Tax accountancy is a profession that offers many different routes within its general scope. Tax accountants are found in a variety of environments. They work with individuals, small businesses, and major multi-national corporations. Their work with an individual can be as simple as using their skills to help a family find the most deductions when they are filing their 1040 income tax form or can involve complex tax issues when they help someone with a large investment portfolio, varied income sources, trust accounts, and multiple properties prepare tax returns. They could work in an office for a large company, with an accounting firm, or work to provide local clients with assistance with tax preparation as a consulting licensed professional within the industry.
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How to Become a Tax Accountant
Step 1: Earn a Bachelor's Degree
Step 2: Gain Relevant Work Experience
Step 3: Obtain a CPA License (Optional, but Highly Recommended)
Step 4. Specialization and Certification
Step 5: Continuing Education - stay current with tax laws and regulations
Step 6: Pursue Continuing Education and Networking
The first step to becoming a tax accountant is to complete a bachelor's degree in accounting, finance, or a related field. This degree provides you with the foundational knowledge necessary for the role, covering subjects such as financial accounting, taxation, business law, and auditing. Some universities may offer specialized courses in tax accounting, which can be beneficial if you want to focus on this area from the start.
While earning your degree, it is important to gain relevant experience in the field. Many students take internships with accounting firms or companies that offer tax preparation services. These internships provide hands-on experience with tax returns, financial statements, and tax-related documents, giving you a deeper understanding of the work involved in tax accounting.
Although becoming a Certified Public Accountant (CPA) is not required to work as a tax accountant, it is highly recommended. A CPA license is recognized in the industry and can open up more job opportunities, higher salaries, and greater professional credibility. To become a CPA, you must meet the education requirements (typically 150 credit hours), pass the Uniform CPA Examination, and gain professional experience under the supervision of a licensed CPA.
For accountants and CPAs, specializing in tax accounting opens the door to a rewarding niche in the financial industry. With certifications like the Certified Tax Specialist (CTS) or Enrolled Agent (EA) designation, professionals can demonstrate advanced expertise in tax laws, compliance, and planning. Specialization not only enhances credibility but also expands career opportunities, allowing accountants to offer high-value services such as tax strategy, corporate tax advising, or estate planning. Pursuing advanced training in this field ensures accountants stay current with ever-changing tax regulations while providing clients with accurate and strategic financial solutions.
Tax laws and regulations evolve frequently, so it is essential for tax accountants to stay informed. Continuing education is critical to keeping up with changes in tax policy. Many tax accountants attend seminars, workshops, or enroll in courses to stay up-to-date with new laws, deductions, credits, and compliance requirements.
As a tax accountant, continuing education and networking are important for professional growth. Joining professional organizations such as the American Institute of CPAs (AICPA), National Association of Tax Professionals (NATP), or National Society of Accountants (NSA) can provide valuable networking opportunities, access to continuing education resources, and career development support.
Becoming a tax accountant requires a solid foundation in accounting principles, a commitment to staying informed on tax laws, and possibly earning certifications to increase your expertise. By following these steps, you can embark on a fulfilling career helping clients navigate the complex world of taxes.
What is Tax Accounting?
The field includes working with foreign tax law and even representing clients in court. Tax accountants that deal with international tax law represent individuals who have worked abroad as well as global corporations that operate on every continent. As Endorsed Agents, a high level certification for a tax preparer, tax professionals can help businesses or individuals protect their assets in court rather than working on the initial tax preparation.
Tax accountants who work with businesses help their clients or employers plan for their tax burden. Rather than existing as a mostly seasonal operation, helping people get through the tax season, they are often working hard all year, helping their employers file quarterly tax statements and the annual federal tax return, discovering deductions, and advising on ways to deduct from the overall taxes the corporation must pay. You'll need excellent communication skills to exceed in this career, but there are plenty of openings in the job market.
The Various Parts of Tax Accounting
- Business Tax Accounting: Corporate and Small Business
Small business accountants manage multiple clients, focusing on income tax preparation and payroll taxes. In contrast, corporate tax accountants handle deductions, property taxes, and federal and state returns while advising executives on tax-saving strategies.
In a corporation, there may be many employees who need annual income tax statements. A licensed CPA might oversee a team of bookkeepers who tally all of the earnings and tax payouts for each employee. The lead accountant would then be responsible for final oversight, internal auditing of the process, and ensuring that each year-end income statement is accurate.
Smaller businesses often hire independent tax preparers for employee taxes and simple returns. These preparers may have a small staff and occasionally advise on tax-saving strategies like leveraging deductions or government programs.
In such a consultancy role, a tax preparer might need to have full knowledge of GAAP so they can show how certain transactions impact the business in the near-term while OCBOA statements reflect the longer-term impact of a purchase or divestiture.
