Becoming a Tax Accountant

By: Dan McLean

Table of Contents

Table of Contents....................................................................................................................................... iii

Introduction................................................................................................................................................... v

Job Description and Duties..................................................................................................................... 1

Major Responsibilities & Duties:.....................................................................................................1

Requirements............................................................................................................................................... 3

Career Opportunities.................................................................................................................................5

Employer Organizations include.....................................................................................................5

Tax Accountant Salary and Job Outlook............................................................................................7

Job Prospects............................................................................................................................................7

International accounting......................................................................................................................... 9

Individual Tax Return Form 1040....................................................................................................10

Step 1: Label...........................................................................................................................................10

Step 2: Filing status............................................................................................................................ 10

Step 3: Exemptions............................................................................................................................. 10

Step 4: Income...................................................................................................................................... 10

Step 5: Total Income.......................................................................................................................... 11

Index.............................................................................................................................................................. 13

References................................................................................................................................................... 15

Introduction

Accounting is not an easy profession by any means. Much of the work dealt with by accountants are the things no one else wanted to do, which is why there is a demand for the specific skill set required.

Tax accountants specialize in preparing taxes for private individuals, private and public companies including non-profits, and in some cases, government entities. Tax accountants also create tax strategies to reduce the amount of taxes a client owes while remaining compliant with generally accepted accounting principles and the law. Tax accountants must interpret and understand tax law, and must occasionally explain tax law and its implications to clients. Common responsibilities for tax accountants include preparing and filing taxes, financial planning, attending and participating in strategy meetings with clients and others, preparing presentations and reports on tax situations, reporting, and law, and researching and reviewing past tax filings.

This manual will provide a better understanding of what a Tax Accountant does in daily operations, as well as give insight into the steady field of opportunity for accountants.

Chapter 1 1

Job Description and Duties

Your first responsibility is to know your own duties and how to do them promptly, correctly and pleasantly. Secondly, you will be expected to cooperate with management and your fellow employees and maintain a good team attitude. How you interact with fellow employees and how you accept direction can affect the success of your department. In turn, the performance of one department can impact the entire service offered. Whatever your position, you have an important assignment: perform every task to the very best of your ability. The result will be better performance for the company overall, and personal satisfaction for you.

Tax accountants prepare federal, state and local tax returns for businesses, organizations and individuals. As such, these professionals are knowledgeable on business concepts and government regulations. Tax accountants may advise clients on how to minimize tax liability, inform them of any tax changes that affect their business and ensure compliance with taxing agency requirements. Tax accountants are involved in any disputes or audits that affect their clients.

Major Responsibilities & Duties: Implement client’s engagements from start to finish (planning, executing,

directing, and completing tax projects). Manage engagements budgets. Supervise, train, and mentor staff and interns on tax

projects. Review tax returns prepared by staff and make

recommendations regarding accuracy and tax savings opportunities.

Prepare more complex tax returns for individuals, trusts, partnerships, and corporations.

Proactively interact with key client management to gather information, resolve tax-related problems, and make recommendations for business and process improvements.

Assist partners on proposals and business development calls. Gain understanding of client operations, processes, and business objectives. Possess an understanding of state and foreign tax issues.

Tax accountants assist clients with their financial and income statements. These professionals may have typical work weeks, except around tax season when their hours can increase significantly.

The basis behind the revenue line of tax accountants is that they provide value to an organization by making their business more efficient. They do this by adding to the client’s baseline in tax preparation. As you can see, tax accountants are

2 Becoming a Tax Accountant

highly specialized in their field of study. They bring economic worth by providing a service to an ever changing tax law. Companies will invest their money into accounting services rather than try to spend hours and labor running through tax documents and abiding by rules and regulations.

The highly specialized characteristic of accountants poses an issue. What are the next steps in education in my pursuit of accounting?

