What is Tax Accounting?

Unlike traditional accountants who tend to their clients' overall financial statements and positions, tax accountants focus solely on a client's taxes. This type of accounting is regulated by the Internal Revenue Code, which outlines specific tax laws that both individuals and businesses have to follow when filing their tax return documents. Tax accountants ensure their clients abide by all of the tax laws, and prevent them from accruing any penalties from the government.

Tax accountants offer tax planning advice to their clients, and help them save money during tax time. These professionals create effective plans for their clients to follow throughout the year, keep them on track to meet their financial goals, and protect them from having to pay more than they can afford by the tax deadline.

What is a Tax Accountant?

Tax accountants work with clients to produce tax return documents that follow tax laws and regulations. They keep their clients updated on their return information, and work with them before tax time to derive a plan that will help them reach their desired financial goals and outcomes. Tax accountants often work longer hours during tax time, as they make themselves fully accessible to their clients to make the tax process as easy as possible for them.

What Does a Tax Accountant Do?

Tax accountants determine tax strategies that defer, minimize, or eliminate tax payments, and arrange audits with taxation authorities. These accountants prepare tax documents for a clientele that can include public and private companies, nonprofit organizations, government agencies, and private individuals. As a result of this broad customer base, tax accountants must demonstrate excellent communication skills, as well as the ability to actively listen to their clients as they express their unique concerns.

Along with preparing tax documents, tax accountants interpret tax laws and explain the implications of any recent changes in the law. After preparing tax documents, accountants file returns on behalf of their clients, and then prepare presentations and reports to reflect their work. Professionals in this occupation should understand a broad base of business concepts and boast a financial or accounting background. As they earn their degree, tax accounting students can often pursue a concentration in tax law through their bachelor's degree in accounting program.

In general, tax accountants work standard full-time hours in an office environment, however, during tax season these accountants are much busier; they may work extended hours including weekends and nights.

In addition to holding a bachelor's or master's degree, many candidates in the field boast certifications, including certified financial planner, certified public accountant, and enrolled agent. These certifications allow professionals to demonstrate a certain level of expertise in a particular area of the field. In general, tax accountants work standard full-time hours in an office environment, however, during tax season these accountants are much busier; they may work extended hours including weekends and nights.

Accountants review financial statements to ensure accuracy, and help clients meet the necessary regulations and laws for taxes. They calculate the taxes owed and prepare tax returns, while also making sure clients' taxes are paid on time. Accountants also work with their clients to come up with ways they can reduce their spending and enhance their income to improve profitability. Additionally, they help their clients develop budget plans to stay on track during the year in order to simplify things during tax time.

Tax accountants can also specialize within their field. For instance, forensic accountants investigate financial crimes such as embezzlement, bankruptcies, and fraud. Tax accountants with a speciality in forensic accounting use their expertise to investigate individuals suspected of tax fraud; they rely on their extensive knowledge of tax laws to conduct their investigations, and work side-by-side with law enforcement professionals.

Tax accountants with a management focus review the finances of organizations and prepare tax documents for business managers. These accountants work alongside financial managers to focus on asset management. They also choose the appropriate financial investments for their clients, and explain the implications to their tax returns.

Understanding software is an important part of a tax accounting career.

Government is another focus of tax accountants, as they work with tax records of local, state, and federal government agencies. These accountants emphasize tax laws and regulations, and ensure their clients align with all of the relevant tax laws. Comparable occupations to tax accountants include financial managers, budget analysts, financial analysts, cost estimators, and personal financial advisors.

Understanding software is an important part of a tax accounting career. Accountants use a variety of software programs depending on their clients' specific needs. Accountants should be able to comfortably use Microsoft Excel to document their data and figures for their clients. Additional software requirements include computing programs and tax preparation programs. Employers often outline software requirements during the application process, and provide accountants the necessary training on many of the systems they must use.

What Are the Responsibilities of a Tax Accountant?

