How To Become A Tax Preparer
Tax preparers help individuals and businesses with their tax needs. In this position you must love math, find it easy to understand numbers and be able to think abstractly. You must enjoy working with people in a customer service setting. You will be explaining complicated subjects such as taxes to people. If you enjoy taxes and helping others, you may enjoy a role as a tax preparer.
Why Become A Tax Preparer
There’s a saying that the two things you can’t escape in life are death and taxes. It’s true that taxes are an inevitable reality for all of us. From taxes on the things we buy, to our paychecks, taxes are everywhere. But very few people understand the intricacies involved with them, and when it comes time to file for our tax refund, we can get confused.
Tax preparers help individuals understand the ins and outs of their taxes. This is a customer service position, working directly with people to help them file their taxes. A tax preparer needs to understand all of the laws and regulations involved with taxes. There are many updates rolled out frequently, and tax preparers must keep themselves educated. They must be able to look for credits and deductibles. A tax preparer needs to give their client the biggest tax refund possible.
Individuals may approach a tax preparer if they have issues that make their taxes more complicated than normal. Businesses also often seek out tax preparation services, because there are many laws that affect business taxes.
This is a great career for an individual who enjoys working directly with people, loves math and working with numbers, and is able to communicate with people effectively to help them understand their tax needs.
Tax Preparers should possess the following qualities and skills:
- Detail Oriented
- Good Customer Service
- Great Communicator
- Problem Solver
Tax Preparer Work Environment
Many tax preparers choose to work for a large national chain. These chains have offices across the country, where clients come in and have their taxes done with a tax preparer. There are many benefits to working for an established company, including having the marketing already done by the company and liability coverage. Sometimes tax preparers open their own businesses. The work environment can be fast-paced and stressful, due to the busy tax season.
Tax Preparer Salary
The median annual wage for tax preparers was $67,190 in 2015, according to the United States Bureau of Labor Statistics.
A tax preparer’s salary may increase depending on the types of certifications they have, such as an enrolled agent or a tax attorney. The salary of a tax preparer can vary based on their place of employment, such as if they are self-employed, employed by a private business, or employed somewhere else such as a government agency.
Average Tax Preparer Annual Salary
The average annual salary for tax preparers is $47,090 a year. Salaries start at $20,170 a year and go up to $81,740 a year.
Average Tax Preparer Hourly Wage
The average hourly wage for a tax preparer is $22.64. Hourly wages are between $9.70 and $39.30 an hour.
Stats were based out of 68,720 employed tax preparers in the United States.
Highest Paying States For Tax Preparers
- 1. District of Columbia $51.86 / hr $107,880 / yr
- 2. Colorado $35.45 / hr $73,740 / yr
- 3. Massachusetts $29.95 / hr $62,300 / yr
- 4. California $29.79 / hr $61,970 / yr
- 5. Oregon $27.75 / hr $57,720 / yr
Top Paying Cities For Tax Preparers
- 1. Oakland, CA $41.04 / hr$85,370 / yr
- 2. Raleigh, NC $40.09 / hr$83,380 / yr
- 3. Dayton, OH $39.32 / hr$81,780 / yr
- 4. Salem, OR $36.29 / hr$75,490 / yr
- 5. San Jose, CA $36.15 / hr$75,190 / yr
Data provided by the Bureau of Labor Statistics (BLS).
Tax Preparer Career Outlook
Employment for tax preparers is expected to grow 11 percent from 2014 to 2024. This is much faster growth than other job fields within the United States.
There will always be a need for people to file taxes. Business owners, especially, tend to seek out tax specialists who can help them with the details of the tax filing process. The continuous updates to the tax codes mean business owners as well as individuals will seek out tax preparers for help on taxes. These new laws and regulations will require the help of a tax preparation service.
Tax Preparer Degree
Many people use the term tax preparer, but the IRS recognizes several different categories of tax professionals under this label: enrolled agents, tax attorneys, and certified public accountants. Read below for more information on how to become a tax preparer.
Step 1: Undergraduate education. You don’t need a college education to become a tax preparer, but a college education can give you a solid foundation in this field. Taking classes in mathematics and business can help you understand the basics about your career.
Step 2: Apply for a PTIN. A Preparer Tax Identification Number (PTIN) is required for anybody who will be analyzing people’s tax refunds in exchange for compensation. You will need to apply for your own individual PTIN to work as a tax preparer.
Step 3: Check your state requirements. Each state has their own individual requirements on what is necessary to become a tax preparer. You can contact the IRS or a tax preparation company near you for more information.
Step 4: Consider becoming an enrolled agent. As an enrolled agent, you are able to file any type of tax return; otherwise, the types of returns you may file are limited. To become an enrolled agent, you must take a test administered by the IRS. This test is three parts and has questions regarding individual taxes, business taxes, and IRS representation. Enrolled agents must complete several hours of continuing education each year in order to maintain their status. They also must undergo a background check on their own tax history to ensure compliance.