A
tax accountant is a financial professional who focuses entirely on
assisting individuals and businesses with preparing and filing precise
tax returns that adhere to all legal requirements. Tax accountants also use their knowledge of tax law to assist clients in maximizing savings and avoiding penalties. Tax accountants are governed by the Internal Revenue Code (IRC), a collection of rules that individuals and businesses must follow while filing taxes. This tax system is lengthy and complex, particularly for companies and other organizations. Tax
accountants may work in accounting firms, in accounting departments of
prominent corporations, or as a member of the financial team of a small
business. The duties of a tax accountant include the following: Since tax accounting is a specialized field, tax accountants must have certain qualifications to succeed. Tax
accountants are now required to hold a bachelor's degree in either
finance or business to comply with the increasingly complex tax
regulations established by all government agencies. They
typically finish a general accounting degree focusing on financial
planning, taxation principles, auditing, cost and tax accounting, and
the laws governing taxes at the federal, state, and local levels. In addition, several financial institutions and government organizations require that a tax accountant hold a master's degree in a specific tax discipline. A
good number of tax accountants are also certified. Certification helps
you broaden your skill set and demonstrates to potential employers that
you are knowledgeable in a specific area. The following are some common options: In addition to the qualifications mentioned above, tax accountants must also possess certain skills to succeed. These include: The
cost of hiring a tax accountant depends on several factors, such as the
size and location of your business. This helps determine the complexity
of your taxes. Generally,
the larger and more complex your business is, the more you will pay for
a tax accountant. Tax accountants in large metropolitan areas typically
charge more than those in smaller cities or towns. Based on the National Society of Accountants' (NSA) survey report for 2020-2021,
the average hourly fee of CPAs for filing federal/state tax returns was
$179.71, while the average hourly charge for other tax services was
$174.29. Tax
preparation costs can also depend on whatever forms you file. Below is
the average tax preparation cost per form, according to the NSA
2020-2021 Report. In
addition to fees for filing federal and state tax returns, a tax
accountant may also charge additional fees for special requests or extra
work caused by unorganized files, late filing, or IRS audits. Hiring
a tax accountant depends on your situation. Here are several situations
where hiring a tax accountant might be an appropriate choice. You
may want to consider outsourcing your tax preparation if you believe
that the time needed to complete your taxes may be used more
productively in other ways. It is usually better than trying to rush through your paperwork and risk making a mistake. Because of the Tax Cuts and Jobs Act's increase in the standard deduction, fewer filers itemize their deductions. But if you have substantial medical expenses, a mortgage,
or make significant charitable contributions, itemizing your deductions
may save you more money than taking the standard deduction. However, itemizing can be challenging to handle on your own, especially if you are a beginner. If you got married, had a baby, bought a home, lost your job, or retired last year, this will impact your taxes. Tax
accountants can help you navigate these changes and ensure you take
advantage of all the deductions and credits you are entitled to. Almost
every financial transaction has tax consequences. Thus, the more
financial transactions you have, the more you must consider. Tax laws are also constantly changing, making it challenging to keep up with the latest rules. If
you own a business, you are responsible for ensuring that your company
pays the correct taxes. This includes self-employment tax, payroll
taxes, and income taxes. Depending
on the structure and size of your business, you may need to file
multiple tax returns. Filing business taxes can be complicated, so it is
essential to hire a tax accountant who is familiar with business taxes. You are not alone if you shudder at the notion of preparing your tax return and wonder how to locate a qualified tax accountant. According to the IRS,
over 58% of the more than 168 million tax returns submitted
electronically for the 2023 tax year were prepared by a tax
professional. Finding a tax accountant does not have to be complicated. Here are a few simple steps for you to follow: You can ask your friends, family, and colleagues if they can recommend a tax accountant. You may also check the IRS directory of
Preparer Tax Identification Number (PTIN) holders. These individuals
have IRS-recognized credentials and include both CPAs and EAs. People who have completed the Annual Filing Season Program, a series of elective continuing education courses on federal tax law and ethics, are also listed in this database. You can find a licensed tax expert nearby by providing your zip code in the directory. Another way to find qualified tax accountants is by consulting with state or national associations. Many state boards of accountancy and CPA organizations maintain online member directories or can provide a list of tax pros. The National Association of Enrolled Agents (NAEA) also maintains a directory of EAs. You can search by location and specialization. Alternatively, if you earn less than $56,000 or are at least 60 years old, you may qualify for the Tax Counseling for the Elderly (TCE) and Volunteer Income Tax Assistance (VITA) programs. These
IRS-sponsored programs are staffed by volunteers trained to give basic
tax prep services. You can find a VITA/TCE provider near you using the VITA/TCE locator tool. If
you obtained the tax preparer's name from the IRS, a state board of
accountancy, a state CPA organization, or the NAEA, their credentials
are likely legitimate. However,
if you acquired the name from a referral, it is prudent to confirm that
the individual possesses the certificates they claim to have. CPA Verify is an online repository of information regarding registered CPAs and public accounting companies. You
may also examine your prospect's website and social media pages to see
the kind of content they share. Online reviews on Yelp, Angie's List,
and Facebook may also be helpful. Most
importantly, you can google their name to see what shows up and ensure
nothing is buried by scrolling through the first few pages of search
results. Everyone who interacts with the public may have a few negative internet reviews from dissatisfied customers. However,
if your research reveals red flags, such as a trend of client
complaints, inappropriate social media posts, or an arrest record, you
may proceed to the next candidate. When
you have narrowed your list down to two or three of the best
candidates, you may set up interviews with them. Tax accounting is a
very personal service, so this step will help you see if you work well
with your prospects. Here are some relevant questions you should consider asking: After you have interviewed your best candidates, it is time to make your decision. Consider all of the information you have gathered so you can select the individual who is the best fit for your needs. Once
you have chosen a tax accountant, sign a contract outlining the
expected scope of work, the services provided, and the fees charged.
