A college-level tax accounting course is required for all accounting majors. Tax accounting courses cover both individual and corporate taxation. Other taxes include estate taxes, property taxes, and state and local taxes. Tax accounting is often very complicated because the taxation laws and regulations have more than one purpose. Although the primary purpose of taxation is to raise funding for federal, state, and local governments, taxation is also used to bring about social policy.
Examples of the effect of social policy on taxes include the home mortgage interest deduction that applies to most homeowners. The purpose of the policy is to help many people afford homeownership. Another social policy included in the federal tax rules is the Earned Income Credit, which is intended to help lower-income families. These types of policies complicate the tax laws. The rules have many exceptions, and each person who studies taxation will not only need to learn the rules but also learn to research tax questions.
Estate taxation is another area of tax accounting. Estate taxation is designed to collect a significant portion of a person’s estate when the person dies. This type of taxation can be especially difficult to determine for those who leave a business to their family. Many business owners also seek tax advice to protect their businesses from taxation when they die. They want to preserve the business and pass it along to their family.
Tax research is taught using the actual tax code or laws. Accountants are taught to read and interpret the code and might also research and cite tax cases that have gone to court. This type of research is similar to legal research. Those who want to specialize in tax accounting should be prepared to learn how to research tax issues. Many of these issues are quite complicated.
Most of the people who enjoy a tax accounting course will also enjoy working with detail. Attention to detail is critical to applying tax law successfully to a client’s situation. Good tax accountants go further than simply recording the effect of a client’s activities and calculating the taxes due. One value-added service that tax accountants can provide is to help clients plan to take advantage of tax laws and changes that might help them to minimize the taxes owed. This is not illegal or even unethical. Tax planning services are especially helpful to small business owners.
There are opportunities for individuals to work in accounting firms that provide tax accounting services and also to work for corporations. Those who work in corporate taxation for larger companies might not only interpret the application of corporate tax law but also help companies plan business activities in ways that can reduce the taxes owed. Some tax accountants also work for the Internal Revenue Service.
All accounting majors will be required to take a basic taxation accounting course. Those who wish to specialize in taxation in their profession or those seeking a master’s or doctorate with a tax emphasis will also need to take at least one tax research class. These tax research classes can involve studying case law as well as the tax code, and students might have to write papers concerning the case problems developed by the professors. Those who plan to sit for the Certified Public Accounting Exam will also need to take tax accounting courses, as one portion of the exam deals with taxation. Some students who plan to obtain a law degree and to practice in the tax law arena will also need to take tax accounting. Tax laws can change frequently, so staying current on tax laws is important for anyone who wants to practice in this area.