What is an Income Tax Preparer?

Felicia Dye

Income taxes are portions of a person’s earnings which he is obligated to pay to the government. In some instances, people pay too much during a tax period. In other instances, people do not pay enough. An income tax preparer is an individual who helps others calculate the correct tax burden so they may pay what they owe to the government or request refunds for excesses paid.

All W-2 forms should be brought to a tax preparer.
All W-2 forms should be brought to a tax preparer.

Income tax is an important revenue source for many governments. Refusing to pay, paying late, or paying the wrong amount can result in numerous problems for an individual or business. To help ensure that taxes are handled properly, an income tax preparer is often hired.

Some tax preparers are CPAs.
Some tax preparers are CPAs.

Tax preparation can be complicated by a number of things. For example, a person may not only owe a portion of his salary to the government, but he may also owe a portion of other types of income, such as that from inheritances and investments. Reporting and calculating these items often requires special forms and specialized knowledge.

Many people who are qualified to engage in tax preparation only do so on a seasonal basis.
Many people who are qualified to engage in tax preparation only do so on a seasonal basis.

Additionally, there are often credits and deductions a government allows which reduces a person’s tax burden. An individual may also have difficulty calculating these. In many instances, individuals are not even aware of all of the means they have to reduce their income taxes. These are some of the common reasons why people choose to hire a tax preparer.

Some tax preparers are actually accountants, which generally means they have completed college and received a degree. This is often the case when businesses seek these types of services. Calculating and managing the taxes of businesses can be much more complicated than what is needed for individuals.

It is not always necessary, however, for an income tax preparer to go to college. In many instances, these professionals can take short courses. Upon completion, they can receive certificates that verify their ability to prepare taxes.

While many may seek employment with tax preparation companies, this is not necessary. An income tax preparer can freelance. Many people who are qualified to prepare taxes only engage in this type of work on a seasonal basis.

When tax preparers offer their services, they assume a portion of risk for errors. In the event that a tax collecting agency finds error or fraudulent behavior, the tax preparer can be punished. Individuals should note, however, that utilizing the services of these professionals does not completely alleviate their risk of punishment. An individual can be held accountable for the actions of the income tax preparer.

Tax preparers help filers complete their returns and make sure that information is properly entered and verified.
Tax preparers help filers complete their returns and make sure that information is properly entered and verified.

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