What is Tax Preparation?

Tax preparation involves preparing tax returns, including income tax returns, for taxpayers and their representatives. Tax preparers determine the amount clients should receive from or pay to the government. Most tax preparers use tax preparation software and online resources, but some rely solely on their own knowledge and computational abilities. These professionals sign and file tax returns for individuals and businesses.

To prepare tax forms, these professionals review financial information and records, including statements and business expenditure documents. Tax preparers review documentation including receipts and expense reports to develop an accurate understanding of the client's finances. Tax preparers apply deductions and credits before finalizing the return.

What is a Tax Preparer?

Although tax preparers work mainly during tax season and the end of budget quarters, they may also review clients' budgets and financial situations to ensure clients are prepared to file their tax returns. These professionals communicate with clients to ensure they have a clear understanding of their overall financial situation. They also complete forms and send copies of financial information to clients upon request. Tax preparers often answer complex financial questions for clients.

What Does a Tax Preparer Do?

Tax preparers prepare tax returns for small businesses and individuals. These professionals may also be called tax associates, tax advisors, tax consultants, enrolled agents, certified income tax preparers, corporate tax preparers, tax specialists, and master tax advisors. Tax preparers calculate the taxes clients have overpaid or owe. These professionals use computers and adding machines, and they follow tax tables and tax form instructions.

These professionals prepare complex and simple tax returns for small businesses and individual clients.

Tax preparers must ensure they apply appropriate deductions, credits, and adjustments so clients do not pay more than necessary. They interview clients to gather information about deductible expenses, taxable income, and allowances. These professionals prepare complex and simple tax returns for small businesses and individual clients.

Tax preparers need excellent technology skills, since they use a variety of software for tasks including tax preparation, accounting, spreadsheet creation, financial analysis, and email. These professionals often work with Intuit QuickBooks, Microsoft Excel, and Microsoft Outlook.

Professionals in the field need oral comprehension abilities to understand clients' information and ideas. Additionally, they should boast strong written comprehension skills and be able to use deductive reasoning to identify issues and derive effective solutions. Tax preparers often boast excellent active listening skills, since they must give clients complete, undivided attention to understand critical financial points. Professionals must ask questions when necessary, without interrupting clients. Tax preparers apply critical-thinking skills to analyze problems and create effective solutions.

Tax preparers apply critical-thinking skills to analyze problems and create effective solutions.

Tax preparers must be able to solve complex problems. They identify issues and review the most effective solutions. Tax preparers work directly with the public and should be comfortable serving clients in various settings.

Tax preparers should be detail-oriented and thorough. They often boast a high tolerance for stress and work well under pressure, since they work primarily during the busy tax season with clients who are often under high amounts of stress. Tax preparers must be able to remain calm and tactful in difficult situations.

In addition to careers in tax preparation, professionals in the field can explore opportunities as brokerage clerks; loan officers; loan interviewers and clerks; tax examiners and collectors; and bookkeeping, accounting, and auditing clerks. These occupations all require a strong attention to detail and the ability to accurately calculate tax information.

What Are the Responsibilities of a Tax Preparer?

Completing Documents

Tax preparers are responsible for complete and submit tax return documents. This process requires professionals to work with a variety of tax forms unique to each client. Outside tax season, professionals often complete budget forms and may communicate with self-employed clients multiple times per year.

Applying Deductions and Credits

Each client has a unique financial and employment situation. Clients may qualify for dedications and credits based on circumstances such as a death in the family, children, marriage, and charitable contributions. Tax preparers find and apply these deductions and credits to create an accurate return for each client.

Reviewing Financial Information

Tax preparers review each client's pay stubs and receipts, along with any other documentation important to the client's financial situation. This review helps tax preparers understand each client's finances so they can create an accurate tax return.

Computing and Calculating

Tax preparers use computing machines and tax software to calculate figures used in tax returns. They must input numbers accurately and pay close attention to detail. Mistakes can result in incorrect tax return information.

Developing Financial and Budget Plans

Tax preparers often help clients understand their financial situation and create annual budget plans, which can help expedite the process of filing tax returns. These budget plans help clients effectively manage their finances. Tax preparers may help clients update their budget throughout the year.

What Qualifications Do You Need to Become a Tax Preparer?

Education

High School Diploma or Equivalent Most tax preparers hold a degree in finance, accounting, or a related field. However, many have only a high school diploma.
Associate Degree An associate degree in a financial discipline can qualify tax preparers for entry-level positions in the field. Associate programs help learners develop a general understanding of topics related to the profession.
Bachelor's Degree Many tax preparers earn a bachelor's degree in accounting or a related field. Students gain the skills and knowledge necessary to excel in tax preparation careers.

Skills

Critical Thinking Tax preparers should be able to apply reasoning and logic to analyze problems. They must create effective solutions that also prevent future problems.
Complex Problem-Solving Tax preparation professionals must address complex problems and issues. These professionals must be able to handle problems efficiently and implement effective solutions.
Speaking A tax preparer's job responsibilities include talking to clients and clearly relaying information about finances and tax situations.
Active Listening Clients often express concerns or ask questions about their overall financial situation. Tax preparers should be able to listen to clients and offer solutions to their issues.

Abilities

Deductive Reasoning Tax preparers should understand how to apply rules to various problems. They must convey clear and understandable answers to clients.
Oral and Written Comprehension Professionals in the field must be able to efficiently comprehend written and spoken information.
Oral Expression In addition to understanding information presented orally, tax preparers must also be able to effectively communicate information orally.

Knowledge

Mathematics Much of a tax preparer's work relies on their ability to calculate and compute numbers. Professionals must understand algebra, arithmetic, statistics, geometry, and calculus.
Economics and Accounting Tax preparers should boast knowledge in accounting and economic principles and must be able to analyze financial data.
Learn More About How to Become a Tax Preparer

How are Tax Preparers Employed?

Tax preparers can work in offices doing accounting, tax preparation, bookkeeping, and payroll services. Other industries for tax preparation professionals include government, finance and insurance, and management of companies and enterprises.

Many tax preparers are self-employed; these professionals cultivate a client base and operate their own business structure, often from their home. Tax preparers typically complete work individually, but they may occasionally work with other auditors and accountants in team settings.

Many tax preparers travel to clients' places of business. Most tax preparers work full time, often more than 40 hours per week. Certain times of the year, including tax season and the end of the budget year, are much busier for professionals in the field. During these months, professionals may work longer hours and make weekend appointments.

Learn More About Tax Preparers and Take the First Step Today!

Professional Organizations for Tax Preparers