What is tax accounting?
Tax accounting is a special area of accounting that employs a special set of principles different from other types of accounting work.
Tax accountants work in various working environments, including government agencies, private businesses, multinational corporations, individuals, and accounting firms. They can even work freelance. Tax accountants are in demand and needed year-round – not just during tax return filing season.
Duties of a tax accountant
The duties of a tax accountant can include:
Business Tax Accounting
Accountants working with small businesses often operate as independent accountants with multiple business clients. They’ll find themselves preparing income tax documents for their clients and helping with payroll taxes. Smaller businesses often hire an independent tax preparer to handle a small number of employees.
Tax accountants working with larger corporations are usually employees, helping their employer to find deductions, prepare property tax documents, and work with federal and state tax returns. They often consult with executives on how to increase deductions. Licensed CPAs may oversee a team of bookkeepers who organize the tax pay-outs of all employees. The lead accountant will be in charge of overseeing each end-of-year income statement.
International Tax Accounting:
International tax accountants are hired for their knowledge of taxation in a foreign nation, and how it impacts CRA filings. Many tax preparers working with international taxes hold their CPA certification. As it’s really difficult to maintain expertise on the taxation practices in multiple foreign countries, it is standard that international tax accounting practices specialize in one or more related countries.
International tax accountants are employed by both individuals and businesses who have income tax returns that reflect foreign and domestic earnings. Canadian expatriates often need an accountant who can sort their income tax filings.
Canada Revenue Agency(CRA)
A lot of tax specialists work for the CRA. Tax accountants working for the CRA may be carrying out tax return audits, offering advice to individuals or businesses, or settling appeals in court.
Enrolled agents (EAs) are hired to represent clients in Tax Court and can offer complete confidentiality to clients.
Areas of expertise
Some tax accountants choose to pursue a further specialization. Examples of areas of tax accounting expertise include:
Tax advising is helping clients to legally reduce their tax liability, and requires knowledge of federal, state, and local tax laws. Tax advisors need to understand how financial choices affect taxation and how to best manage assets to achieve taxation outcomes.
Some tax advisory experts earn professional certifications, such as the certified planner designation.
Some employers will only hire tax accountants with accounting certifications. These include the CPA (Certified Public Accountant), certified management accountant, and certified financial forensics designations.
External auditors typically work for accounting firms or governmental organizations, examining financial records for evidence of tax evasion or financial crime.
Internal auditors typically work for businesses, assessing financial activity and looking for performance improvements. They also monitor company accounting procedures and ensure accurate financial reporting.
An Enrolled Agent is a specially certified tax accounting expert, who carries out duties for clients. Typically duties of an EA include representing clients in dispute resolution negotiations and arguing cases before the CRA.
What is the difference between a CPA and an EA?
CPAs are state-licensed accounting professionals. CPAs may be one of the following:
EAs are federally-authorized tax practitioners who:
EAs are specialized professionals who focus on tax issues, and job opportunities may be found at tax preparation franchises or working for a CPA. In comparison, CPAs often work for the government, in the private sector, for organizations, or for individuals – including self-employed work. Job titles held by CPAs include CFO, controller, tax specialist, or auditor.
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