What is a Tax Preparer?

Also known as: Income Tax Preparer, Certified Income Tax Preparer, Tax Specialist, Tax Consultant, Tax Advisor, Corporate Tax Preparer, Tax Return Preparer.

A tax preparer is a professional that is qualified to calculate, file and sign income tax returns on behalf of individuals and businesses. They can also represent the taxpayer during IRS examinations of tax returns. There are various types of job titles these professionals may have, as well as various certifications and educational levels; individuals need to choose which type of tax professional will best suit their situation.

More than half of taxpayers hire a professional tax preparer when it’s time to file a tax return. Taxpayers trust these professionals with the most personal and sensitive details of their financial life - their marriage, their income, their children and their social security number.

What does a Tax Preparer do?

A tax preparer is qualified to calculate, file and sign income tax returns on behalf of individuals and businesses.

People and companies have to file tax returns every year. There are various types of tax preparation professionals, along with various levels of experience and appropriateness to an individual's personal tax situation. The Internal Revenue Service (IRS) requires registration for all paid tax preparers. Tax preparation professionals must obtain a Preparer Tax Identification Number (PTIN) and include it on all returns they sign.

The following is an overview of the various types of tax preparation professionals:

Tax Preparers for Chains or Local Outlets
These professionals are trained to some extent, but their training and experience could be at any level. Many of these tax preparers do this as a second job, and only for four months out of a year. If an individual's return is a fairly simple one, this may be the most inexpensive option for them. If there is any complexity to their return, some of these preparers may not have enough experience or know-how to maximize on particular deductions.

Enrolled Agents
These professionals are licensed by the federal government, and have either been a former IRS employee (for at least ten years), or have passed an IRS exam. They also complete required credit hours every year in tax regulations and accounting methods. They are experts in tax planning and the preparation of tax returns. Many enrolled agents specialize in a specific tax area, and can represent an individual with the IRS and state tax agencies if there are any questions about their return.

Certified Public Accountants
These professionals can guide an individual through complex financial situations. For example, if an individual has recently retired, started or closed a business, gotten divorced, or had any other significant lifestyle changes that have impacted their financial situation, a certified public accountant may be their best option. Certified public accountants can configure an overall tax plan for an individual and can also represent them before the IRS. In a mid-sized to large firm, the initial work is done by a staff person who has up to a few years of experience. A more experienced person will review the work. The senior people in the firm tend to concentrate on issues such as planning (the tax laws are complex and there are different ways to do things that can reduce the taxes) and making decisions on more complex issues.

Tax Attorney
Tax attorneys usually work with clients who have large assets and business dealings, or for those interested in sheltering part of their income. They are tax specialists, are experienced with complex corporate matters, know the latest tax laws, and are excellent in tax disputes. However, they may not be as qualified in preparing actual tax returns.

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What is the workplace of a Tax Preparer like?

Tax preparers work in a variety of organizations, such as accounting firms, franchise tax businesses, law firms and more. Many seasonal tax workers have other jobs they work year-round. For them, tax-preparation work adds a second shift during tax season, so their total workday might last 12 to 14 hours.

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Further Reading

  • How to Become a Self-Employed Tax Preparer everydaylife.globalpost.com

    Tax time creates a flurry of activities for many tax preparers and accountants. Many tax firms look to hire additional help during these busy periods. If you are interested in becoming a self-employed tax preparer, working for an established tax firm provides an excellent opportunity to gain experience before going it alone.

  • Responsibilities of a Tax Preparer work.chron.com

    Tax preparers have an important job that requires earning the trust of the client. It is the responsibility of a taxpayer to prepare and submit an accurate income tax return to the Internal Revenue Service.

  • What is a Tax Advisor? What does a Tax Advisor Do? biztaxlaw.about.com

    Having a good tax advisor can mean (1) saving money at tax time (2) not having to pull out the records and do it yourself (and that's about as painful as going to the dentist!) and (3) having someone who can help if you get audited.

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