Does a CPA Do Taxes & What Tax Services Do They Provide?

Certified Public Accountants (CPAs) are deeply involved in taxation, but their role extends beyond just preparing tax returns. They offer a wide array of services related to tax laws and financial strategy. This article details their credentials and the situations where their expertise is valuable.

Understanding the Certified Public Accountant Credential

A Certified Public Accountant (CPA) is a licensed financial professional who has met strict educational, examination, and experience requirements. To become a CPA, candidates typically need to complete 150 semester hours of college education. This coursework often includes specific hours in accounting and business subjects.

Following their education, aspiring CPAs must pass the Uniform CPA Examination, a comprehensive, multi-part exam covering auditing, business concepts, financial accounting, and taxation. Beyond passing the exam, individuals must also fulfill a work experience requirement, which involves one to two years of accounting-related experience verified by an active CPA. This experience can be gained in settings like public accounting, industry, or government.

CPAs are licensed and regulated by state boards of accountancy, ensuring adherence to a code of ethics and professional standards. They are also required to complete continuing professional education annually to maintain their license and stay current with financial regulations and tax laws.

Range of Tax Services Offered by CPAs

CPAs offer comprehensive tax services that go beyond basic tax form completion. They prepare various tax returns, including individual income tax returns (Form 1040), and business tax returns such as those for corporations (Forms 1120, 1120-S) and partnerships (Form 1065). Their expertise also extends to more specialized areas like estate and trust tax returns.

Beyond preparation, CPAs engage in tax planning and strategy, providing advice to help individuals and businesses minimize their tax liabilities. This includes identifying eligible deductions and credits, and advising on investment strategies or business structures that can optimize tax outcomes.

They also offer IRS representation, assisting clients who face audits, receive notices, or need to navigate appeals processes. CPAs have unlimited representation rights before the IRS.

CPAs provide tax advisory and consulting services, offering guidance on complex tax issues, business transactions, and regulatory compliance. This can include advice on mergers, acquisitions, or the tax implications of new ventures. Many also specialize in State and Local Tax (SALT) services, helping clients understand and manage obligations related to sales tax, property tax, and other state-specific levies.

Situations Benefiting from CPA Tax Expertise

Engaging a CPA for tax matters becomes advantageous in several circumstances. Individuals with complex financial situations, such as significant investments, multiple income streams, or foreign assets, often find a CPA’s guidance essential. This also applies to those with substantial itemized deductions or unique financial arrangements.

Business ownership, from starting a new venture to buying or selling an existing one, represents another scenario where CPA expertise is beneficial. CPAs can advise on the optimal business entity choice, manage business tax implications, and assist with financial reporting. Major life events, including marriage, divorce, receiving an inheritance, or navigating real estate transactions, also create complex tax considerations that a CPA can help address.

When individuals or businesses receive correspondence from the IRS or face an audit, a CPA’s representation can provide expert navigation through the process. Their knowledge of tax law and audit procedures helps ensure accurate responses and resolution. Individuals or businesses seeking to optimize their tax situation also gain from a CPA’s year-round tax planning insights, moving beyond annual filing to strategic financial management.