Do CPAs Do Taxes? Tax Preparation and Planning Services

Certified Public Accountants (CPAs) are licensed financial professionals who provide a broad range of tax-related services. These services extend far beyond simple tax form preparation, encompassing intricate planning and advisory roles for both individuals and businesses. Understanding the scope of a CPA’s tax expertise can help individuals and organizations navigate the complexities of tax regulations and optimize their financial positions.

CPA Qualifications for Tax Practice

The qualifications to become a CPA are rigorous, ensuring a high level of expertise, especially in tax matters. Prospective CPAs typically need to complete 150 semester hours of college coursework, which is more than a standard bachelor’s degree. This extensive education provides a deep understanding of accounting principles, business law, and taxation.

After fulfilling the educational requirements, candidates must pass the Uniform CPA Examination. This comprehensive exam includes four sections, with the Regulation (REG) section directly covering taxation, ethics, and business law. Following the exam, aspiring CPAs must gain practical experience, usually one to two years, under the supervision of a licensed CPA.

Maintaining a CPA license involves ongoing obligations, including continuing professional education (CPE) requirements. These CPE hours ensure that CPAs remain current with changing tax laws, regulations, and financial standards. Furthermore, CPAs are bound by a strict code of ethics, which provides a layer of trust and accountability in their financial dealings.

Core Tax Preparation Services

CPAs prepare various tax returns for individuals and businesses. For individuals, this includes the preparation of Form 1040, along with associated schedules such as Schedule A for itemized deductions, Schedule C for self-employment income, and Schedule D for capital gains and losses. CPAs gather financial documents like W-2s, 1099s, and investment statements, then accurately input data and apply relevant tax laws to ensure compliance.

For businesses, CPAs prepare returns tailored to the entity type. This includes Form 1065 for partnerships, Form 1120-S for S-corporations, and Form 1120 for C-corporations. Sole proprietorships report their business income and expenses on Schedule C, which is part of the owner’s individual Form 1040.

Beyond income tax returns, CPAs also assist businesses with other common tax filings. This can involve payroll tax filings, such as Forms 941 and Form 940. They also help with sales tax returns, depending on state and local requirements, and property tax forms.

Advanced Tax Services and Advisory

Beyond the preparation of tax returns, CPAs offer tax planning and advisory services designed to optimize financial outcomes. They help individuals and businesses develop strategies to minimize tax liabilities, which can involve advising on retirement contributions, investment tax implications, and the optimization of business expenses. This approach ensures that financial decisions align with long-term tax efficiency.

CPAs also provide representation during audits or inquiries from tax authorities like the IRS. They act as a liaison, providing necessary documentation and explanations to resolve issues. For clients with international income or assets, CPAs can navigate international tax treaties and reporting.

Furthermore, CPAs assist with estate and gift tax planning, helping clients structure their assets to minimize future tax burdens. They also offer tax consulting, advising on the tax implications of significant financial events like buying or selling a business, real estate transactions, or starting a new venture. These services highlight a CPA’s role as a trusted financial advisor.