Chapter 2 3

Requirements

Building your education properly and timely is crucial to the success and betterment of your career. To become a tax accountant, individuals must obtain a bachelor’s degree in accounting, preferably with a concentration in tax and tax law. Many professional tax accountants also pursue a Master’s in Taxation or Audit as well as organizational or state level certifications. Widely recognized certifications that can help tax accountants become competitive in the job market include Certified Public Accountant, Certified Financial Planner, and Enrolled Agent. Since a position as a tax accountant involves a high level of responsibility and can have a major impact on a business’ finances, a growing number of companies also require tax accountants to have obtained tax compliance experience in addition to holding an accounting degree and/or certification.

A base level outline of education should take into consideration:

1. Bachelor’s degree in accounting 2. Master’s degree with concentration in Tax3. CPA certification (Certified Public Accountant)4. CFA certification (Chartered Financial Analyst)5. JD (Juris Doctor) : if proceeding further into tax field

1 & 2: In order to find a school best fitting for your desires, you’ll need to take campus tours, research their school of business, talk to current students as well as alumni and get your questions answered. Most schools offer an accounting degree, however when choosing a school for post grad work you’ll need to consider what specializations they offer in concurrency with your perused field.

3: The CPA exam is rigorous in nature and has a very low pass rate. Whereas the BAR exam for lawyers has around a 50% pass rate, the CPA usually passes 18% on the first attempt. The review courses offered will help with studying and preparing for the CPA exam, however you must complete 150 hours and 2 years of experience before being able to sit for the exam. These requirements make the certification something highly sought over and distinguishable among other candidates.

4: The Chartered Financial Analyst credential has become the most respected and recognized investment designation in the world; enrolling in the CFA Program is your first step toward earning this qualification. The CFA covers concepts and skills you will use at all stages of your career, bridging academic theory, current industry practice, and ethical and professional standards to provide a strong foundation of advanced investment analysis and real-world portfolio management skills.

5: The JD (Juris Doctor) is the degree commonly conferred by law schools. It is required in all states except California (which includes an option called law office study) to gain Admission to the Bar. Gaining admission to the bar means obtaining a license to practice law in a particular state or in federal court. The specific

4 Becoming a Tax Accountant

requirements for a J.D. vary from school to school. Generally, the requirements include completing a minimum number of class hours each academic period

Chapter 3 5

Career Opportunities

Tax accountants can work directly for a business or organization, work as a tax consultant or advisor through a public accounting firm, or work as a self-employed tax accountant. Firms large and small need tax accountants to prepare, audit, and plan their tax filings. Not surprisingly, government agencies like the Internal Revenue Service also hire tax accountants. Tax accountants can start a career with the Internal Revenue Service to gain work experience at a competitive salary with great opportunities for advancement

Employer Organizations include

KPMG Deloitte PriceWaterhouseCoopers IRS GrantThornton Ernest&Young BakerTillyVirchowKrouse, LLP Universities Local and public firms Privately owned and operated companies

According to the U.S. Bureau of Labor Statistics (BLS), employment for accountants and auditors was expected to increase by 16% from 2010 to 2020 (www.bls.gov). The increase is due to stricter regulations and a need for accountants to handle compliance matters.

Chapter 4 7

Tax Accountant Salary and Job Outlook

Overall, the US Bureau of Labor Statistics reports that accountants and auditors make an average salary of $61,690 per year. However, specialized careers in accounting like tax accountancy could well lead to a higher than average salary, as data compiled by Robert Half Finance & Accounting found that recent starting salaries for tax accountants range between $51,000 and $70,250 per year, and are set to increase considerably in coming years. As the globalization of marketplaces continues, knowledgeable tax accountants are expected to be in high demand, especially those who have professional designations speaking to their expertise. The top paying industries at that time were securities and commodity exchanges and the federal government.

Accountants and AuditorsMedian annual wages, May 2010

Accountants and Auditors$61,690

Business and Financial Operations Occupations$60,670

Total, All Occupations$33,840

There has been an increased focus on accounting in response to corporate scandals and recent financial crises. Stricter laws and regulations, particularly in the financial sector, will likely increase the demand for accounting services as organizations seek to comply with new standards. Additionally, tighter lending standards are expected to increase the importance of audits, as this is a key way for organizations to demonstrate their creditworthiness.

