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Tax Accounting

A tax accountant helps businesses or individuals organize, analyze, and file their taxes. The modern tax system is highly complex and is designed to provide incentives to individuals and businesses to act in a certain way. For example, someone who contributes money to charity will pay less tax. Tax accountants use these incentives to the client’s advantage. Each year, people in the United States need to pay their local, state, and federal taxes. Many citizens choose to hire a tax accountant to work with them through the process. Tax accountants provide advice to clients and businesses or will complete and file taxes for a fee. While many firms typically hire tax accountants, some are self-employed and find their own clients. Before a tax accountant can complete and file taxes for an individual or company, they must request various documents and information, such as financial data and pay stubs. Once this information is gathered, the tax accountant can look for any deductions and determine the total amount of taxes owed to the state and federal government. Learn more about tax accounting, accounting jobs for graduates, and the benefits of getting an accounting degree.

What is Tax Accounting?

Tax accounting is a form of accounting specifically for tax purposes. In the United States, taxes are governed by the Internal Revenue Service. All basic rules and regulations relating to tax accounting are dictated by the IRS under Section 446. This section under the Internal Revenue Code (IRC) states that all taxpayers can choose any method of accounting they wish to compute taxable income, as long as the method they choose accurately reflects income.

Tax accounting is similar to traditional accounting as financial accounts and transactions are recorded, reported, and analyzed so that managers and outsiders can use this data for various purposes. For example, accounting documents may be used to help businesses complete their tax returns. Taxpayers who would like to change their tax accounting method must seek permission from the U.S. Treasury secretary, according to Section 446. There are two types of changes, one derived from a series of common changes in which the taxpayer fills out a form and the other in which you must seek permission from the Treasury.

There are several types of tax-accounting techniques used by individual taxpayers and businesses alike. Under Section 446 of the IRC, there is a list of acceptable methods of tax accounting. The most common of these accounting methods include traditional cash and accrual methods, although there are some non-traditional methods. Each method used for tax accounting must be approved by the IRS first.

What Jobs are Available to Graduates?

There are many jobs in the tax accounting field available to graduates with knowledge of tax accounting. For someone looking into a field involving money, finances, or accounting, an auditor may be the ideal career choice. An auditor is an individual who verifies financial information. This person will investigate a company or individual to ensure that the information they gave related to income and taxes is correct. Auditors may look at tax refunds, bank statements, paychecks, and other documents to verify integrity of financial records.

Tax directors are another type of job available to graduates with experience with tax accounting. A tax director is a type of tax accountant that handles a business’s tax organization, compliance, and accounting throughout the year. This individual is responsible for overseeing other tax professionals while interacting with clients. Tax directors commonly oversee tax audits at a federal and state level. They may also work with the IT staff of a company to ensure that all tax preparation software is the latest in technology and is in compliance with laws. Tax directors work alongside company treasurers, department heads, and vice presidents to conduct financial transactions for a company.

Why Get an Accounting Degree?

Getting a degree in accounting can open many doors to a rewarding career. According to the Bureau of Labor Statistics, more than 1.3 million jobs in the United States were held by accountants and auditors. An accounting degree can also offer the benefit of self-employment. Many accountants work for themselves, performing bookkeeping duties and taxes. Some accountants specialize in a particular industry. More than eight percent of all accountants are self-employed. The average salary for someone with a career in accounting was $59,450 in 2008. Professionals can accelerate their salary raises with experience and certifications, such as a CMA or CPA.