This will help protect you in the event of any disagreements down the
road. Accountant vs Tax Accountant There are differences between an accountant and a tax accountant. An accountant may provide some tax services, but their primary focus is on bookkeeping, financial statements, and general business advice. Tax accountants, on the other hand, specialize in tax law and planning. Generally, accountants record business transactions, report on company performance, and produce financial statements. Accountants are involved in transactions such as: Accountants also produce reports in addition to transaction records. These reports include: Tax
accountants, on the other hand, specialize in tax law and planning.
They help individuals and businesses save money by legally minimizing
their tax liability. Tax accountants also use their knowledge of tax codes to find deductions and create tax-advantaged investment strategies. While
accountants and tax accountants are essential members of any financial
team, they serve different purposes. Below is a summary of their
differences. Tax accountants
play an important role in ensuring that individuals and businesses
comply with tax laws. They can also help save money by taking advantage
of deductions and other opportunities to lower their clients' taxes. You
will need a tax accountant if you have a small business, lack the time
and patience to deal with your taxes, or have any other complex
financial situation. Tax accountants can help you with tax planning, preparing and filing your taxes, and representing you in an audit. When selecting a tax accountant, check your prospects' references and interview them first. Once you have chosen, sign a contract outlining the scope of work, services provided, and fees charged. Tax accountants can be an important asset to your financial team. Be sure to consult with one to ensure that all your financial needs are met.What Is a Tax Accountant?
Tax Accountant Duties
It
also includes ensuring that all required information is included on the
return, calculating the amount of taxes owed, and filing the return
with the Internal Revenue Service (IRS).
Tax Accountant Qualifications
Education
Certifications
Successful
completion of a national examination and the fulfillment of specific
state requirements are needed to attain this designation.
However,
it requires them to pass the IRS Special Enrollment Exam and a
background check. To maintain this designation, they must also
accomplish 72 hours of continued education every three years.Skills
Cost of Hiring a Tax Accountant
Should You Hire a Tax Accountant?
Lacking the Time or Patience to Deal With Tax-Related Tasks
Planning to Itemize Deductions
Undergoing a Major Life Change
Experiencing Complicated Tax Situations
If
your taxes are complicated, it may be worth hiring a tax accountant to
ensure everything is done correctly and all available deductions and
credits are taken advantage of.Owning a Business
How to Find a Tax Accountant
Step 1: List Down Prospects
Step 2: Narrow Down Your Options
You
can check the CPA Verify database or the website of your state's board
of accountancy to confirm your prospects' credentials.Step 3: Interview the Best Candidates
Step 4: Make Your Choice
Final Thoughts
Tax Accountant FAQs
A tax accountant is a professional who specializes in tax law and planning. They help individuals and businesses save money by legally minimizing their tax liability.
Tax accountants must have a thorough understanding of tax law. They usually have a bachelor's degree in accounting or a related field, and many also obtain professional certifications.
An accountant may provide some tax services, but their primary focus is on bookkeeping, financial statements, and general business advice. Tax accountants, on the other hand, specialize in tax law and planning.
The cost of hiring a tax accountant varies depending on the individual's qualifications and experience, the scope of work, and the location. Tax accountants typically charge by the hour or by the project.
You may benefit from hiring a tax accountant if you have a complex financial situation or want to save money on your taxes. Tax accountants can help you find deductions, create tax-advantaged investment strategies, and take advantage of other opportunities to lower your tax liability.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
