yourself. In most cases, there are advantages to going to an accountant if you have a difficult situation.
You may want to hire a CPA who specializes in personal taxes to prepare and file your taxes if you have a difficult tax situation.
For example, if you own a business, an accountant can help you correctly identify and claim business tax deductions that can lower your taxable income and save you money. Even if you’ve done your taxes before, hiring a professional tax preparer can be a smart choice after a major life event like:
- Marry or divorced
- Buy or sell a house
- Own a rental property
- Had or adopted a child
- Sold investments, such as stocks or cryptocurrencies
A CPA can offer advice and tax planning strategies with these important events in mind. Tax planning often requires you to make transfers during the same tax year, not before you prepare and file your tax return.
If you’re thinking of hiring a CPA, you can look at several prospects to see which might be the best fit. You can also use CPA verify.org to verify your credentials.
It’s best to contact tax professionals during less busy periods, as many can be fully booked as the tax deadline approaches.
Although you may be able to apply for a tax extension that only extends the time you have to file your return. You may still need to pay the taxes you owe before the tax filing deadline to avoid penalties and fees.
Before you go, I hope that the above article related to do I need a CPA to prepare taxes will be helpful and informational for you.