Accounting - How To Become A Tax Preparer
How To Become A Tax Preparer: Degree & Career Guide
In a world where taxes are a necessity, tax preparers play a fundamental role in making sure that businesses and individuals never have to worry about the accuracy of their tax returns.
Taxes are an important part of businesses and of our personal lives. But many people are unaware of the fact that they may qualify for certain tax deductions or exemptions. Tax preparers come on the scene, and they assist organizations and individuals in effectively completing their taxes.
However, being a tax preparer is not as straightforward as just preparing taxes. Since you are privy to people's financial information, you need to be authorized to conduct such duties, you need to have in-depth knowledge and understanding of tax laws, and you are required to share this information effectively and accurately with your clients as and when it is applicable.
To become a tax preparer, you would first need to complete your high school diploma, you would need to gain the appropriate training, you would need to be registered with the Internal Revenue Service (IRS), and you would need to become licensed in your state.
Let us take a deeper look at this fascinating career within the tax field and let us look at the steps you would need to follow to become a tax preparer.
What Is A Tax Preparer?
The reality is that we would all crumble under the stress of tax season if we didn't have any help from those experienced in the field of accounting. Tax preparation and tax laws are difficult to keep track of and differ when you are an individual, a business owner, and if there is any link between your personal finances and your business finances.
Keeping track of all the details you need to file your tax return and submit your taxes accurately can be extremely difficult. However, having a tax preparer on your side assists you in the entire process from start to end. They assist you in the preparation of all the necessary documents and they help you with the filing process, allowing you to work or run your business while they handle your taxes and communication with the IRS.
What Do Tax Preparers Do?
From looking at bank statements, financial documents, invoices, and everything else in between, to completing and submitting the tax forms, and even processing tax returns through digital processes, tax preparers take the stress off their client's hands and handle the entire tax process for their clients.
While there isn't a specific required college degree or qualification that you are required to complete to become a tax preparer, there are different subdivisions in the field that you could pursue that require different qualifications.
For the most part, tax preparers become enrolled agents who are approved by the IRS to complete tax returns, and they are approved to guide and assist individuals and businesses through the processes of completing their taxes.
Others may choose to become CPAs, tax accountants, or tax attorneys, depending on their own personal choice and their willingness to invest time into studying further. Granted, a higher qualification would open up greater career growth opportunities and will allow them to grow within their field, but for an entry-level role and even to be an independent tax preparer, you would just need to be an enrolled agent.
For the most part, tax accountants serve as the middleman between an individual or a business and the IRS. They complete and submit all tax documentation, and they have a working knowledge and understanding of all legal and other tax processes.
While you don't need a degree to be a tax preparer, you do need to have a knowledge of accounting processes and you need to have a 60-hour qualifying education course that allows you to practice as a tax preparer. This course can be obtained from the California Tax Education Council (CTEC).
Over and above going through physical bank statements and other documentation, you would also need to be familiar with software that is used to complete tax returns.
Steps To Become A Tax Preparer
Step One: Get Your High School Diploma
It is at this point that you would have decided what role you are hoping to fulfill when you finish school. By taking high school subjects that include mathematics and accounting, you will be equipped to venture on your career path toward becoming a tax preparer.
Step Two: Get Your Training And Enroll With The IRS
Once you have finished school, you can then enroll with the IRS as a preparer and obtain training to complete tax forms, conduct taxpayer interviews, execute filings, and much more.
State Three: Gain State Licensure And Begin Working
Once you are enrolled with the IRS, some states may require that you obtain a state license to practice as a tax preparer. With this in hand, you can then seek an entry-level role at an accounting or tax firm, or you can work independently and market your services as a tax preparer.
How Much Does A Tax Preparer Earn?
According to the U.S. Bureau of Labor Statistics (BLS), Tax preparers earn an average annual salary of $51,080, and if you would rather bill clients at an hourly rate, the average hourly rate of a tax preparer was $24.56 when recorded in May 2021.
What Skills Do You Need To Be A Tax Preparer?
Aside from having the unique skill of working closely with taxes, which is something most people try to avoid because it causes intense stress, you would need to have a working knowledge and understanding of tax laws and requirements and how this may differ between an individual and a business.
You would also need to have the ability to communicate with and listen to clients. This means that you would need to have understanding and empathy, you would need to be able to communicate complex tax terms in easy-to-understand layperson terms, you would need to provide clients with superior customer service, and you would need to have analytical skills, critical thinking skills, and problem-solving skills.
How Can I Gain Experience As A Tax Preparer?
You could consider pursuing an internship or an entry-level role within an accounting firm, or tax attorney office whereby you will work under the supervision of an experienced tax preparer, and you will gain application skills of how to handle the taxes of a variety of different clients.
Do I Need A Degree To Be A Tax Preparer?
For the most part, potential employees may not require you to have a bachelor's degree to fulfill the role of a tax preparer. You will, however, be required to have a license in order to be a tax preparer.
Is A Tax Preparer A Good Job To Have?
The role of a tax preparer will never be obsolete. You will be assisting people in completing necessary and extremely important processes and this is something that is needed every year. While tax season does only roll around once a year, you will be busy year-round consulting with potential clients, gathering financial documentation from clients, and conducting other necessary duties.
Therefore, it can be concluded that being a tax preparer is a good job, for you and for the rest of society.
If you have a love for numbers and a love for helping people, then this is the career path for you. Not only will you serve as a valuable member of companies and society as a whole, but you will hold valuable tax information that most people would never dream of knowing. Gain the advantage and pursue this role.