December 29, 2022
Tax season is coming very soon, and you’re probably wondering how to maximize your tax savings this upcoming season.
In this blog, you will learn the difference between a tax preparer and a tax strategist and determine which professional can save you the most money on taxes.
Table of Contents
What Is a Tax Preparer?
A tax preparer prepares, calculates, and files income taxes on behalf of an individual or business.
Here at KDA, we prepare taxes for individuals and businesses every year.
We make them sign a waiver saying it’s okay to file their tax returns on their behalf.
That said, there is also tax preparation software a person can use instead of seeking professional help.
On average, tax software is more affordable than hiring a tax preparer.
That said, hiring a tax preparer might be more beneficial, depending on your tax situation.
What Is a Tax Preparation Software?
Tax preparation software is computer software that prepares, calculates, and files taxes on the business or individual’s behalf.
Most tax software is free to use. However, some software can charge you up to $100 for its services.
Here are some examples of tax software available currently:
- H&R Block
- Jackson Hewitt
What Tax Preparation Software Is The Best?
Every tax software will have its advantages and disadvantages.
Which software you should use will depend heavily on your tax situation and what your goals are in the long term.
For example, some software is built towards serving investors while others are for self-employed individuals.
Then there’s software like Jackson Hewitt, which allows you to file unlimited state returns.
Being able to file unlimited state returns is a unique feature that not all software has.
What Is a Tax Strategist?
A tax strategist is a professional who specializes in tax law and can help you save money on taxes legally.
A tax strategist can be an accountant, financial advisor, or lawyer.
No matter their profession, anyone who is a tax strategist is current with all the latest tax laws.
They are also informed on both the IRS and state tax guidelines.
What is a CPA?
CPA stands for certified public accountant.
CPAs are the first type of professional you turn to when looking for help with taxes.
To become a CPA, a person must pass 4 CPA exams.
These exams cover audits, business concepts, financial accounting & reporting, and regulation.
The regulation exam covers the taxes very briefly.
Seeing how they are tested on various topics, CPAs are very knowledgeable all across the board.
If you don’t have a lot of complex tax situations, then a CPA can assist you with all your tax needs.
What Is The Difference Between a Tax Strategist & CPA?
However, the challenge comes in when you have complex tax returns.
Not all CPAs aren’t are tax specialists.
CPAs who do not specialize in tax strategy cannot offer you proactive tax strategies to reduce your tax bill.
Ultimately, CPAs are accountants and not tax strategists.
They can choose to study and become a tax strategist, but these are normally two different professions.
In the end, a tax strategist is your best bet for lowering your tax liability.
Which One Will Save Me The Most On Taxes?
No one can deny that hiring a tax preparer or using tax preparation software is more affordable than hiring a tax strategist.
That said, a tax strategist will be the one who will save you the most on taxes.
That’s because a tax preparer only has one real purpose: to file your taxes and remain compliant with tax regulations.
Tax preparers are not professionals who specialize in tax law.
Tax preparers and tax software will not take a deep look into your business or personal finances and strategize how you can save on taxes.
On the other hand, a tax strategist’s sole purpose is to find ways to lower your tax bill while complying with tax rules.
So hiring a tax strategist is your best bet if you’re trying to save money on taxes.
However, if you’re just trying to file your taxes on time, then using tax software or hiring a tax preparer is your best bet.
Want To Read More Educational Content Like This?
We created a blog that shows you the top 11 states that are tax-friendly to middle-class families and retirees.
If you’re considering moving to a different state or just love traveling, this blog is for you!
Click the link below to start reading now.