How Much Do Tax Preparers Make?

Tax preparation is a career path that is growing in interest each year, and particularly with the increasing complexity of the tax code. Whether you are considering becoming a tax preparer, or looking to hire a tax preparer, or even thinking of starting a new side-gig, it can help you determine whether the profession is the right one for you.

This guide is a simple, step-by-step, and clear explanation of the common earnings, income variables, and career opportunities of a tax preparer.

What Influences a Tax Preparer’s Income?

The earnings of tax preparers can be high and low. Although there are professionals who just perform tax preparation during tax season, there are those who have made it a full-time career, throughout the year.

Income is influenced by some important factors which include:

Experience Level

Novices receive lower wages than preparers who have spent a few years working or those who have high knowledge in tax matters.

Credential or Certification

Tax professionals with such designations as EA (Enrolled Agent), CPA (Certified Public Accountant), or attorney credentials usually charge more.

Work Environment

The income of self-employed preparers, national tax franchises (such as H&R Block), and accounting firms can be different.

Location

Big cities that have a higher cost of living usually enable preparers to charge more.

Client base and Specialization

The returns of small businesses or complicated taxes are more profitable to handle.

Average Income for Tax Preparers

Although salaries are not fixed, the following categories can show how much tax preparers earn.

Hourly Earnings

Most tax preparers charge per hour, particularly the more experienced tax preparer.

Entry-level tax preparers: $15- $25 per hour

Mid-level preparers: $25-$45 per hour

Experienced or qualified preparers: $50-100+ per hour

Even part-time preparers who do not work year-round can make good money by setting higher fees at peak months.

Annual Salary Estimates

The amount of income earned by a preparer is different when he or she works seasonally or throughout the year.

Seasonal staff at national chains: $20,000-$35,000 per season

Full-time preparers: $35,000 to $65,000 per year

Renowned or qualified individuals: $70,000-120,000+ per year

Self-employed preparers with established practices: $80,000 -150,000+ per year

Preparers who are self-employed tend to earn a higher income since they are able to charge whatever they want, deal with clients on a recurring basis, and provide other financial services.

How Tax Preparers Get Paid

Tax preparers make money in various ways depending on the services that they provide.

Fee per Return

This is the most widespread structure. Preparers use a fixed charge according to the complexity of the tax return.

Typical filing fee ranges:

Simple W-2 individual return: $150-$250

Return in itemized deductions: $250-$400

Schedule C (small business) return: $300-$600

Partnership or S-Corp return: $700-$1,500+

Corporate return: $1,000-$2,500+

Specialty preparers, like those that deal with small businesses or rental property returns, can earn much higher income.

Hourly Billing

Tax planning, audit support, or consulting

Add-On Services

In order to generate more money, most tax preparers offer the following services:

• Bookkeeping
• Payroll management
• Tax planning
• IRS representation
• Financial coaching
• Services of business formation

The add-ons assist in the generation of year-round revenue as opposed to depending on the tax season.

Earnings by Work Environment

Not all tax preparers are alike. Your work will be greatly related to your income and where you work.

Working for a Tax Franchise

Firms such as H&R Block, Jackson Hewitt, and Liberty Tax employ thousands of part-time employees.

Typical pay:

Entry level preparers: $10-$20 per hour

Experienced staff: $20-$35 per hour

Office managers or high-skilled preparers: 40 to 50 +

Franchises have a certain clientele but reduced compensation compared to private practice.

Accounting Firm Employee

Preparers are usually hired either on a seasonal basis or permanently by CPA firms or tax firms.

Expect:

• Competitive pay
• Professional environment
• Consistent workload
• Promotional opportunities

The salaries are between $20-$45 an hour, and specialists are paid more.

Self-Employed or Independent Tax Preparers

The earning potential of this group is the greatest.

Benefits include:

• Setting your own prices
• Building recurring clients
• Providing year-round services
• Flexible schedule

Self-employed preparers may find it easy to earn $80,000-$150,000+ per year with a large client base, particularly those who deal with small business clients.

Earnings by Credential or Certification

Tax preparers do not necessarily require credentials, but certifications are a much better indicator of a higher income.

Non-Credentialed Tax Preparers

Such professionals make simple returns and can be employed in franchises or operate their practice.

Typical earnings:

$15-$35 per hour or $20,000-$60,000+ per year

Enrolled Agents (EAs)

Enrolled Agents are the federally licensed IRS, and they have the right to represent a client during an audit or an appeal.

Typical earnings:

$60,000-$120,000 per year

The best EAs who have business clients can make over $150,000 a year.

Certified Public Accountants (CPAs)

The tax preparation industry is the most profitable sector that CPAs are set to gain.

Typical earnings:

$70,000-$150,000 per year

Partners and owners of firms can surpass $200,000 and above.

Tax Attorneys

They deal with legal tax issues, which are complex.

Typical earnings:

$100,000-$200,000+ annually

Seasonal vs. Year-Round Income

The number one question that has been posed is whether tax preparers have the opportunity of making a full-time income.

Seasonal Income

Tax season normally begins in January and continues to April; most of the preparers work long hours only during this season.

A seasonal preparer may carry in:

• $10,000-$25,000 for beginners
• $25,000-$50,000 for experienced preparers
• $50,000+ for specialized preparers

Year-Round Income

To make a living between tax seasons, preparers can sell:

• Bookkeeping services
• Payroll management
• Tax planning
• IRS notice assistance
• Business consulting

The introduction of these services brings about stability, and it also leads to large growth in annual revenue.

Increasing Your Earnings as a Tax Preparer

To gain maximum income in this sphere, you should take into consideration the following strategies:

Get Certified

Being an EA or CPA will instantly boost your rates and marketability.

Specialize in High-Value Tax Areas

Examples include:

• Small business taxes
• Real estate investors
• Truck drivers
• Gig workers
• High-net-worth individuals

Build Year-Round Services

Providing bookkeeping or payroll has the potential to make seasonal clients monthly income.

Professional Tax Software

The better your tools, the more quickly you work, and the more clients you can serve.

Market Your Services

Create an online presence, solicit referrals, and network with small business owners.