10 Reasons to Choose a CPA in 2022

10 Reasons to Choose a CPA in 2022

Instead of TurboTax or H&R Block

Millions of people try software and services like TurboTax or H&R Block thinking it will save them money.

But does this save you money? Or does it cost you money because of mistakes, missed tax opportunities, fines, penalties, and more?

There is a considerable difference between the value you get from CPAs, tax software, and discount tax prep companies.

CPAs Care About You - Software Doesn’t

CPAs are highly educated and trained professionals who actually care about you, your family, and your business.

While this sounds a bit corny, it is true. CPAs build their businesses with happy, satisfied clients that stay with them for years and years. Your CPA gets to know your financial situation and helps you save money and grow revenue each year. TurboTax is just software, and H&R Block is seasonal sales at best.

And if you think TurboTax will catch your mistakes – think again.

Even the IRS Head Filed an Incorrect Tax Return Using TurboTax

In 2009, Treasury Secretary nominee Timothy Geithner had to explain a $34,000 tax mistake on his tax returns, which was embarrassing for the soon-to-be IRS head Geithner had to pay the tax, penalties, and a fine. When asked by Congress if TurboTax brought the error to his attention, Geithner replied, “No.” 

Geithner went to Dartmouth, got a MA in International Economics from Johns Hopkins, worked for the IRS, was president of the New York Federal Reserve Bank of New York, and was a Wall Street wizard – and he got it wrong with TurboTax.

How comfortable are you that TurboTax will catch your mistake? And that is the point. 

Ironically, many new clients come to CPAs because of mistakes and wrongful tax filings that happened when they used TurboTax.

But leaving the emotion aside, below are 13 reasons to choose a CPA over software like TurboTax or seasonal tax prep companies like H&R Block.

1. CPAs Have a Higher Educational Standard

CPAs are held to a high educational standard. The course work is difficult and long, and the certification test is comprehensive.

While all jurisdictions are different, it is customary to have 150 college credits and 2,000 hours or 12 months of experience. CPAs must pass the rigorous Uniform Certified Public Accountant Examination (CPA Exam), which in most states, consist of four, four hours tests with 100s of potential topics. This CPA Exam is accepted by the regulatory bodies of all fifty states plus the District of Columbia, Puerto Rio, Guam, the US Virgin Islands, and the Northern Mariana Islands.

As such, a CPA is licensed to prepare taxes and other accounting work in all 50 US states and all US territories, and DC.

Requirements for tax preparers at companies like H&R block are much less stringent. H&R block gives their own course of about 70 hours and issues an H&R Block certification that allows someone to work at H&R block.

2. CPAs can Represent You in front of the IRS

If the IRS has any questions about your tax returns, your CPA can represent you to the IRS. The IRS must approve someone who can represent you, and CPAs are all approved.

Most non-CPA tax preparers are not approved by the IRS and cannot represent you or answer questions for you. The exception is if your non-CPA is an Enrolled Agent, then they will be allowed to represent you at the IRS.

But, if your non-CPA tax preparer is not an EA, then you are on your own with the IRS. The logical question is, why would you let someone prepare your taxes who cant represent you at the IRS?

3. CPAs are Held to a Higher Ethical Standard

PAs are regulated by their state boards of accountancy. Even before becoming CPAs, they undergo extensive background checks. Additionally, they must adhere to the rigorous code of professional conduct of the America Institute of accountancy CPAs (AICPA).

The AICPA monitors and enforces compliance in the industry among its more than 400,000 members in 130 countries. The AICPA enforces fiduciary standards, objectivity, the duty of care, and more. Non-CPA tax prepares have no such oversight or accountability.

4. CPAs are Always There – Not just at Tax Season

CPAs are in the accounting business all year long – not just at tax season. Most tax prep companies like H&R Block hire extra “seasonal” employees for the tax season of January through April. After April, these part-time employees are gone until the next tax season.

Your CPA, on the other hand, is there for you every day, every week, and every month. If you have any accounting or tax question, you can always reach your CPA.

5. Changing Tax Laws

The tax code is long and complex, with more than 2,652 pages and about one million words. The tax code has been amended about 4,000 times in the past ten years.

Then there are laws, statutes, regulations, and guidelines. And for most states, there are ever-changing state income laws and rules. 

CPAs keep up with ALL the changing rules and regulations, so you don’t have to.

6. If You are Starting a Business

If you set up your business entity incorrectly, it can cost you thousands of dollars in lost tax savings. A CPA can show you the best entity for you to choose, whether it is an LLC, partnership or corporation. And your CPA can show you how choosing an S-Corp tax classification might work best for you.

Suppose you set up the wrong entity in the beginning and need to change it later. You might incur extra costs to change licenses, insurance, or banking if you need to modify the structure. And it is often difficult or impossible to change certain tax classifications without redoing your entire business structure.

7. Freelance, Have a Small Business or Side-Hustle

When you are an employee, you get a W-2 and file your Form 1040. Pretty simple.

But if you freelance or have your own business, tax filings are more complicated. You might have 1099s, partnership forms, or a disregarded entity.

The good news is that you also have the opportunity for more tax deductions. A qualified CPA can show you the best planning and deductions so you can keep more of what you earn

8. You Own Real Estate or Rentals

Real estate and rental can be great investments with spectacular tax advantages. A qualified CPA can help you take advantage of all of these.

You can learn the ways to access the equity tax-free, and the best yearly deductions. Also, there are 1031 tax free exchanges where you can sell and buy properties with tremendous tax-deferred savings. 

If you are building a real estate portfolio, TurboTax or H&R Block type businesses are of little help. 

A CPA can help you with all current real estate tax laws and deductions and help you maximize your family’s real estate investments.

9. The IRS Contacts You for ANY Reason

If the IRS contacts you for any reason, call your CPA and let them handle the situation.

While the IRS might be asking for something that seems simple, like substantiations of expenses, a confusing or incorrect answer on your part might accidentally elevate the situation. What if you don’t understand what they are asking for or can’t remember the details of what you filed?

A good CPA speaks the same language as the IRS and is familiar with the notices, forms, and questions they send to taxpayers.

This is one area where a CPA can help you avoid turning an innocent situation into an unnecessary exchange.

10. You Owe ANY Back Taxes

If you owe any back taxes to the IRS, call a CPA immediately! Don’t hesitate, and don’t put it off.

The IRS is arguably the world’s most powerful collection agency, with strong collection powers backed by the laws and the federal government. Being a target of the IRS collection process can be scary and unsettling. 

Avoiding them will just make the problem worse.  

CPAs are familiar with the IRS collection process. Have your CPA find out the issues and plan your best strategy.

Let a CPA help you get your life back to normal and get some peace of mind as soon as possible.

Let Our Team of CPAs Help You

If you are curious about whether to use tax software, a tax prep company, or a CPA, give us a call and we are happy to help you understand the difference it will make in your situation.

​​ At CE Accounting, we don’t just file forms and crunch numbers. We analyze your personal and business goals to minimize your tax obligations.

We keep up with the laws, rules, and ever-changing tax code, so you don’t have to.

Call today and let us show you how using a qualified CPA is your next best step.

“This article is not intended to give, and should not be relied upon for, legal tax advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of a qualified professional.”