How to Become a Tax Accountant: Career Overview and Educational Requirements

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Just about every working adult is at least somewhat familiar with taxes. But perhaps no one is more familiar with them than tax accountants. Beyond their unique ability to quickly prepare tax returns as April 15 draws closer during tax season, tax accountants examine financial statements, inspect account books, organize records, and identify solutions on behalf of their clients. They do so for their clients’ convenience, strategy, and compliance needs.

Many people who have a degree in accounting go on to become accountants in some capacity, but the steps and skill sets required to become a highly competent tax accountant may be more involved than solely obtaining a bachelor’s degree.

What education do you need to become a tax accountant? What skills — both hard and soft — are required? What is the career outlook like for today’s tax accountants? How long does it take to become a tax accountant?  Do you need to tax the CPA exam, or is the test something that is more recommended than required?

You’ll find the answers to these and other questions in the online Bachelor of Science in Accounting program at the University of Alabama at Birmingham’s Collat School of Business.

The award-winning faculty, networking opportunities, and robust curriculum have supplied graduates with the competencies and proficiencies to start their own small businesses as tax accountants and work as tax professionals for private accounting firms. If you’re newly graduated from high school or are considering a career change, UAB’s bachelor’s-level accounting program will provide you with the training, expertise, and capabilities to be successful in this dynamic industry.

Person holding pen in left hand, with right hand on calculator

What Does a Tax Accountant Do?

In many ways, a tax accountant performs many of the same functions as traditional accountants, which typically involve financial data related to costs, expenses, and revenues, especially for businesses. But as their title suggests, tax accountants’ primary responsibilities revolve around taxes and tax management. Whereas a tax preparer may be charged with filing and reviewing tax returns, making tax season the busiest time of the year for them, tax accountants’ duties are more comprehensive: From reviewing payroll information to researching specific issues related to real estate or investments, tax accountants serve as the resident experts for all tax-related matters.

Some of these jobs may be small — such as answering questions about tax documents — while others may be more involved, like putting together comprehensive reports for the IRS or some other oversight body. It all depends on the day, their employer, and the client.

What Education Do You Need to Become a Tax Accountant?

The most basic level of education necessary for tax accountants is a bachelor’s degree in accounting. While a related field may be sufficient — such as finance or business administration — a degree in accounting is preferable because the curriculum is geared for traditional accounting and tax services. For instance, the online Bachelor of Science in Accounting course curriculum at UAB includes Principles of Accounting I, Principles of Accounting II, Cost Accounting, and Income Taxation. Each class is designed to give students the practical skills and analytical tools they can use in their profession as well as in their personal lives.

From a sheer education perspective, a bachelor’s degree is traditionally sufficient for how to become a tax accountant. But many decide to take things a bit further by reinforcing their undergraduate degree with a master’s degree. A graduate degree in accounting not only provides students with additional skill sets and understanding of accounting principles, but it also gives them the potential to reach more professional opportunities. For example, as noted by the U.S. Bureau of Labor Statistics, only certified public accountants (CPAs) are able to submit reports to the Securities and Exchange Commission, an oversight body that is part of the federal government. While a master’s degree is not mandatory to be a CPA, the ability to take the CPA exam entails having completed a certain number of credit hours that participation in a bachelor’s degree accounting program alone may not fully satisfy. This is why CPAs frequently decide to supplement their bachelor’s degree with a master’s. Additionally, a master’s program provides prospective CPAs with tips, study materials, and preparation so they know what to expect when they take the CPA exam.

What Skills Do You Need to Become a Tax Accountant?

How to become a tax accountant isn’t just about having book knowledge and fulfilling certain qualifications. It’s also about practical knowledge, as well as the hands-on skills that enable tax accountants to excel in their careers. Here are some of them:

Attention to Detail

Few lines of work are as strict about the details as accounting, and this is especially true of tax accountants. From tax identification numbers (PTINs) to electronic filing identification numbers (EFINs), one errantly inputted character can create major headaches for clients, who rely on their tax accountants to be error-free when submitting documents for official review. And when there are problems on tax documents — preventing them from being accepted — tax accountants must rely on their attention to detail to find out what’s wrong and make the appropriate corrections.

Ability to Listen, Reflect, and Convey Clearly

Being detail-oriented necessitates good communication skills; you can’t have one without the other. For example, when tax accountants are required to identify reporting issues, they must be clear on the nature of the problem itself. This entails asking the right questions so the correct solution can be identified and achieved. Speaking and listening intently is also critically important when interacting with clients, coworkers, and supervisors in the course of day-to-day activities, projects, and deadlines. If tax laws change, tax accountants need to be clear on what those changes are so they can be properly implemented and incorporated into the tax services they provide to ensure compliance and accuracy.

Highly Organized

From W-2s and W-4s to 1040EZ and 1099, tax forms come in all sorts of alphanumeric combinations. Knowing the purpose and what these forms call for is an important element to productivity so reports, returns, and statements are completed and submitted before deadlines. Disorganization is a recipe for disaster and can lead to losses not only in productivity but also profitability caused by late fees. Clients rely on their tax accountants to be highly organized so taxes are not just paid, but paid on time.

