Tax accounting is a unique form of financial reporting that helps individuals and businesses manage their income taxes. It focuses on specific information, such as qualifying deductions and investment gains or losses.
In addition to preparing the necessary tax return documents, these professionals advise clients on ways to minimize their tax liability by finding eligible deductions and credits. This is a very different role than that of traditional accountants who tend to overall financial statements and positions.
Education and Training
Typically, tax accountants hold at least a bachelor’s degree in accounting, with some pursuing a master’s to expand their career opportunities. In addition, they must obtain certification as a CPA to practice in the field.
Aside from completing the IRS filing requirements for their clients, these professionals advise individuals and businesses on tax-saving strategies. They also work to ensure that their client’s financial records comply with laws and regulations and assist them during tax audits.
Accountants in Chicago examine all financial statements for each client and review the various taxes due on incoming income, deductions, and investment gains or losses. They also advise companies on the best method for recording incoming and outgoing expenses, which can have different tax implications.
In addition to their day-to-day work, these professionals are constantly updating themselves on changes in the tax code and how it affects their clients. For example, if new legislation affects a client’s situation, the tax accountant must amend documents and ensure clients understand how this change could impact them.
Those looking for a career in tax accounting can seek job opportunities through online listings, professional associations, and local job fairs. Many aspiring tax accountants can also find internships in their area to gain experience and build their resume.
Duties and Responsibilities
Tax accountants are in high demand, whether it’s for large corporations, small businesses, or individuals. These professionals work with clients to help them file accurate taxes and understand how they can save money. They also ensure that all materials adhere to accounting laws and regulations. They must have exceptional attention to detail and strong analytical skills to succeed.
They help clients create budget plans and explain how income changes can affect their filings. Additionally, they examine financial statements to get a clear picture of their client’s finances. This includes helping them understand their 401(k)s, investments, and other financial assets. They often have to communicate with clients throughout the tax filing process and must be able to answer questions about complex financial matters.
They also help clients with audits and completing tax returns. They must know how to analyze data and identify trends in their reports. They must stay updated on new legislation and court rulings that could impact their client’s finances. If they work for an accounting firm, they may be responsible for overseeing the tax functions of the business and working with different departments to gather information for tax filings. They are also required to support the general accounting processes for US entities, including ensuring month-end close procedures are timely completed and journal entries are posted with appropriate backup by GAAP.
Salary and Benefits
Tax accountants are well-compensated compared to their peers in other industries, with job stability and the ability to advance their income over time. However, like many occupations, salary levels can vary dramatically based on experience and other factors. Some ways to increase your earning potential include continuing your education, attaining professional certifications, relocating to high-demand areas, and developing a robust client base for self-employed people.
The geographic location of a position is also a major factor. Urban areas, especially those with significant business hubs, typically pay more than rural regions. Additionally, those working for large corporations or prestigious accounting firms generally earn more than those employed by smaller businesses or private individuals.
Lastly, your salary may be affected by the overall economic conditions. An economic downturn can reduce the demand for tax services and negatively impact your earnings. Some other ways to improve your earning potential include gaining additional education and certifications, specializing in tax accounting, moving to high-demand areas, or developing a robust client base for those who work as self-employed accountants.
Work Environment
As the economy continues to grow, tax accountants are in high demand. Some accounting firms offer flexible schedules to accommodate work-life balance. Professionals in the field can also advance by gaining certified public accountant (CPA) status or master’s degrees in specific areas of accounting.
Unlike tax brokers, who specialize in preparing individual tax returns, tax accountants take a more holistic approach and advise clients on avoiding tax penalties and reducing their tax liability. They also represent their clients during government audits.
Although they are trained to prepare various taxes, many tax accountants focus on specific types of tax filings or industries. For example, one accountant may specialize in preparing taxes for nonprofit corporations, while another may concentrate on high-income individuals and the complex issues related to trusts and large estates.
Most tax accountants work within a financial department and collaborate with colleagues such as financial analysts, bookkeepers, and payroll coordinators. They also often interact with business managers and executives who seek their advice on business-related financial matters.
Tax accountants’ job environment and culture vary significantly by industry, location, and firm size. Those pursuing this career should familiarize themselves with these factors, as they can impact their career options, earning potential, and advancement opportunities. For example, larger accounting firms typically have higher entry-level salaries than smaller ones.