Job Prospects

Accountants and auditors who have earned professional recognition, especially as a Certified Public Accountants (CPA), should have the best prospects. Job applicants who have a master's degree in accounting or a master's degree in business with a concentration in accounting also may have an advantage. Competition should be strong for jobs with the most prestigious accounting and business firms. The continued globalization of business should lead to more demand for accounting expertise and services related to international trade and international mergers and acquisitions.

8 Becoming a Tax Accountant

Chapter 5 9

International accounting

The Next surge of accounting practice occurs in the specialization of international accounting. International Tax Accountants are a specific type of accountant who specializes in international tax law. International Tax Accountants are employed by large corporations, international companies, tax consultancies and accounting firms; International Tax Accountants may also be self-employed and own their own practice or firm. Common duties of International Tax Accountants include researching tax law, preparing tax returns, completing tax forms, meeting with clients and other duties as necessary.

The Security and Exchange Commission would like to move toward a single international accounting standard opposed to our GAAP (generally accepted accounting principles) we use here in the United States. Doing so would provide transparency to international investors and provide relevant and relatable data across the economy.

A quote taken from sec.com “With the activities and interests of investors, lenders and companies becoming increasingly global, the Commission is increasing its involvement in a number of forums to develop a globally accepted, high quality financial reporting framework” shows the increased focus on international reporting and possibly the way the occupation is headed.

Individual Tax Return Form 1040

10 Becoming a Tax Accountant

Box by Box, step by step guide to filling out a basic 1040 statement of income tax return

Step 1: Label

Fill in the information requested, including your first name, middle initial and last name. Joint filers must each fill in this information. Then add your home address, including ZIP code. And don't forget your Social Security number (numbers, for married couples) in the boxes provided at the upper right-hand corner of the form.

Step 2: Filing status

You get five choices, one each on lines 1 through 5: single, married filing jointly, married filing separately, head of household and qualifying widow or

widower with a dependent child. Each has specific requirements and offers different tax advantages. Also, the standard deduction amount is different, as is the final tax due.

Step 3: Exemptions

Next, you start cutting away at your impending tax bill. The exemptions section of the form (line 6 and all its sublines below) lets the IRS know how many people depend on you for support. Technically, if you're married filing jointly, your spouse isn't your dependent. But when you file, each of you is counted as an exemption, so check boxes 6a and 6b. Later in the filing process, this will help reduce your taxable income.

Step 4: IncomeNow to the main reason the IRS wants a form from you: Just how much

money did you make last year? This is where you enter in the proper monetary income from Wages, Interest income, Dividend Income from the prior year.

Chapter 5 11

Step 5: Total Income

This next section of the 1040 allows you to adjust your income by taking several above-the-line deductions. By taking all these deductions you can, you'll cut your adjusted gross income. That, in turn, cuts your overall bill because figuring your AGI is the first step in arriving at your final taxable income amount.

After 70 line items entered into the Form 1040 you will receive your refund amount. This is the single line item that drives the tax accounting industry. Hidden ways to deduct income and itemize certain assets is the key to complex tax issues.

Index 13

Index

education, 2, 3, 15

income, 1, 10, 11

International, iii, 9

operations, v, 1

planning, v, 1

principles, v, 9

Responsibilities, iii, 1

responsibility, 1, 3

Security, 9, 10

strategies, v

Index 15

References

http://www.bls.gov/ooh/Business-and-Financial/Accountants-and-auditors.htm#tab-7

http://hiring.monster.com/hr/hr-best-practices/recruiting-hiring-advice/job-descriptions/senior-tax-accountant-job-description.aspx

http://education-portal.com/articles/Tax_Accountant_Career_and_Salary_Information.html

http://www.forbes.com/2007/03/05/sec-accounting-standards-biz-washington-cx_bw_0306sec.html

http://www.bankrate.com/brm/itax/news/20010402e.asp

http://www.accountingdegreetoday.com/careers/tax-accountant/