What is a Tax Preparer?
A tax preparer is a professional that is qualified to calculate, file and sign income tax returns on behalf of individuals and businesses. They can also represent the taxpayer during IRS examinations of tax returns. There are various types of job titles these professionals may have, as well as various certifications and educational levels; individuals need to choose which type of tax professional will best suit their situation.
More than half of taxpayers hire a professional tax preparer when it’s time to file a tax return. Taxpayers trust these professionals with the most personal and sensitive details of their financial life - their marriage, their income, their children and their social security number.
What does a Tax Preparer do?
People and companies have to file tax returns every year. There are various types of tax preparation professionals, along with various levels of experience and appropriateness to an individual's personal tax situation. The Internal Revenue Service (IRS) requires registration for all paid tax preparers. Tax preparation professionals must obtain a Preparer Tax Identification Number (PTIN) and include it on all returns they sign.
The following is an overview of the various types of tax preparation professionals:
Tax Preparers for Chains or Local Outlets
These professionals are trained to some extent, but their training and experience could be at any level. Many of these tax preparers do this as a second job, and only for four months out of a year. If an individual's return is a fairly simple one, this may be the most inexpensive option for them. If there is any complexity to their return, some of these preparers may not have enough experience or know-how to maximize on particular deductions.
These professionals are licensed by the federal government, and have either been a former IRS employee (for at least ten years), or have passed an IRS exam. They also complete required credit hours every year in tax regulations and accounting methods. They are experts in tax planning and the preparation of tax returns. Many enrolled agents specialize in a specific tax area, and can represent an individual with the IRS and state tax agencies if there are any questions about their return.
Certified Public Accountants
These professionals can guide an individual through complex financial situations. For example, if an individual has recently retired, started or closed a business, gotten divorced, or had any other significant lifestyle changes that have impacted their financial situation, a certified public accountant may be their best option. Certified public accountants can configure an overall tax plan for an individual and can also represent them before the IRS. In a mid-sized to large firm, the initial work is done by a staff person who has up to a few years of experience. A more experienced person will review the work. The senior people in the firm tend to concentrate on issues such as planning (the tax laws are complex and there are different ways to do things that can reduce the taxes) and making decisions on more complex issues.
Tax attorneys usually work with clients who have large assets and business dealings, or for those interested in sheltering part of their income. They are tax specialists, are experienced with complex corporate matters, know the latest tax laws, and are excellent in tax disputes. However, they may not be as qualified in preparing actual tax returns.
What is the workplace of a Tax Preparer like?
Tax preparers work in a variety of organizations, such as accounting firms, franchise tax businesses, law firms and more. Many seasonal tax workers have other jobs they work year-round. For them, tax-preparation work adds a second shift during tax season, so their total workday might last 12 to 14 hours.
Frequently Asked Questions
Are Tax Preparers happy?
Tax preparers rank among the least happy careers. Overall they rank in the 9th percentile of careers for satisfaction scores. Please note that this number is derived from the data we have collected from our Sokanu members only.
This extremely low happiness quotient may be rooted in the seasonal nature of many positions in the field, which may lead to a higher-than-average rate of unemployment and career volatility for tax preparers. The high pressure of meeting tax filing deadlines may also be a contributing factor.
Steps to becoming a Tax Preparer
The process of becoming a tax preparer does not involve a long formal education. It does, however, include several requirements, regulations, and options.
How long does it take to become a Tax Preparer?
Tax preparers can request a Preparer Tax Identification Number (PTIN) from the IRS before undertaking any tax-related education. It can take several – most commonly, eight to ten –weeks to complete a tax preparation course and additional time beyond that to pass any examinations required for state registration or licensure.
What are Tax Preparers like?
Based on our pool of users, tax preparers tend to be predominately enterprising people. Some individuals enter the field to supplement another profession. This, of itself, is an ambitious, industrious, ‘enterprising’ act.
The work of a tax preparer involves diligently examining documents and identifying deductions and exemptions. This activity, as well, calls for someone who, according to the very definition of ‘enterprising,’ is ‘ready to undertake projects of importance or difficulty.’
Should I become a Tax Preparer?
The job of tax preparer calls for some specific basic skills, which are crucial to effectively communicating with clients; understanding a myriad of often complicated forms, documents, and instructions; completing accurate and honest tax returns; and working under the pressure of deadlines.
Active listening & articulate speaking skills Reading comprehension & writing skills Critical thinking ability Attention to detail & organizational skills Ability to manage stress Integrity & dependability Customer service mindset
If you possess this skill set and have a penchant for mathematics, economics, accounting, and using computer software, the occupation of tax preparer may be for you. Before committing to the field, however, consider its cons and its pros:
-Many positions are seasonal -Preparing complex tax documents can be demanding and stressful
-High school diploma is often the only educational prerequisite -Some training programs can be completed in as little as eight to ten weeks -Little or no experience required -On-the-job training is common -Little start-up cost to work independently -Sense of satisfaction from ‘making the numbers match up’ and helping clients receive a larger tax refund -People will always need help with tax preparation
In addition, this career offers flexibility. Tax preparers can work for a tax preparation company or for themselves from home. They can work full-time, part-time, or seasonally. They are often able to manage their own schedules, choosing whether they work days, evenings, or weekends. They may work in the field to supplement another profession. If they wish to transition to another position in the future, their accounting and tax knowledge will invariably be looked upon as an asset. Aspiring tax preparers also have the option of completing their course of study remotely, giving them greater control over both their learning and life schedules.
Tax Preparers are also known as:
Income Tax Preparer Certified Income Tax Preparer Tax Specialist Tax Consultant Tax Advisor Corporate Tax Preparer Tax Return Preparer