Tax Preparation Consultant

Becoming an income tax preparer can be a great way to earn extra income or make a living with your own business. Unlike accountants, income tax preparers do nothing but tax returns; they do not handle bookkeeping for businesses or individuals, and often work for a short period of time each year between January and April. Some tax preparers also prepare quarterly returns for individuals and businesses and therefore have a certain amount of work all year.

Becoming a tax preparer is relatively easy, and the income from preparing tax returns can be a great way to supplement a college student’s or housewife’s income.

What Does a Tax Preparer Do?

A tax preparer compiles reports known as returns for individuals and businesses to file with the federal, state, and local authorities that collect taxes. Many tax preparers are called on to help with the federal 1040 series of forms, but if they can branch out into state and local forms or other types of tax returns these preparers can widen their customer base. A tax preparer may work for a company that prepares taxes or may open his or her own business.

How Much Are Tax Preparers Paid?

Tax preparers are paid either an hourly wage by the companies for which they work or a flat fee per return by their own clients. The Bureau of Labor Statistics estimates that tax preparers earn a median yearly salary of $39,410.

How Do I Become A Tax Preparer?

Tax preparers are legally responsible for the content of the returns they prepare, so proper training is essential. Depending on your state, there are different requirements for tax preparation specialists, including licensing.

The Internal Revenue Service requires that anyone who prepares federal income tax returns for others must pass one of two tests given by the agency. There is a test for enrolled agents, who prepare returns and represent clients at audits with the IRS.

There is also a test for Registered Tax Return Preparers for those who will simply fill out tax forms for others. Of course, preparers can take both tests, but the enrolled agents test gives many more rights to preparers. Attorneys and CPAs are not required to pass these tests in order to represent clients with the IRS.

Each state has individual requirements for its tax preparers. Some states do not require licensing to prepare state returns, but many states do. In order to determine what your home state requires, you should visit your state’s Secretary of State website or state taxation department website. Tax preparers living close to state lines or in metro areas that cross state lines may want to become licensed in more than one state.

To prepare for the test and to learn what you need to know to be a tax preparer, you can choose to take courses through a local vocational school or you can pay for a course through another agency. Beware of scams and choose training courses that have been approved by governing agencies. You should also be sure that your course will prepare you to work with federal, state, and local tax forms.

A career as a tax preparer can be rewarding and offers a way for those who want to make extra money once a year to work their own hours and earn a good income.

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