How to Become a Tax Preparer: Skills Needed

While it's relatively easy to become a tax preparer anywhere in the country, you should take a good look at your own skills and abilities before you enter the profession or start a tax preparation business. Anyone can prepare taxes, but not everyone is suited to being a tax preparer.

A tax preparer needs the following skills to be successful:

Knowledge of federal and state tax laws. Understanding the tax code is an important aspect of preparing taxes. The bad news is that the tax laws change every year, so be prepared to put in a good deal of time studying and learning. Fortunately, however, the foundational principles of preparing taxes seldom change. In other words, if you understand the principle behind how a dependent is treated under the tax law, it's a simple matter to look up the dependency exemption amount - which changes every year.

Math Skills. Most people think that tax preparers must be extremely good at math. Math is important in tax preparation but not as important as knowledge of tax law. There are two reasons behind this. First, anyone who has completed third grade has the math skills to complete a tax return. The only math required for a tax return is basic addition, subtraction, multiplication, and percentages. Second, tax preparers rely more and more on computers to assist them in preparing client returns. Since computers are exceptionally well-suited to making accurate mathematical calculations, most of the hard work is done. Still, the ability to look at number and make estimates and comparisons in your head is a good skill. Those with an affinity for math typically have more success in financial careers.

People Skills. Accountants and other financial-type people often get a bad reputation when it comes to dealing with other people. If you were to ask many people to describe their tax preparer, words like outgoing, social, and extrovert are not usually the first ones that come to mind. But preparing taxes is not just about the numbers. In order to build a successful business - whether you work for yourself or someone else - requires coming in to contact with tax-paying clients. You must be able to talk to people and put them at ease about a topic that generally causes them anxiety. It's helpful if you can explain complicated tax concepts in an easy-to-understand manner. If you need to bring new clients into your company, you'll want to be adept at meeting new people, telling them about what you do, and "making the sale" - getting them to become a new client.

Computer Skills. Although there are some tax preparers who still complete tax returns by had, the majority of tax preparers use computers to assist them in preparing client returns. You must possess the basic ability to use the computer, install software (including the many tax season updates), and be able to quickly get up to speed with new software versions released each year. You should be comfortable using popular software such as Microsoft Word and Excel, or QuickBooks.Of course, understanding the Internet is critical is today's information-dependent society. Knowing how to research tax law online can give you a tremendous advantage.

Communication Skills. You should be able to effectively communicate with your clients and with the agencies and companies with which you interact. You must be proficient speaking and writing. You must also be able to interact with your clients in a way that they understand, free from confusing jargon and trade terminology.

Attention to Detail. You must be careful, conscientious, and accurate when it comes to working with client tax returns. Even a small mistake with a decimal point or a transposition of numbers can equate to a big tax consequence for your client. You must be willing to check and re-check your data entry, math calculations, and the application of tax law to your client's situation. Your clients will expect no less than complete accuracy from you. Don't overlook anything - no matter how small.

Ethics. As a tax preparer, you must be above reproach. When you work with clients, you will learn information that may put you in an awkward situation. You must be willing to be objective and place your duty to obey the tax laws above your desire or need to maintain your client base. In other words, if a client is asking you to do something you know to be unethical or against the law, you must decline, even if it means you risk losing the client. Ethics play a big role in the tax preparation industry and you must be prepared to play along. Preparers face hefty personal penalties and fines - as well as jail time - for unethical behavior.