Excel in Calculations

Perhaps no profession works as closely with numbers as accounting. From reviewing financial records to calculating tax deductions, accountants are constantly working with formulas, figures, and computations. This makes mastery of mathematics a core component to successful accounting, be it for tax work or any other branch of the larger discipline. Statistical analysis, calculus, algebra, and other advanced math concepts may be used at various times to ensure accuracy and efficiency.

Technologically Proficient

While tax accountants may be responsible for a variety of complex computations, they have many technological solutions available to them that can make this process simpler. Database and spreadsheet tools like Microsoft Excel assist with tabulating datasets and eliminating the potential for human error by completing data-heavy calculations automatically. They may also leverage enterprise resource planning software, which many businesses use today to improve visibility into their organization’s ongoing operations. There is a learning curve to ERP, and with technology in a constant state of advancement, tax accountants often participate in continuing education courses so they can familiarize themselves with new breakthroughs in ERP software or other tech solutions.

Technology is one of the major focal points touched upon within the UAB accounting curriculum. Accounting Information Systems, Cost Accounting and Internal Auditing all include discussions on how technology is helping accountants perform their jobs more effectively today and what these advanced capabilities may look like in the years ahead.

What Is the Career Outlook for Tax Accountants?

Since many of the job responsibilities of tax accountants are similar to those of traditional accountants, they’re categorized by the BLS as part of the larger profession. Currently, there are approximately 1.4 million accountants in the U.S, according to BLS data. Between 2019 and 2029, the number of accountants is projected to grow by 4%, translating to about 61,700 more practicing accountants. A 4% rate of annual growth is roughly in line with the average increase among all occupations in the U.S.

From a standpoint of job openings, the BLS anticipates a consistent flow of opportunities. Over the next decade, some 125,700 accounting positions are expected to turn over per year. These may result from people deciding to leave the profession or retiring.

The actual number of jobs that are available for accountants is largely a function of the U.S. economy. In a recent survey by the American Institute of Certified Public Accountants, nearly 40% of accounting executives said they had too few employees. Of this group, 50% said they intended to increase hiring in 2021 and would do so “immediately.”

How Long Does It Take to Become a Tax Accountant?

The amount of time required to achieve the title of tax accountant can vary considerably. Much of this depends on an individual’s professional goals, their prior experience, and what levels of proficiency or specialty they’d like to obtain. For a bachelor’s degree alone, it’s about four years. For those who would also like to obtain their master’s degree, that can take an additional two to two and a half years. According to Zippia.com, a majority of practicing tax accountants have a bachelor’s degree alone, but nearly 33% have a master’s degree.

If you decide to go through the Collat School of Business bachelor’s degree in accounting program, it’s possible to complete all 120 semester credit hours in as little as four years. The work is 100% online, though, so if you’d prefer to space out what courses you complete and when, you can take as long as you’d like. The program is designed to work around your schedule.

Another variable that can affect the timeline is CPA licensing. As noted by the BLS, all 50 states require that aspiring CPAs complete 150 semester hours of college coursework to be fully licensed. How many semester hours you need to complete — in addition to your bachelor’s —depends on what courses you took previously and your grade point average, among other factors.

How Much Can You Expect to Earn as a Tax Accountant?

You know the general guidelines for how to become a tax accountant. You may not know about the salary in terms of what you may be able to earn upon achieving this role.

According to Salary.com, the income range among tax accountants in the U.S. runs between $53,200 and $65,660, but where you wind up working could affect this total. For example, in New York, the range is higher, from a low of $57,100 to potentially as much as $70,500.

In California, the range is even wider, going from $59,450 to $73,340, according to Salary.com.

Aside from where the job is located, the employer can also impact earnings. Finance firms and insurers in 2020 paid a median salary of $78,600, according to the BLS. The median for government entities was $72,260.

Work experience, certification, and level of education can also affect earnings. Similar to traditional accountants, how long CPAs have been in a position, and the length of their licensure as a CPA, can affect their pay. According to data obtained by Accounting Today, entry-level CPAs who work for small firms command salaries that average between $47,000 to $59,000. Those same CPAs who work for larger firms usually earn from $51,500 per year at the low end to $68,500 at the high end.

The more experience they attain, the more likely it is that accountants make more money. Accounting Today reported that small-firm-employed senior CPAs — meaning those in the business for at least four years —earn from $66,000 to $89,000. Large-firm-employed CPAs average between $78,500 and $110,000.

If you have the desire to become a tax accountant, an online accounting degree through UAB can supply you with the necessary skills, training, and preparation. For more information on admission requirements, course descriptions, or transferring from another school, please download the free brochure.

 

Recommended Reading:

Finance vs. Accounting Degree: How to Choose the Right Program for Your Career Goals

Great Jobs for Those with a Bachelor’s in Accounting

 

Sources:

Bureau of Labor Statistics, Accountants and Auditors

AICPA, A More Optimistic View on U.S. Economy Comes with a Catch: Inflation Fears, AICPA Survey Finds

Zippia, What Does a Tax Accountant Do?

Accounting Today, How Much Do Accountants Really Earn?

CPA Accounting Institute for Success, 664,532: The Total Number of Active CPA Licenses in the U.S.A.

Salary.com, Tax Accountant Salary in the United States