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.
The first CPA examination occurred 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 fulfill state-mandated education requirements. State boards generally require prospective CPAs to complete a total of 150 semester credits at a state-accredited university or college. They must earn at least a bachelor’s degree, and take a specified number of accounting courses and business courses. Unlike CPAs, 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 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.
- Accounting Coach: CPA Requirements
- U.S. Bureau of Labor Statistics (BLS). "Unemployment Rates and Earnings by Educational Attainment." Accessed Mar. 27, 2020.
- American Institute of CPAs. "FAQs - Become a CPA." Accessed Mar. 27, 2020.
- American Institute of CPAs. "CPA Exam Process." Accessed Mar. 27, 2020.
- U.S Bureau of Labor Statistics (BLS). "Occupational Outlook Handbook: Accountants and Auditors: Pay." Accessed Mar. 27, 2020.
- Indeed. "How Much Does a Certified Public Accountant Make in the United States?" Accessed Mar. 27, 2020.
- Robert Half International. "2017 Salary Guide: Accounting and Finance." Accessed Mar. 27, 2020.
As a former financial advisor to companies and individuals for 16 years, Joe Andrews knows financial planning and marketing from start-ups to personal budgets. He also writes on motor racing, board games and travel. Andrews received his B.A. from Michigan State University in English. He is currently working on a young adult novel.