| Tax Preparer Key Stats | |
|---|---|
| Education | 2-4 Years |
| Job Outlook | 10.7% |
Tax Preparers are professionals who are experienced in preparing, completing and submitting tax forms to federal and state governments on behalf of their clients.
These individuals may work for several types of organizations including accounting firms, law firms or tax preparation companies.
Individuals who want to become a Tax Preparer will need to fulfill some basic requirements and have some personal characteristics in order to enter this professions.
Tax Preparers must also have an in depth knowledge of the tax code in order to complete and file tax forms on behalf of their clients.
Table of Contents
Education Requirements to Become a Tax Preparer
Individuals who want to become a Tax Preparer will need to have a minimum of a high school diploma, complete required training and register with the IRS in order to complete and file tax returns.
There are no specific guidelines in regards to having a certain level of education.
Some helpful skills to have include being detail oriented, have strong communications skills and basic mathematical skills.
There are many different ways to become a Tax Preparer.
Certification programs may be offered by community colleges or universities.
These programs typically take under a year to complete and train individuals on the complexities of the tax code and its forms.
There are also professional organizations such as the Accreditation Council for Accountancy and Taxation (ACAT) and the National Association of Tax Professionals (NATP) that offer training programs for individuals who want to become a Tax Preparer.
Tax Preparer Job Description
Tax Preparers are professionals who are experienced in preparing, submitting and proofing tax returns on behalf of their clients.
They will use their extensive knowledge of the tax code and their interpersonal skills in order to work face to face with clients while preparing tax returns to interview clients and enter their tax information into specialized software.
These individuals are typically hired during the tax season and may work for an accounting firm, a tax law firm or a tax servicing firm.
Tax Preparers must not only use their attention to detail to succeed in this profession but also be able to work in a fast paced or stressful environment submitting tax returns with little to no errors.
Some typical duties for Tax Preparers may include the following:
- Review client statements and tax forms including W-2s or business expenses
- Prepare a variety of tax returns from simple to complex for clients
- Determine possible tax deductions or credits on client’s behalf
- Determine whether a client has a tax liability or a refund
- Calculate tax liability and review completed tax returns
Some Tax Preparers may complete tax returns with clients observing the process.
They will review the tax return with their clients, discuss whether there is a refund or tax liability and provide suggestions on potential tax deductions and tax liability for future returns.
Tax Preparer Salary and Career Path
The median wage for Tax Preparers was approximately $16.98 per hour or $35,310 per year.
Exact wages will depend on a variety of factors including level of experience, industry, geographical location and whether an individual works on a part time or full time basis.
Individuals who work in Accounting, Bookkeeping and Payroll industries tend to earn higher wages at approximately $20.78 per hour.
Salary and wages will also depend on the whether someone works throughout the year or only during the tax season.
The job outlook for Tax Preparers and related professions is expected to grow at an average pace when compared to other professions.
Job opportunities are expected to grow by 10 percent through the year 2022.
Job growth in this field is attributed to the ever changing tax code and the demand for these specialized services.
Individuals interested in a career as a Tax Preparer can expect to use a variety of skills to perform well in this profession.
Individuals can look forward to using their analytical skills, attention to detail, basic math skills and interpersonal skills in order to work with clients and help them prepare their taxes.
Individuals who are bilingual or who have some postsecondary schooling will have the best job prospects in this field.
The below information is based on the 2023 BLS national averages.
