Tax Preparer: Career Summary, Employment Outlook, and Educational Requirements
Research what it takes to become a tax preparer. Learn about education requirements, job duties, salary information and certification options to find out if this is the career for you.
What Is a Tax Preparer?
Before the April 15th rush, lots of people will need the skills of tax preparers to get their accounts in order and find out if they will get a tax refund or if they need to write a check to the Internal Revenue Service. Tax preparers typically discuss clients' tax situations and help them gather the necessary documentation to submit a tax return. These preparers typically need to procure a specific identification number from the IRS.
The following table presents an overview of information for this career.
|Education Required||High school diploma, classes in tax preparation to pass the IRS competency exam|
|Key Responsibilities||Fill out income tax returns, organize relevant documentation, follow mandatory tax regulations|
|Certification||Preparer Tax Identification Number (PTIN), Accredited Tax Preparer (ATP) credential from the Accreditation Council for Accountancy and Taxation|
|Job Growth (2018-28)||2%*|
|Median Salary (2018)||$36,450*|
Source: *U.S. Bureau of Labor Statistics
What Will My Job Duties Be as a Tax Preparer?
Your primary responsibility is to fill out income tax returns and supporting schedules for individuals and small businesses. The process of completing a return begins with gathering relevant documentation from clients. You then calculate income using W-2, 1099 and other reporting forms, subtract deductions, apply credits and make other adjustments. If necessary, you consult tax bulletins and handbooks and interview clients for additional information to resolve complex or atypical situations. Finally, you review completed returns to verify figures and totals and calculate the fee for each return you prepare.
Where Could I Work?
Most preparers work for accounting, bookkeeping, tax preparation and payroll service firms. You might also find a small number of opportunities with insurance companies, management consulting firms and financial services firms. According to the U.S. Bureau of Labor Statistics (BLS), about 68,090 people worked as tax preparers in 2018. The number of jobs for these professionals is projected to increase at an average rate of 6% from 2018-2028, per the BLS. According to the U.S. Bureau of Labor Statistics, as of May 2018 you could have earned a median annual salary of $39,390.
What Education Would Help Me?
Figures from O*Net OnLine show that in 2018, about 30% of tax preparers had only a high school diploma or GED. However, many community colleges offer basic, intermediate and advanced classes in tax preparation that can help you develop the knowledge and skills you need to pass the IRS competency exam and work as a preparer. Courses cover forms and schedules, deductions and the differences between individual and business returns.
Do I Have Certification Options?
The IRS requires you to register with the agency and obtain a Preparer Tax Identification Number (PTIN). To be eligible for the PTIN you must personally be in compliance with tax law and pass a competency exam. PTIN renewal is contingent on completing a continuing education requirement.
You could also obtain the Accredited Tax Preparer (ATP) credential from the Accreditation Council for Accountancy and Taxation by passing their exam. Eligibility for the ATP exam requires three years of work experience or completion of accredited college courses and a year of experience. The exam consists of 100 multiple-choice questions covering such topics as income inclusions and exclusions, deductions, data organization and ethical standards.
What Are Some Related Alternative Careers?
One related career option includes bookkeeping, which involves keeping basic financial records using accounting software programs. This profession usually requires some college coursework, though a high school diploma is sometimes acceptable to employers. If you want to work on the other side of the taxation system, you might consider becoming a tax examiner. This career often requires a bachelor's degree, and typically involves collecting tax revenue for federal, state or local government agencies.