I haven’t disclosed this much on the blog, but I’m actually a Certified Public Accountant (CPA). I used to work in a CPA firm back in my 20s. Filing taxes was a part of the annual routine.
While I haven’t been a “practicing” CPA for several years now, I’m actually going to be doing some taxes this year to supplement our income. I’ll be lending my services to a family member’s CPA firm. I’m looking forward to getting back into the work and learning a few things along the way.
On my mind lately has been the reasons why having a CPA do your taxes is important. Why it matters, and for who, is what I’m going to try and explain below. I realize this may come across as self-serving. My apologies before hand.
Why Use a CPA to Prepare Your Taxes
Licensing - Practicing CPAs are licensed through their particular state. In order for the CPA to maintain this license, he/she must generally do 2 things: complete continuing education (e.g. take a course on the latest tax deductions) and run his/her business according to specific standards.
These standards provide assurance to you that you’re getting a quality service. If you ever have a question about your CPAs legitimacy, contact your state’s board of public accountancy and request information about your CPA.
Consistency and Stability- A CPA is going to be there for you year after year. Practicing CPAs are in it for the long run.
Doors are Always Open – A CPA performs many types of financial services, not just taxes. Therefore, their doors are always open for tax questions, tax planning, and for any audit help you may need. Other tax preparation services are going to close their doors from May to December. Who’s going to help you when you get that audit letter? A CPA can.
Record Retention- A CPA is going to maintain your tax information much like a doctor holds on the patient’s medical records. A CPA will act as your own personal filing cabinet through the years. You’ll even get your own copy of the return and supporting documents in a nice little folder for you to file away yourself if you want. Digital is also becoming more prevalent.
Tax Planning – The best part about having a CPA is the tax planning advice he can provide throughout the year. There are certain year-end tax moves you can make each year that will save you hundreds in tax dollars. Software and tax preparation companies aren’t around to help you with those things.
Professionalism - Like I mentioned above, a CPA is licensed with the state. They’ve gone through a ton of accounting classes, a tough exam, and must maintain continuing education credits each year. Only a person who wants to be a professional is willing to go through what it takes to be a CPA. Of course, CPAs are still just people. But I’ll take the CPA designation over any other for tax filing purposes.
Your Time – The last good reason I’ll give you is your time. I’m not going to lie and say that you won’t have to spend a little time preparing your tax files to bring to a CPA. But they will save you the time it takes to enter in all the information, and file the return. And each year it gets quicker as you’ll learn what to bring to your CPA.
When Not to Use a CPA
Generally speaking, you don’t need to use a CPA if you’ve got a simple return. If you only file a 1040EZ, or if you file a 1040, but take the standard deduction, a CPA wouldn’t be necessary. There are plenty of free tax filing services that you can use to quickly prepare and e-file your taxes. I’ve actually used free tax software to file my own taxes for the past 6 or 7 years. Only now, when I’ve got some small business details, will I rely on the second eye of a practicing professional.
What Not to Use: Tax Prep Services
I’m a firm believer that if you’re going to spend money to have someone do your taxes, take them to a CPA. Every place else is going to be a crap shoot when it comes to the level of professionalism. Tax preparer IRS penalties are high, but they aren’t the deterrent that losing your license would be. If you are going to use other services, please make sure they have some standards (like H&R Block) and do a background check with the better business bureau.