If you have learned about tax-related subjects, you might know a professional called a tax accountant. They are responsible for assisting individuals and companies in filing their taxes properly and following legal guidelines to ensure the maximum possible accountant’s tax returns.
In this article, you will figure out all about tax accountants to evaluate whether tax accounting is ideal for your taxes, business, or profession.
What Is A Tax Accountant?
Tax accountants are financial professionals who comprehend all the laws and regulations that decide how much money is owed to federal, state, and local agencies.
Tax accountants help companies in:
- Finding the best ways to reduce the amount of taxes they owe;
- Giving them advice on managing their assets to reduce the number of tax penalties;
- Keeping them updated on tax code changes and representing them in court if necessary or in audits or legal disputes.
What Does A Tax Accountant Do?
The following are a tax accountant’s primary duties:
- Tax preparation for both federal and state income
- Calculating and submitting licenses, sales taxes, and property taxes
- Quarterly employment tax filing
- Preparing and filing 1099 forms
- Updating management on projected taxes
- Assisting with any accountant’s tax returns, tax audits, or legal disputes
Tax accountants can also:
- Identify incentives and tax breaks that apply to an individual or business client’s situation.
- Prepare the various forms, schedules, and statements to file taxes.
- Organize and store all tax-related documents, such as receipts for tax-deductible expenses, to answer any questions that might arise after taxes have been filed.
Business tax accountants can advise people and corporations on accountant taxation, accountants’ tax returns, and managing financial assets to reduce future tax burdens using their knowledge of the various tax rules.
- For business clients, this can involve giving guidance on tax incentives for money for employee benefits, capital expenditures, and energy conservation.
- For individual clients, this might entail advice on a health savings account, a retirement account, or a plan for a child’s education.
Educational Background and Requirements
Due to the rising complexity of tax regulations at all levels of government, today’s business tax accountant professionals need at least a bachelor’s degree in finance or business. This degree in general accounting often focuses on financial planning, accounting taxation theory, auditing, cost and tax accounting, and tax regulations at the federal, state, and municipal levels. Additionally, a master’s degree in a specific area of accounting taxation and professional experience are preferred by several financial companies and governmental organizations for business tax accountants.
In addition to a bachelor’s or master’s degree, many tax accountants possess a certification that enables them to exhibit a high level of experience in niche fields. These certifications include Certified Public Accountant (CPA) or Enrolled Agent (EA).
- Certified Public Accountant (CPA): A CPA is authorized to handle tax records and submit paperwork to the U.S. Securities and Exchange Commission by a state-level license. CPA applicants need to finish about 30 hours of coursework above their bachelor’s degree level. Several undergraduate programs now integrate this coursework into their curricula to prepare students for the challenging CPA exam after graduation.
- Enrolled Agent (EA): An EA specializes in taxation and is authorized to represent clients in IRS proceedings. Candidates for the EA certification must either study for and pass IRS’s Special Enrollment Examination or have at least five years of tax code interpretation and application experience working for the IRS. EAs must complete 72 hours of continuing education every three years to keep their certification.
Tax Accountant Average Salary
The salaries for tax accountants can vary depending on experience, degree of education, certification, industry, and location.
According to the Bureau of Labor Statistics, a tax accountant typically earns $79,500 annually. The typical salary for a tax accountant at the entry-level is roughly $51,000 annually, increasing with experience. A tax accountant can make more money if they have a higher level of education.
Certification also affects the salaries of tax accountants. EA certification is the highest certificate granted by the IRS. Certified tax accountants with EA certification often earn $15,000 to $20,000 more per year than CPAs.
The salaries for tax accountants are also significantly influenced by location. Urban locations typically pay more than rural areas.
Frequently Asked Questions
Should You Hire a Tax Accountant?
Whether you should hire a tax accountant or not will depend on your needs.
If you are looking for assistance with tax preparation and filing, a non-credentialed tax preparer will help. In this case, it is recommended that you go through a reputable tax preparation service since credentialed individuals are not regulated in the same way as certified tax accountants and are often at the center of tax scams.
On the other hand, if you have complex financial circumstances, run a business or manage a non-profit, or require assistance navigating the IRS, consider employing a tax accountant who has earned either a CPA or an EA certification.
See more: How Much Does It Cost To Get Your Taxes Done? 2023 Tax Preparation
What Time of Year Do Tax Accountants Work?
Tax accountants work throughout the year with their daily tasks. However, there is a time called tax season, from January to April. During this time, tax accountants have to work more than regularly.
Throughout tax season, accounting professionals must keep up with many paperwork obligations (such as 1099s, W-2s, etc.). They must be well-organized, meticulous, and ready for anything that might arise during the current February through April tax filing season. Accountants must know tax regulations and how to resolve any potential issues.
What Are the Differences Between Accountants and Tax Preparers?
The significant differences between accountants and tax preparers are the educational background and licensure requirements.
- Certified Public Accountants (CPAs) are authorized by the AICPA (American Institution of Certified Public Accountants). Accountants need to get a bachelor’s degree, and 150 credits with an emphasis on accounting, business, and general education are required before taking the AICPA exam. CPAs do not have limited representation rights and are authorized to represent their clients before the IRS. A CPA can offer beneficial financial services beyond taxes or involve more extensive tax planning.
- Tax preparers do not need to achieve any college degree in any field. Tax preparer duties include gathering pertinent financial records, entering relevant tax information, using federal, state, and local tax laws to determine deductions, refunds, and payments, filing paperwork with the IRS, and educating clients on the tax preparation process. A tax preparer or enrolled agent is your best option if your company needs help filing taxes.
See more: How To Become A Tax Preparer – A Complete Guide
Hopefully, this article gives you a clear answer: What is a tax accountant? Certified tax accountants specialize their practices to become authorities in particular fields to tackle the complexity of tax regulations.
Businesses and individuals hire professional Outsourced Tax Preparation services to protect their financial interests by having a FREE consultation session.
Related Posts: