Tax accountants are financial professionals who specialize in preparing tax documents and advising clients on tax matters. Certified public accountants (CPAs) or tax CPAs are the most common type of tax accountant. They have the autonomy to practice in the field of accounting, as well as to prepare income taxes for compensation without being subject to the same IRS guidelines for income tax preparers. Tax accountants help individuals and businesses with financial and wealth planning, as well as preparing taxes.
They provide their clients with advice on preparing and filing tax returns with the IRS, and can also help them during IRS audits. Tax advice requires strategic planning and a thorough knowledge of federal, state and local tax laws. In addition to needing to know the basic principles of accounting and taxation (which is usually obtained through an accounting degree), tax accountants should also have a good understanding of economics and political science. This gives them a good perspective on fiscal policy, something they interact with on a daily basis.
Tax preparers are different from tax accountants in that they don't need to have a degree in accounting or taxation. They can take your various income items, enter them into the tax return software, and print them out. However, they won't have the basic accounting skills needed to prepare business tax returns. CPAs should only renew their tax preparer identification number annually, if they intend to prepare taxes for compensation.
The lack of licenses also provides tax preparers with an opportunity to adopt aggressive (and sometimes illegal) tax positions without regulatory agencies taking disciplinary action.
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