All That You Need to Know About Tax Preparation
Tax preparers compute, file, and offer assistance with simple and complex tax returns for individuals and companies, called tax preparation. The primary objective of these experts is to maximize tax returns for clients while abiding by all relevant rules.
Tax preparers can assist with tax return preparation as well as accounting, bookkeeping, and payroll services. Many tax preparers are employed full-time, part-time, or independently at private businesses or accounting firms. Although most of these specialists are employed year-round, tax season is often their busiest time.
Customer service, financial analysis, data input, and data management abilities are frequently used by tax preparers. People who are good at problem-solving, communication, and critical thinking may excel in this position.
Read on to know more about tax preparation and how can a tax preparer help you with your taxes!
Who is a Tax Preparer?
There are various different categories of tax preparers, some of whom have certifications issued by independent organizations while others do not. You can achieve the greatest possible tax results by being aware of the various tax preparer types and credentials.
What Includes Tax Preparation?
For their clients, tax preparers complete and submit tax forms. A tax preparer can analyze all of a client’s personal information, including Social Security numbers, income statements, and personal and business costs, to identify which expenses and situations may result in tax deductions or credits. This requires a good understanding of tax law.
A tax preparer can also advise clients on the best course of action to take to lower their tax liability in the upcoming year based on the outcomes of the calculation of their return.
Credentialed vs Non-credentialed Tax Preparers
Credentialed Tax Preparers
- Certified Public Accounts (CPAs)
- Enrolled Agents (EAs)
- Tax Attorneys
- State boards grant qualifications to CPAs.
- The IRS issues credentials to EAs.
- State bar bodies issue licenses to tax attorneys.
Non-credentialed Tax Preparers
Non-credentialed preparers are people who do tax preparation without holding a credential from a third-party organization. Non-credentialed tax professionals may be self-taught or have acquired training from a tax preparation store where they work seasonally rather than fulfilling the requirements of a third-party issuing body.
Tax preparers without credentials include:
- Seasonal tax store employees
- Volunteer Income Tax Assistance (VITA) program volunteers
- Tax accountants not Certified by the American Institute of CPAs (AICPA)
- Annual Filing Season Program participants
Tax preparers who work or volunteer for these companies and organizations may have credentials and file returns, although they are typically not compelled to. Many unlicensed tax preparers only offer tax preparation assistance for a few months of the year during tax season, unlike CPAs, EAs, and tax attorneys.
Types of Credentialed Tax Preparers
Certified Public Accountant (CPA)
- Maintaining financial records
- Certifying financial statements
- Conducting audits
- Tax audits
- Payment and collection issues
Enrolled Agent (EA)
A tax attorney often needs to complete both a college education and a legal education. the state bar examination, and obtain a state license, which frequently requires meeting specific moral requirements. Moreover, throughout their professions, they continue their education.
Tax attorneys assist clients with the legal ramifications of their taxes using their extensive understanding of business and tax legislation. They are qualified to represent their clients before the IRS in all tax-related situations and can also prepare their customers’ tax returns.
Tax Preparation Areas of Expertise
Other aspects of the job change depending on the role and industry. Accounting, bookkeeping, and payroll services are just a few of the areas in which tax preparers might specialize to meet the needs of particular clients.
Tax accountants are well-versed in all relevant tax laws and rules. They have the necessary bookkeeping and accounting experience. While senior-level accountants handle more challenging jobs including representing clients in tax disputes and analyzing tax returns, entry-level tax accountants are responsible for filing individual and corporate tax returns.
Is this all too much to understand? Don’t worry!
Tax preparation is not an easy thing to do! So, you can hire a tax preparer or a tax preparation service to help you with your tax fillings and returns.