Tax professionals, often called tax preparers, usually work on a commission basis for a tax consulting firm or as a private individual. Their success depends on their ability to market themselves on their skills in tax preparation and their technical expertise with tax software programs. The leading tax preparation companies, H&R Block, Liberty Tax and Jackson Hewitt pay an average wage of $9.50 an hour.
Education Plays an Important Part in Pay
The median income, for a tax professional, average between $23,000 – $49,000 a year, which is an eight percent increase from 2004. The job requires a high school diploma or its equivalent, familiarity with tax law, federal and regional codes and financial software. Individuals must stay up to date with the constantly changing tax laws.
Small businesses and individuals are most likely to seek the assistance of a tax professional in preparing their financial statements. Tax forms can range from the very simple to the highly complex, and may include reviewing the work of other tax preparers for accuracy. It is the job of the tax professional to ensure that the client pays the minimal amount of taxes necessary to stay in compliance with tax codes and regulations, and receive the largest tax return possible when the situation is applicable.
It is the responsibility of the tax professional to prepare and submit accurate information on the tax return to the Internal Revenue Service. It is the taxpayer who suffers if the professional makes a mistake, with a possibility of incurring late fees and penalties.
Trust and Good Business Sense
The tax professional must gain the trust of his or her client, who may have had a negative experience with a previous tax preparer. Sensitivity to privacy is necessary, as the questions the tax professional asks will concern the client’s income, exemptions and deductions.
In addition, he/she may also examine the prior year’s tax return with queries concerning any changes. The tax professional must know if the client owns a business, regardless of its size, in order to determine the type of tax form to be used. The tax professional must collect and discuss the client’s current financial information for the year.
There are several advantages to becoming a tax professional. Tax preparation companies train individuals seeking employment in the financial sector. A tax professional may become his or her own business, operating from a home computer. Experience as a tax professional is a qualifying step for becoming a Certified Public Accountant.
Highly skilled tax professionals can earn twice as much as the median income. While tax preparers in the booking and payroll industry earn an average of $39,320 a year, insurance carriers can average $58,390. Other top industries include management, scientific and technical consulting services.
All tax professionals must obtain a federal preparer tax identification number (PTIN) from the IRS. The identifying information must include the applicant’s social security number. Often, they must pass an exam before they can prepare federal tax returns for clients. Some states require licensing or registering with the state before the tax professional can begin practicing. Many states, as well as the IRS, waive some or all of the licensing and registration requirements for Certified Public Accountants, lawyers and attorneys or enrolled tax agents. Continuing education is required for maintaining a PTIN and for ensuring a successful career as a tax professional.