Accountants are often asked the difference between tax preparers, such as H&R Block, Jackson Hewitt, and Liberty Tax Services, and Certified Public Accountants (CPAs) during tax time in the US. These roles are often seen as similar when it comes to tax preparation, and so it’s useful to know the difference between the two. As the 2019 annual tax season begins, here is what you need to know about H&R Block-like services versus a CPA.

Backgrounds & Requirements

Tax preparers and CPAs differ mainly in qualifications and level of expertise. Requirements to be a tax preparer include having a high school diploma, taking a tax preparation course, obtaining a Preparer Tax Identification Number (PTIN), and registering as a tax preparer with the state. Tax preparers can take a Special Enrollment Examination (SEE) and become an enrolled agent to demonstrate competence in tax preparation.

Alternatively, CPAs have additional requirements in order to become certified. A Certified Public Accountant must hold a bachelor’s degree with a concentration in accounting. Additionally, CPAs must complete an additional 30 credit hours of continuing education which, when combined with a bachelor’s degree, satisfies the 150 credit hours needed to sit for the CPA exam. The final requirement involves sitting for the CPA exam, a 16-hour test administered by the American Institute of Certified Public Accountants (AICPA).

Tax Preparation Costs

Taxpayers in the US typically focus on one sole factor: the costs of tax preparation. Tax preparation companies and CPAs alike continuously focus on providing clarity and consistency surrounding pricing of tax preparation. If you are having a tax preparer do your taxes, you can expect to pay a flat fee of between $60 to $100 to have your federal taxes prepared and submitted to the IRS. This assumes that you are not doing an itemized tax return. An additional fee will be charged to do a state income tax return, and some firms will place other additional costs for changes or extra tax schedules that you need.

While a flat fee is standard for a tax preparation company, what CPAs charge for tax preparation in 2019 varies more widely. An accountant may charge based on an hourly rate, a set fee, or value-based pricing. The average cost for a CPA to prepare a tax return in 2018 was $175 for non-itemized returns and $275 for itemized returns. Your tax preparation cost will vary based on where you live, the complexity of your tax returns, and the organization in which you supply your CPA with the necessary documents.

Advantages of Working with CPA

There are numerous advantages to working with a CPA including decreased tax liability, access to additional tax services like tax planning, and access to a deeper understanding of taxes in general. When you take your taxes to a tax preparation company like H&R Block, you will likely meet with a tax preparation professional who works part-time outside of annual tax seasons and who uses a tax preparation software to fill in the blanks on your return and file it with Uncle Sam. Instead, when you hire a CPA to complete your 2019 tax preparation, you’ll sit down with a professional who has five or more years’ experience studying accounting concepts and methodologies. Furthermore, CPAs are up to date on the newest tax requirements, guidelines, and rules. A CPA will also work harder to qualify tax deductions and help you understand the tax implications of your personal or business actions going forward. CPAs are the better choice for tax preparation as these professionals are better equipped to provide long term tax planning. Tax planning can produce significant savings via a lower tax liability.

Should I Hire a CPA Instead?

CPAs and accountants offer much more than simple tax preparation services. CPAs are well worth a slightly higher fee, as you increase your chances of capturing the extra money you spend in tax liability savings. Individuals and small businesses can rely on CPAs to offer customized solutions with taxes and accounting issues.

Taxes by a Knoxville, TN, CPA

Lawhorn CPA goes a step further by equipping you or your organization with the tools and professionals necessary to obtain your financial goals. Contact us online or call 865.212.4867 for an initial consultation on how we can provide you with the accounting, consulting, tax, and cloud integration needs.