The daily financial news is full of stories about people and companies that fell behind on their tax obligations. Some people make mistakes and pay too little or too much. And a few underpay (or don’t pay at all) on purpose and end up in legal trouble. That is where income tax accountants come in.
Why People Need Income Tax Accountants
Income tax accountants help individuals and businesses file their tax returns accurately and on time. That’s the short explanation. The longer one is that income tax accountants prepare forms, give advice, help companies get bigger refunds, and assist new business owners who need help with taxation planning.
To understand what these specialized accountants do, it’s helpful to view the profession through several lenses, each explaining what it’s like to work as a professional tax income accountant.
You will need to know what kind of experience you will need, what the daily life of a trained income tax accountant is like, how you will work in teams, what income tax accounting is, your responsibilities, what a solid career path looks like, and what essential skills are needed. It’s easy to see that the field of income tax accounting is broad but contains specific niches.
What is Income Tax Accounting?
Tax accounting is controlled by the Internal Revenue Code (IRC), ensuring that businesses, individual taxpayers, and non-profits follow the current tax rules. An income tax accountant will work to ensure tax returns are accurate. They also have to be familiar with the ever-changing tax laws so they can calculate any income tax due, lower any tax liabilities, and complete and file tax returns accurately and on time.
Every person and legal organization are responsible for paying taxes to the IRS based on the U.S. tax code. However, income tax accounting is involved in the tax payment process on two levels. First, it can ensure that monthly, quarterly, and annual taxes are paid as the law requires. That could include sales taxes, payroll taxes, excise taxes, property taxes, and income taxes. Second, it is often required to record tax-related adjusting entries and prepare tax returns based on financial information.
What Does an Income Tax Accountant Do?
At the federal level and in most states, there is a tax authority that wants a share of a company’s profits. The income tax accountant’s job is to understand the tax code and make the necessary adjustments to convert financial statements from accounting-basis statements to tax-basis statements.
Before becoming an income tax accountant, you should understand the career path and typical job requirements. So, what does an income tax accountant do?
Preparing Required Government and State Forms
Preparing tax forms is vital to any income tax accountant’s job. The federal and state governments use unique forms for individuals and companies. Most individuals file their taxes once per year, while businesses file quarterly.
In addition to the most common personal forms, like the 1040 and the various “EZ” forms, income tax accountants must learn the ins and outs of dozens of other complex schedules and required forms for individual and business filing. Entities like non-profit corporations use special, sometimes much longer forms, as well as multiple kinds of partnership arrangements.
However, it is safe to say that as a person moves through an income tax accounting career, filling out forms will take less time because, as an experienced accountant, you will be needed for more complicated tasks related to planning, advice, and legal assistance.
Giving Helpful Advice to Clients
Whether working alone or on a team, tax income accountants must give expert advice to clients. In most cases, this means advising small or new business owners on how to proceed with expansion, spending, and financial planning. Tax income accountants are uniquely qualified to offer such advice because they understand how money is spent, where it goes, and how to record every transaction correctly.
Individuals often ask income tax accountants for advice about maximizing their refunds or minimizing the amount of taxes they must pay. There are common strategies, like using itemized deductions or claiming notable credits, that can mean a lower tax bill. Even people using advanced software often need help understanding which credits to take, how to itemize correctly, and how to plan.
As for business clients, income tax accountants can save businesses money by helping them file their returns on time. In addition, how a company structures its seasonal sales, and other activities can profoundly impact its quarterly tax bill. An experienced and adequately trained income tax accountant can show business owners how to prepare so that taxes are minimized.
Getting Bigger Refunds for Individuals
Filing the annual required forms is relatively straightforward for the everyday taxpayer without a business and having just one full-time job. However, there are ways for individuals to get the most significant possible refund. There are plenty of opportunities for taxpayers who choose to itemize their yearly deductions. Only a capable, well-trained income tax accountant can help them discover the most innovative ways to obtain the most significant refund or to pay the lowest possible amount.
Helping Businesses Set Up Operations and File Their Taxes
When individuals create a new business, multiple federal and state forms need to be filed. Not all are tax-related, so most new business owners hire legal help. However, for the tax side of the operation, a well-trained income tax accountant can offer essential advice at this crucial stage of a company’s life.
A new company can choose from several types of business forms: a partnership, a typical corporation, a non-profit corporation, a sole proprietorship, etc. The federal government and the states scrutinize a company’s first filing. Virtually every dollar spent needs to be traced to its source and final use.
Final Thoughts
U.S. tax laws are often rewritten, refined, updated, and changed every couple of years. The income tax accountant’s job is to help people and business owners follow tax law. They also make sure that forms and schedules are filed on time to avoid penalties.
Companies and individuals use income tax accountants to plan by keeping an eye on deductible expenses inventory levels (for companies that sell things) and pay before deadlines each year or each quarter.
While complex taxation laws may make the job of an accountant challenging, a career in accounting comes a wide range of rewards, both in income and self-satisfaction.
Eager to Learn More?
The Bachelor of Science Accounting Degree provides students with a solid academic foundation for entry into professional careers in accounting-related areas of business and government. The program also prepares students to pursue advanced education in accounting and accounting-related fields. Students are cautioned that the Bachelor of Science in Accounting degree alone will not satisfy the eligibility requirements to sit for the Uniform Certified Public Accounting Exam or to practice as a CPA in the State of Florida.
The Associate of Arts Accounting Degree program is designed for students planning to pursue a higher-level degree in Accounting as well as to prepare the student for employment as an entry-level accountant, bookkeeper, or general accounting clerk. The program is designed to provide the student with an intensive background in general accounting procedures and principles, business principles, and automated accounting procedures. The program includes a thirty-nine credit-hour component of general education/liberal arts courses.
Contact Florida National University today to learn more about our degree programs.