Examine Financial Statements

Tax accountants work with clients to get a clear picture of their overall financial situations as they prepare their tax return documents. Accountants review all relevant financial statements to make sure they align with the tax laws and regulations, and ensure they maintain the most accurate view of a client's financial situation.

Create Budget Plans

One of the primary responsibilities of tax accountants is to help their client's determine ways they can save money and stick to a viable budget. Accountants also help clients strategize ways to increase their income and improve their overall profitability; this includes notifying them of how those changes can impact their tax return information.

Organize Financial Records

Not only do tax accountants work with their clients to prepare tax return documents, they help clients organize their personal financial records. Tax accountants keep their clients' information on file and can access it anytime their clients have a specific request that requires a reference to prior documents.

Computing Taxes

Tax accountants compute the taxes their clients owe to the Internal Revenue Service (IRS), prepare their tax returns, inform them of any refund or balance owed, and make sure they do not incur any penalties for missed deadlines.

Inspecting Accounting Systems

Successful tax accountants must review their accounting systems to make sure they are as efficient and effective as possible. Doing so allows accountants to notice any issues or errors and correct them as needed.

Communicating with Clients

Individuals and business owners like to stay involved with their tax return process. It is important for clients to feel like they understand what to expect with their tax return, as well as the process it takes to complete their information. Therefore, tax accountants must communicate with their clients and provide them with timely information.

What Qualifications Do You Need to Become a Tax Accountant?

Education

Bachelor's degree Most tax accountants hold a bachelor's degree in finance or accounting, while an additional concentration in tax law may be particularly beneficial.
Master's degree Some employers require tax accountants to hold a master's degree and certifications as financial planners, public accountants, or enrolled agents.

Skills

Tax preparation These accountants must have a keen eye for detail in order to accurately and efficiently prepare tax returns and documents.
Tax compliance Tax accountants must possess a comprehensive knowledge of tax compliance and tax laws and regulations to ensure they best represent their clients.
Microsoft Excel Tax accountants regularly use Microsoft Excel to input data and maintain their records.

Abilities

Written and verbal communication Since they work directly with clients, tax accountants should be able to communicate with others effectively both verbally and in writing.
Attention to detail Tax accountants must ensure they do not make mistakes while working with tax return information. They must also pay close attention to detail.

Knowledge

Mathematics Tax accountants need to understand mathematics from a variety of areas -- including arithmetic and statistics -- since they must compute complex tax figures for their clients.
Business concepts and government regulations In order to produce accurate figures for their clients, tax accountants must understand government regulations and every aspect of business management.
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Roles for Tax Accountants

Tax accountants usually work 40 hours per week in an office environment; however, during tax time their schedules can vary. Often tax accountants meet their clients at a central location or travel to their business or home to discuss their tax return information. Additionally, during tax time, these accountants usually work extended hours -- including late nights and weekends -- to accommodate the busy schedules of their clients.

The main industry for these professionals is the accounting, tax preparation, bookkeeping, and payroll services industry. Tax accountants can also find employment in government agencies, finance and insurance, management, and self-employment. Self-employed tax accountants can work out of their own private office location, or conduct their work out of their own home; they can bring clients into their homes or offices to complete their tax returns, or travel wherever is most convenient for an individual.

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Professional Organizations for Tax Accountants

  • The Institute of Internal Auditors This organization focuses on the auditing aspects of accountancy. It boasts nearly 200,000 members around the world and promotes training and development.
  • American Association of Finance and Accounting The American Association of Finance and Accounting helps accountants and finance experts pinpoint employment opportunities and chances for professional development throughout the United States.
  • Young CPA Network This organization offers professionals the chance to develop their career skills and interpersonal abilities in the accounting profession. The Network also hosts conferences and provides networking opportunities.
  • Institute of Management Accountants Membership in the IMA is required to earn the certified management accounting (CMA) certification. Members also receive access to job boards and career development plans, annual conferences, networking opportunities, and continuing education courses.
  • Professional Association of Small Business Accountants One of the top accounting organizations in the world, the Professional Association of Small Business Accountants provides members access to national and regional meetings, peer advisory groups, networking opportunities, and discounts.