If you are like most Americans and have to do your taxes every year, you may wonder about the benefits of using a professional service instead of doing taxes yourself. You may also consider whether there is a real difference between tax preparation services like H&R Block and Jackson Hewitt and a professional who has obtained their “CPA” designation. Is there really a difference? Are there benefits to retaining a professional?
Who are Tax Preparation Service Employees?
Most tax preparation service employees are individuals who have gone through training with that service – H&R Block or Jackson Hewitt, which are two well-known companies – to prepare and file taxes. They are trained to ask specific questions and input your data into their specialized database.
Tax preparers must go through training every year to be recertified by their service and the IRS. That training involves getting updates on laws that have changed. They get a very high-level view of what they should be doing to help others prepare their income tax returns. Some companies choose to only have their preparers go through the very basic training provided by the IRS on an annual basis.
These individuals are not licensed by the state in which they work. They are subject to very minimal regulations and are not required to attend any specific continuing education training. While their individual company may provide some training or education, it is not a requirement. Instead, the only training required is what the IRS provides. In some situations, this is the same minimum training provided to volunteer tax preparers.
Tax preparers who are not licensed also generally cannot talk to the IRS on your behalf about your tax situation. Instead, you may have to deal with those issues yourself if any crop up.
What is a CPA? Who can be a CPA in Connecticut?
“CPA” stands for “Certified Public Accountant.” A CPA is a licensed professional. He or she has gone through a variety of training and education methods, including:
- A five-year formal education program
- Two years of training with another CPA
- A series of rigorous examinations
- A commitment to ongoing, annual continuing education
For that last item, CPAs are required to complete 40 hours of continuing education every year in Connecticut. Failing to go through the educational requirements and keep up in changes in tax laws and preparation methods can result in a CPA losing their license.
Importantly, CPAs are held to higher moral or ethical standards compared to tax preparers. That can mean that some tax preparers can take an aggressive stance on your taxes with the IRS with little or no repercussions, which can end up costing you thousands of dollars.
Which Option is a Better Choice to Prepare Taxes for Connecticut Filers?
CPAs obviously have much more training and education. That helps them provide services to you that the average tax preparer simply cannot.
One of the most obvious areas where this benefit shows is in helping you find and take advantage of tax deductions and credits that may not be obvious. CPAs can also help you with tax planning and strategy in a way that the average tax preparer is not prepared to address. You can also count on their high ethical standards and requirements as well. They will often help you deal with the IRS if an issue arises.
There are certainly circumstances where having a tax preparer look at your taxes makes sense. Perhaps you have a relatively straightforward tax situation and would not qualify for most deductions or credits. If you have more income than what would be shown on a W2 or you have costs that you think might meet the requirements for a unique or specific deduction, you may want to talk to a CPA. Having the right information as you prepare your taxes can save you thousands of dollars at tax time.
If you would like more information about how a CPA could help you prepare your taxes or strategize your taxes, give our team a call. Schedule a consultation by calling our Meriden office at 203-634-7549 or our Madison office at 203-318-1488.