- International Tax Accounting
International tax accountants must understand both domestic and foreign earnings and how they impact IRS filings, as well as taxation in foreign nations. Many in this field hold a CPA certification and specialize in specific countries, as maintaining expertise in multiple nations’ tax practices is complex and time-consuming. This is not an entry-level position.
International tax accountants assist businesses and individuals with establishing tax entities abroad, managing cross-border sales, and working with US-based subsidiaries of offshore corporations. They may also help shelter domestic entities from IRS taxes by routing e-commerce transactions through offshore entities and structuring income to reduce tax implications.
International tax accountants assist individuals, such as U.S. citizens working abroad or contractors living in lower-cost countries. These expatriates often face dual tax obligations from host countries and the IRS, requiring expert guidance to manage complex filings across nations.
- International Tax Reporting Standards
With globalization and the growth of offshore businesses, the International Accounting Standards Board (IASB) has established International Financial Reporting Standards (IFRS) to reduce confusion in multinational dealings. Even Panama, criticized for questionable tax shelters, is adopting IFRS to curb the misuse of its financial institutions for illegal practices. - Internal Revenue Service
Many tax specialists work for the IRS. Tax accountants who work for that agency, might be involved in auditing tax returns, offering advice to individuals or businesses, or even help settle appeals when taxpaying persons or entities contest a ruling in court.
On the other side of this appeals process are Enrolled Agents. EAs are licensed tax professionals who have passed a rigorous certification exam or who have worked with the IRS for at least five years. They are hires to represent clients in Tax Court. Like attorneys or other professionals, EAs can offer complete confidentiality to clients, in certain circumstances.
Average Tax Accountant Salary and Career Outlook
Tax accounting is a special area of accounting that employs a special set of principles different from other types of accounting work. That is, it falls outside of the generally accepted accounting principles (GAAP). Instead, tax accounting falls under the rubric of Other Comprehensive Basis of Accounting (OCBOA).
One key difference between GAAP and OCBOA is found how they report various transactions. Tax accountants can defer reporting a transaction until its debts are settled. The settlement might even take place before the transaction occurs, and often is recorded on a statement a year or more after it closes. Accountants working with the same client will record the same transactions, just not at the same time. Because of the differences, certification aimed toward this career choice may require additional education or training, even if you already have a degree in accounting.
| Entry Level | Mid Career | Late Career |
|---|---|---|
| $52,300 | $63,800 | $70,400 |
Tax accountants are always in demand. There are always individuals who have complicated tax returns that will need professional oversight, and businesses of all sizes constantly need help. With the rise of globalization, more and more U.S. workers are stationed overseas where they may have their dollars subject to foreign and domestic taxation, and there are still more workers entering the U.S. on short-stay visas who will need help with their IRS filings. It′s no surprise then that accountants are rather well-paid. In 2023, the median pay in the field was $79,880.
Education Requirements for Tax Accountants
Tax accountants begin with a bachelor's degree in accounting, often taking specialized courses and pursuing internships to gain real-world experience. With around 35% of accounting graduates entering taxation, early preparation in this niche provides a significant advantage.
Many accounting majors pursue graduate programs to enhance their careers. Options include Master of Accounting programs with a focus on taxation, Master of Tax Accounting, MS in Taxation, and MBA programs with a tax focus. The key is to choose a path aligned with one’s career goals.
Accountants with a relevant degree can check with their state’s Accountancy Board for CPA exam eligibility. A bachelor’s degree with required accounting courses is the minimum, and typically, 150 semester hours, including 30 in advanced accounting, are required. Taxation specialists may focus on the Regulation section.
The REG portion of the CPA exam focuses on federal taxation and business laws. Passing this section alone highlights a specialized area of expertise, making candidates highly valued in tax accounting roles. While it doesn’t earn a full CPA license, it can help secure a position in tax accounting at a firm or corporation.
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What Certifications Are Needed?
Tax accountants can hold numerous certifications and licenses. Each has rigorous standards for those who claim those credentials, and those accountants reap the benefits of their hard work.
- CPA License
Those who decide to move on to attain a full CPA license will enjoy even more opportunities, especially in the long-term. CPAs are able to sign legal documents and offer more services to their clients. Along with these abilities, they also have more responsibilities, mostly in terms of Continuing Professional Education. - EA
To become an Enrolled Agent, accountants don′t necessarily need any special education, though it is helpful. Generally, future EAs should graduate with a bachelor's degree in accounting. Then, they should probably consider additional coursework specializing in taxation prior to taking the EA examination, which is quite strenuous. Alternately, EAs gain their credentials by working with the IRS for at least five consecutive years. - Accreditation
Yet another avenue that many tax accountants take is through the Accreditation Council for Accountancy and Taxation.
They offer examinations in four areas:
- Accredited Business Accountant
- Accredited Tax Advisor
- Accredited Retirement Advisor
- Accredited Tax Preparer
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