Tax accountants are highly specialized and focused on taxes such as federal individual income tax, federal corporate tax, estate tax, and state income or property taxes. This type of work requires great attention to detail, as the taxes are often calculated on various and numerous forms. Data from one form feeds to another form, and supporting schedules must be completed correctly and tied to the summary schedules. Many tax accountants take an annual review accounting course to stay current on the changes in taxation.
In prior years tax accountants had to complete forms by hand, a tedious and error-prone process that required a lot of cross-checking and effort to be sure that the forms were correct. Now tax software packages are available for the more common types of tax forms, such as the 1040 used for individual taxes. These tax software packages reduce the number of mathematical errors and also can help tax accountants stay more current on the changes in the tax law. Of course, a tax accountant who relies on software without understanding the law might make errors through misunderstanding the software.
Many tax accountants are Certified Public Accountants (CPAs); however, it is not necessary to be a CPA to be a tax accountant. Tax accountants can work in CPA firms, for tax preparation firms, as sole practitioners, or in industry. Those working in industry can help corporations comply with tax laws and plan business activities so that taxes are minimized. An added complication for multinational companies is that taxes can be levied in several different countries, and some United States taxes are offset by taxes paid in foreign countries. Tax accountants might also work for government agencies, such as the Internal Revenue Service.
Tax accountants who specialize in estate taxes might actually spend most of their time working on tax planning to help small business owners find ways to preserve their estate and not have to sell a small business to pay estate taxes, which could be as high as 35 percent of the value of the business. This type of planning can involve creating one or more trusts, such as a family trust, and transferring the business into the trust. Other tools include purchasing some form of life insurance to use to pay the taxes.
In most cases, tax accountants need a bachelor’s in accounting or an equivalent. Ongoing education is needed to stay current with changes in laws, forms, and software. Certification as a CPA is often an added factor that enhances success in this field.
The United States Department of Labor, Bureau of Labor Statistics, 2010-11 Occupational Outlook Handbookdiscusses in general terms accountants and auditors but does not provide a great deal of information on the tax accounting specialty. It does state that “tax specialists often work long hours during the tax season.” This might be something of an understatement. Tax returns for individuals are due on April 15. It is possible to request an extension; however, many clients need to know the results by April 15. For example, clients who want to contribute to an individual retirement account need to make that contribution by the specified date in order to take the deduction in the current tax year.
The Handbook states, “Accountants and auditors are expected to experience employment growth from 2008-18. Job opportunities should be favorable; accountants and auditors who have a professional certification, especially CPAs, should have the best prospects. As the economy grows, the number of business establishments will increase, requiring more accountants and auditors to set up books, prepare taxes, and provide management advice. As these businesses grow, the volume and complexity of information reviewed by accountants and auditors regarding costs, expenditures, taxes, and internal controls will expand as well. The continued globalization of business also will lead to more demand for accounting expertise and services related to international trade and accounting rules and international mergers and acquisitions.” According to the Handbook, the 2008 median annual wages for accounting, tax preparation, bookkeeping, and payroll services was $61,480.