Soon after the calendar turns to a new year in January, tax season begins. Whether you're a W-2 employee or a freelancer or gig worker, you likely have to file a tax return in the U.S. You can prepare your own tax returns, but plenty of people hire a professional to prepare their taxes. Here's how much a tax preparer makes.
The average hourly wage for tax preparers ranges a bit across different regions of the country and depending on the specific services they provide. Although you can get your taxes done for free in some cases, that doesn't mean the person doing the work won't get paid.
How much does a tax preparer make?
According to the U.S. Bureau of Labor Statistics, the mean annual wage (average yearly salary) of tax preparers is $51,080. The mean hourly wage is $24.56. That goes for those who prepare tax returns for individuals and small businesses, but doesn't include accountants and auditors.
Since the $51,080 salary is an average, here's how that plays out among the various tax preparers in the nation. BLS data shows that the bottom 10 percent of tax preparers make $11.51 per hour or $23,930 per year. On the other hand, the top 10 percent make $41.09 per hour and $85,470 per year.
Where do tax preparers make the most money?
As with any job, the salary varies depending on your location. Generally, states with a higher cost of living also have higher wages. The BLS data for tax preparers indicates that the top paying states are Alaska, Colorado, Massachusetts, California, and Texas.
Here's the average hourly and annual pay for those five states:
- Alaska: $38.80 hourly and $80,710 annually
- Colorado: $32.51 hourly and $67,620 annually
- Massachusetts: $30.27 hourly and $62,970 annually
- California: $28.91 hourly and $60,140 annually
- Texas: $28.55 hourly and $59,380 annually
The five states with the highest employment level as a tax preparer are Texas, California, Florida, New York, and Pennsylvania.
Can anyone prepare a tax return?
You may be wondering, can anyone prepare a tax return? There are a few answers to that. First of all, anyone can prepare their own taxes, but if you have a more complex tax return, it's important to hire a tax professional. The IRS notes that anyone can be a tax preparer for others if they have an IRS Preparer Tax Identification Number (PTIN).
Some of the job titles of people who can prepare tax returns include certified public accountants (CPAs), enrolled agents, and attorneys. However, it's possible to become a tax preparer by applying for a PTIN through the IRS and be self-employed. If you're deciding who to hire to do your taxes, be sure to look into the services and guarantees they provide as well as their credentials.
What's the best industry to work in as a tax preparer?
There are a number of different industries you could work in as a tax preparer. Tax preparation might not be your only job responsibility in various industries.
According to the BLS, both the highest levels of employment and the highest concentration of employment for tax preparers are in the following industries:
- Accounting, Tax Preparation, Bookkeeping, and Payroll Services
- Management, Scientific, and Technical Consulting Services
- Securities, Commodity Contracts, and Other Financial Investments and Related Activities
The industries that pay the best for tax preparers likely include other tasks besides tax preparation. Here are their mean annual salaries:
- Management of Companies and Enterprises: $74,660
- Legal Services: $70,260
- Insurance Carriers: $70,220
- Securities, Commodity Contracts, and Other Financial Investments and Related Activities: $69,160
- Management, Scientific, and Technical Consulting Services: $69,060