National Average Salary
$90,780Average Salary by State
| State | Avg. Annual Salary |
|---|---|
| Alabama | $76,200 |
| Alaska | $82,480 |
| Arizona | $86,700 |
| Arkansas | $70,290 |
| California | $100,560 |
| Colorado | $94,170 |
| Connecticut | $90,570 |
| Delaware | $93,180 |
| District of Columbia | $113,190 |
| Florida | $83,430 |
| Georgia | $93,500 |
| Hawaii | $79,480 |
| Idaho | $69,300 |
| Illinois | $85,790 |
| Indiana | $79,070 |
| Iowa | $77,280 |
| Kansas | $79,840 |
| Kentucky | $74,730 |
| Louisiana | $74,640 |
| Maine | $82,940 |
| Maryland | $93,440 |
| Massachusetts | $99,360 |
| Michigan | $82,970 |
| Minnesota | $87,290 |
| Mississippi | $71,830 |
| Missouri | $84,540 |
| Montana | $75,430 |
| Nebraska | $75,380 |
| Nevada | $73,950 |
| New Hampshire | $85,090 |
| New Jersey | $110,700 |
| New Mexico | $77,060 |
| New York | $113,310 |
| North Carolina | $90,870 |
| North Dakota | $71,760 |
| Ohio | $81,640 |
| Oklahoma | $81,740 |
| Oregon | $85,000 |
| Pennsylvania | $83,760 |
| Rhode Island | $99,020 |
| South Carolina | $76,180 |
| South Dakota | $77,840 |
| Tennessee | $81,510 |
| Texas | $88,820 |
| Utah | $79,670 |
| Vermont | $83,960 |
| Virginia | $91,290 |
| Washington | $97,120 |
| West Virginia | $73,380 |
| Wisconsin | $82,630 |
| Wyoming | $78,990 |
| Guam | $48,960 |
| Puerto Rico | $42,010 |
| Virgin Islands | $63,170 |
The top earning state in the field is New York, where the average salary is $113,310.
These are the top 5 highest-paying states in the field:
* Employment conditions in your area may vary.
Frequently Asked Questions
What does a tax preparer do?
Tax preparers are qualified individuals that can calculate, file and sign income tax returns; the procedures can be done on the behalf of businesses or individuals.
Over 50% of taxpayers prefer to hire a professional tax preparer when the time to file their taxes comes.
A tax preparer can also be the one to represent taxpayers during IRS examinations.
There are different types of specialists – enrolled agents (those are either a former IRS employee or someone who had taken the IRS exam), tax preparers for local outlets or chains (many professionals do this job for only 4 months in a year; the experience and training can be at any level), tax attorneys (might not be qualified, but should have an impeccable knowledge about taxes), and certified public accountants (usually configure an overall tax plan for the client).
How much do tax preparers make?
On average, a tax preparer can make a little more than $40.500 per year in the United States.
In case you decide to choose this career path, you can expect to earn anywhere between $21.000 and $77.500 annually.
The salary would certainly depend on a variety of factors – your education and experience level, the client, the location, and so on.
The professionals that work in Massachusetts, Colorado, and Hawaii, for example, have the highest average salaries.
An entry-level tax preparer can earn around $10 per hour, while a top-level specialist with plenty of experience can make $37 and more per hour.
How much does it cost to become a tax preparer?
At first, you would have to decide what type of tax preparer you want to become, as the requirements would differ.
You would typically need to complete some sort of tax training; it will cost you $250 to take the exam and become an Accredited Tax Preparer (through the Accreditation Council for Accountancy and Taxation).
To improve job prospects, you can consider getting an associate’s or master’s degree in accounting.
A year in a university can cost you anywhere between $8.000 and $45.000 (and more); the cost depends on a variety of factors (bear in mind that the books, supplies, and accommodation expenses are not included).
What is the demand for tax preparers?
Between 2016 and 2026, the tax preparer job market is expected to increase by 10.7%, according to the Bureau of Labor Statistics.
That is faster than the average for all occupations in the United States.
The candidates that possess a degree and plenty of experience will have better chances of getting the highest-paid job.
The industry is mainly concentrated in Illinois, Texas, and California.
How long does it take to become a tax preparer?
An associate’s degree can take you 1-2 years to obtain, while a bachelor’s degree in accounting would require 4 years of your time.
The preparation for your Accredited Tax Payer exam can take you only a few days or weeks, depending on your pace.
In the future, you can go for voluntary certification from the Accreditation Council for Accountancy and Taxation; to qualify for the exam, you would need to have at least three years of experience.
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