Do Accountants Do Taxes? Services They Offer

Accountants provide financial services that extend beyond basic record-keeping. Many specialize in taxation, assisting individuals and businesses with complex tax regulations. Their involvement helps ensure compliance and contributes to effective financial management.

Tax Services Offered by Accountants

Accountants offer a comprehensive range of tax services. They assist individuals with annual Form 1040 filings and handle various business tax obligations, such as corporate income tax (Form 1120), partnership tax (Form 1065), and self-employment taxes. Beyond preparation, these professionals engage in tax planning and advisory, strategizing with clients to minimize tax liabilities and identify potential savings.

Accountants also provide representation services during audits or in response to notices from the Internal Revenue Service (IRS) or state tax authorities. This can involve tax disputes, negotiating payment plans, or pursuing penalty abatement. Further support includes payroll tax compliance, ensuring businesses correctly withhold and remit employment taxes, and sales tax compliance, which involves managing collection and reporting requirements.

Credentials for Tax Professionals

Several types of professionals are qualified to prepare taxes. Certified Public Accountants (CPAs) are licensed by state boards of accountancy and have broad expertise, including tax preparation, auditing, financial planning, and consulting. To become a CPA, candidates must complete 150 hours of higher education, pass a Uniform CPA Examination, and meet state experience requirements.

Enrolled Agents (EAs) are federally licensed tax practitioners specializing exclusively in taxation and authorized to represent taxpayers before the IRS. EAs must pass a three-part Special Enrollment Examination covering individual and business tax preparation, as well as representation. Unlike CPAs, there are no specific education or experience requirements to become an EA, though they must complete continuing education. Other tax preparers may also assist with filings, but might not hold the same level of certification or authority as CPAs and EAs.

Information Needed for Tax Preparation

An accountant requires specific documentation and personal information from the client to prepare a tax return. Income documentation includes Form W-2s for wages, various Form 1099s (e.g., for nonemployee compensation, dividends, interest, retirement distributions), and Schedule K-1s for income from partnerships or S corporations. For self-employed individuals, detailed records of income and expenses are necessary.

Documentation for deductions and credits is also needed. This includes records for itemized deductions like medical expenses, mortgage interest (Form 1098), and state and local taxes. Information for credits, such as student loan interest (Form 1098-E), education expenses (Form 1098-T), and childcare expenses, should also be provided. Clients need to provide social security numbers for all individuals on the return, bank account information for direct deposit or debit, and copies of prior year tax returns.

Working Through the Tax Preparation Process

Working with an accountant for tax preparation begins once all necessary documents and information have been gathered. An initial consultation allows the client to provide materials and discuss significant life changes or financial events from the past year. Accountants then use this information to input data and prepare the tax return.

Once prepared, the accountant presents the return to the client for review. During this review, the accountant explains the return, addresses questions, and obtains client approval before filing. Filing occurs electronically, with the accountant submitting the return to the IRS and relevant state authorities after receiving client authorization. The accountant may provide post-filing support, such as confirming acceptance by tax authorities and advising on record retention.