What Is a Tax Preparer?

Tax preparer responsibilities can overlap with other accounting professionals, but their primary focus is preparing tax returns for people and organizations. These tax specialists work through complex scenarios, mitigate compliance issues, and maximize tax deductions.

Tax preparers can work as independent contractors or as employees within organizations and accounting firms. The job includes collaborating with other finance and accounting professionals, individuals, business managers, and the Internal Revenue Service (IRS). With time and experience handling different scenarios, tax preparers may advance into managerial or consulting roles.

On its own, the tax preparer profession can be lucrative. According to a study by the National Society of Accountants (NSA), tax preparers make an average of nearly $180 per hour to complete state or federal tax returns. Discover more about the role in this helpful guide, including what it takes to enter the field and the opportunities that await you.

Tax Preparer Duties

Tax preparers file tax returns for individuals and businesses, ensuring that each return meets state and federal requirements and that clients receive full benefits. These professionals gather and review all relevant information, process the tax returns, and consult with clients on their next steps.

While not exhaustive, the following list highlights some of the most common tax preparer duties.

Tax Preparer Areas of Expertise

Tax preparers can specialize if they want to focus their work on a certain field or industry. The following sections explore four possible areas of expertise for tax preparation specialists.

Small Business Tax Preparer

These professionals specialize in small business taxes. They assist with tax planning, deploy tax-saving strategies, and offer projections based on past numbers. Small business tax preparers usually work in accounting firms, though they may also visit client offices.

Entry-level roles in this field often involve handling minor tasks associated with small business accounts. With experience and a history of success, professionals can move up to senior and manager roles where they handle the entire account and oversee junior-level associates.

Common Job Titles

• Small business tax associate
• Junior tax preparer
• Senior tax preparer
• Tax preparation manager
• Tax consultant/advisor

Tax Accountant

Tax preparers who take on broader roles may pursue work as tax accountants. These professionals help individuals and organizations prepare their taxes while offering services like audits, investment management, and financial planning. Tax accountants may also handle the taxes for larger organizations and corporations.

Tax accountants typically find employment in accounting firms, but they can also work in finance departments for larger organizations. Tax accountants usually start by handling small tasks for senior tax accountants and corporate clients. After demonstrating the ability to manage all tasks, they may oversee their own team and clients.

Common Job Titles

• Junior tax accountant
• Senior tax accountant
• Tax manager
• Tax director

Tax Consultant

Tax consultants advise clients on the best ways to minimize tax burdens while staying compliant. They apply knowledge of state, federal, and industry tax laws to educate clients and develop tax strategies. They may also specialize in international, corporate, or mergers and acquisitions taxation.

Tax consultants usually work in accounting and consulting firms. They often start as tax preparers and move into consulting roles as they gain experience, especially in handling complex or unique tax situations.

Common Job Titles

• Tax advisor
• Junior tax advisor
• Senior tax advisor
• Principal tax consultant

Bookkeeper

Bookkeepers perform many tasks for individuals and organizations, but they primarily ensure the accuracy and organization of financial records. They may also record and monitor financial transactions, perform regular audits and compliance checks, and reconcile accounts.

Bookkeepers often help accountants and tax preparers by preparing financial reports. They usually work in accounting or finance departments of organizations or as independent contractors. These professionals typically start off handling the books for smaller organizations before advancing into more substantial roles.

Common Job Titles

• Junior bookkeeper
• Senior bookkeeper
• Accounting clerk
• Accounting assistant

How to Become a Tax Preparer

Tax preparers do not have minimum education requirements, but many pursue associate degrees or bachelor's degrees in accounting for a competitive advantage. That means your path could take 2-4 years if you pursue a degree or longer if you pursue an accounting certification like certified public accountant (CPA) credentials.

Depending on the role, a professional may need a preparer tax identification number (PTIN) from the IRS. Some states require tax preparers to hold tax preparer certifications and/or licensure, as well. The IRS also runs a suitability check for tax preparers, which may include credit, compliance, and background checks.

Tax Preparer Salary and Career Outlook

While the tax preparer industry appears stable, the national salary and growth data is modest. According to the Bureau of Labor Statistics (BLS), tax preparers had an average annual salary of $49,550 in May 2023, lower than the average for all occupations. The BLS also projects a below-average 1.5% growth from 2022-2032.

