The most important part of registered tax return preparer work is awareness of basic tax rules for various situations. Memorizing every detail in the income tax code is not only impossible but also unnecessary. Occasional research of exact information is routine in a tax preparation career. This is especially true because so many figures are adjusted for inflation and change annually. Plus, new tax rules are introduced every year.
Taxpayers do not expect someone who has passed the tax preparer test to suddenly know every tax fact. But, tax practitioners must have sound familiarity with the types of taxable circumstances they are reporting for clients.
For example, before tackling Schedule C, a tax preparer must know some general rules about depreciation of capital assets and separate reporting of home office expenses on another form. Likewise, tax professionals working with farmers should know their way around Schedule F and have solid understanding about various types of agricultural income.
The purpose of tax preparer training is providing a well-rounded base of knowledge. Tax practitioners have to comprehend what tax rules are applicable in a variety of circumstances. They learn to recognize potential errors or omissions. Using reference materials to double check and verify exact tax calculations is common.
Clients do not mind being informed that a trained professional must sometimes conduct research to assure accuracy. In fact, such cases are opportunities for tax return preparers to demonstrate their commitments to precision.
One of the potentially troubling situations for tax preparers is over reliance on tax preparation software. Computer programs do permit insufficiently trained professionals to make mistakes. Tax software will, for example, allow entry of home office expenses directly on Schedule C or deduction of the same expense on multiple forms.
The slightest keypunch error can significantly alter a tax return calculation. Tax pros with plenty of experience and ongoing tax CPE courses possess the ability to locate errors. They also have the training to look up details needed to make corrections.
Every tax practitioner has limits of knowledge. They key to successful tax preparation careers is understanding limitations. Regardless of experience, room for improvement always exists. Every tax professional should take continuing education courses covering areas of weakness. In addition, maintaining a well-stocked collection of reference materials is certain to render benefits.
IRS Circular 230 Disclosure
Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.