As the tax deadline approaches, you may be picturing your tax accountant holed up in his or her office behind stacks and stacks of papers. In this scenario, the bleary eyed tax accountant hasn’t slept in days. He or she is well into their fifth cup of espresso for the day leaving coffee rings on tax statements as the only thing to show for. That is what we picture accountants around tax season to look like, right? Sleep deprived, working around the clock, number crunching zombies? These tax accounting expectations may just be that—something we expect to happen but in reality, it may be more stereotype than reality.
Expectations of Tax Accountants:
Many expectations of a tax accountant are similar to the image painted above. But you may also have the following expectations:
- Tax accountants are math geniuses: If you work with taxes, you have to be a math guru to be able to “crunch the numbers” as they say.
- Tax accountants have a boring job: Working with numbers and inputting figures all day isn’t for everyone, some may say working with numbers is the best way to get a good nights sleep!
- Tax accountants are only busy during tax season: Considering majority of people must file taxes by the April 15th deadline, tax season is known as the “busy season.” No one seems to really understand what tax accountants do during the remaining months of a year.
- Tax accountants are easy to get in touch with: As a client, we are paying for a service. We expect to be able to quickly schedule appointments and communicate back and forth with the representative.
Realty of Tax Accountants:
Although we have the above expectations of tax accountants, you may be surprised by the reality of the profession.
- Tax accountants are not necessarily math geniuses: It’s easy to see how tax accountants may be associated with being number whizzes, but thanks to 21st century technology, they really rely on software such as Microsoft Excel to do the actual crunching of numbers. Accountants plug the information into a spreadsheet and a formula does the work on their behalf.
- Tax accountants actually have an exciting job: Although not everyone enjoys numbers, tax accountants help individuals and businesses daily which is very fulfilling. Tax accounting is also seen as a very reputable and respectable profession.
- Tax accountants stay busy throughout the year: Yes, tax season may be their busiest time of year, but that doesn’t mean the other 9 months out of the year are a snooze fest. Many tax accountants work with businesses to provide financial guidance and bookkeeping services year-round.
- Tax accountants are not always on speed dial: Although we can call or email the tax accountant, many offices utilize secretaries or receptionists who do most of the communication on behalf of the accountant. This can create a little bit of back and forth when working together. Also, during the busy tax season, if you don’t schedule your appointment early, it may also be weeks before you can get one scheduled.
Expectations of Tax Accounting:
In addition to having expectations regarding an accountant, many people also have assumptions of the tax accounting process:
- Many people often expect that they are guaranteed to owe money while others feel like they are guaranteed to get a refund: The ultimate goal when filing for taxes is to not owe money but also not get a return either. This would mean you didn’t overpay the government in taxes throughout the year but that you paid exactly enough.
- People often think it is best to wait as long as possible to file for taxes because they fear they will have to owe money: If you are going to owe money, you will owe whether you file for taxes early or at the last minute. It is actually best to file for taxes as soon as you get all of your documentation together due to an increase in tax identity theft.
- Tax identity theft is on the rise. This occurs when someone fraudulently files for taxes using someone else’s’ social security number to get a return. Many people won’t know they are a victim of tax identity theft until they file for taxes and discover a return has already been submitted under their social security number.
What is the Reality of Tax Accounting? A Summary of Filing for Taxes:
Tax accounting is a branch of accounting which relates to tax preparation and filing tax returns. If you are looking for simple information regarding taxes and tax jargon, investopedia.com is a useful resource to learn the basics.
Tax accountants focus on specific variables when completing tax returns which will determine if you owe taxes or will get a refund:
1. Deductions:You can do standard deductions or itemized deductions. It is recommended to use the deduction option that benefits you the most.
- Standard: Standard deductions are a flat rate that is provided based on the status of how you are filing for taxes.
- Itemized: You can choose to itemize your deductions if it is greater than the standard option. There is a large amount of possible itemized deductions with a few of the most common examples being:
- Mortgage Interest
- Medical Expenses
- Donations to Charities
- Property Taxes
2. Income: Taxable income must be reported to the IRS when filing taxes. Some common taxable income includes:
- W-2 Wages or Salary
- 1099 Independent Contracts
- Gambeling Prizes
3. Tax Credits: Similar to deductions, tax credits help to cancel out what you may owe on your taxes. The most well known tax credit is what you earn for taking care of a child/minor. A more up and coming tax credit (depending on your state) may be given for owning an electric vehicle.
Now that you understand the reality of tax accounting, it is important not to let your misconceptions hinder you from making the best decision possible when it comes to your taxes and finances. To get the most accurate return, it is important to seek guidance from a professional tax accountant if needed. The reality is, taxes can be overwhelming and sometimes scary to face but it is something we are all required to do. Know the process inside and out and soon the reality of taxes will be easy and simple!