Despite the moderate outlook, the opportunities for tax preparers vary by state and industry. Professionals with strong levels of education, credentials, and experience can expect access to more responsibility, more jobs, and more money.

Career Spotlight: Logan Allec

Can you explain the similarities and differences between a tax preparer and a general accountant?

A general accountant keeps a company's internal set of books — their balance sheet, profit and loss, etc. — while a tax preparer takes those sets of books, makes any necessary adjustments required by federal and state tax codes, and properly reports them on the company's tax return.

It's a similar story with individuals — most individuals don't have their own set of books, but in a sense, they are their own "general accountant" that provides their income and deduction amounts to their tax preparer, who reports this information on their tax return.

Why did you become a tax preparer? What initially interested you in the field?

I knew I wanted to do something with numbers and spreadsheets because I've always been a spreadsheet lover. Even when I was a kid, I loved tracking things in spreadsheets.

In college, when you're interviewing with various public accounting firms, you have to indicate whether you want to work in audit or tax, since those are the two major types of accounting groups that new hires of public accounting firms generally fall into. I personally thought my tax classes in college were more interesting than my auditing class, so I picked tax, and the rest was history.

What education did you need to pursue this career? How did it equip you for your current role?

Technically, there's no federally mandated education that is necessary to become a tax preparer. However, a few states — including my own, California — require all paid tax preparers within the state to either be a CPA, an enrolled agent (EA), a California-licensed attorney, or a California registered tax preparer (CRTP).

Personally, I went the CPA route. From an education perspective, in order to earn my CPA license, I had to obtain a bachelor's degree and complete 150 total college-level semester units, including 24 units in accounting subjects and 24 units in business-related subjects. I also had to study for and pass the CPA exam.

Although not all of the coursework and education I obtained is directly used in my current role, every accounting class I took taught me something and improved my ability to see business through an accounting lens, which has definitely made me a better CPA. I also eventually obtained a master's degree in business taxation, but that was not necessary for me to start my career as a tax preparer.

What was the job search like after graduating with your degrees?

The way it worked at my college is that students would generally lock down a job while still in college, so that's what I did. During my senior year, I interviewed at several accounting firms before finding one that was a good fit. Overall, it was a very competitive process — the year was 2009, and the economy was terrible at the time, so many students were vying for fewer spots than usual.

What does a typical day at work look like for you?

A typical day at work for me is a mix of responding to questions from both my clients and my staff, preparing or reviewing tax returns for clients, preparing or reviewing tax resolution options for clients who owe more money to the IRS or their state taxing authority than they can afford to pay, and creating content to generate leads for my tax business.

What are some of the most rewarding aspects of working as a tax preparer? Some of the most challenging aspects?

Probably the most rewarding aspect is making something that many people (especially business owners) dread — taxes — as painless a process as possible for them. One of the most challenging aspects is keeping up to date on tax law changes. Nearly every year, Congress tweaks the tax code at least a little bit, and every so often — typically when a new administration comes in — they tweak it a lot.

It can be difficult to remember the rules, especially at my firm where we prepare a lot of returns for people who haven't filed in years. So if I'm preparing, say, a client's 2016 tax return, I have to remember (or at least know how to look up) what the tax laws were like for the 2016 tax year. Another challenging aspect is working with the IRS.

Because my firm not only prepares tax returns but also helps clients resolve their tax debt, I have to communicate with IRS personnel a great deal, and they can frankly sometimes be difficult to get a hold of.

What do you think is the most important skill a tax preparer needs to succeed?

The most important skill is definitely attention to detail. Tax returns have several pages full of calculations on them. While it can be tempting for a tax preparer to just "trust the software," that's a recipe for error-ridden returns. A good tax preparer will always go through the tax returns they prepare line by line to ensure accuracy.

What advice would you give to students considering your career?

Read as much as you can in the news about taxes and tax law changes. Also, read U.S. Tax Court cases if you can. Reading how judges craft their opinions on tax law can really help someone entering the field to help build their "tax brain" — the ability to intuitively know what the tax implications are of any given situation.

Logan Allec

Logan Allec is a CPA and tax relief expert who holds a master's degree in taxation from the University of Southern California. Starting his career working in the tax groups of various public accounting firms — including a Big Four firm — Allec now owns his own tax relief and preparation company, Choice Tax Relief. He lives in the Los Angeles area with his wife and children.

You can read more of Allec's insights on our top accounting skills for success page.

Questions About the Tax Preparer Job Description