Tax Preparers: Salary Overview
Tax preparers help their clients file their income tax returns.
They may work with individuals or small businesses.
Tax preparers meet with their clients to review financial records, complete tax forms, and ensure that the completed forms follow legislation and regulations.
According to the Bureau of Labor Statistics, the mean annual wage for this profession was $49,550 as of May 2019.
The median annual wage for this profession (the salary found at the exact middle in the distribution) was $43,080 per year.
Salaries for tax preparers vary depending on a wide range of factors, including the level of experience, education, and region of employment.
The top 10 percent of tax preparers earned more than $87,060 a year while the lowest 10 percent made less than $21,750 per year.
The 25th percentile for the salary distribution is $28,450 per year, which means that most tax preparers (75%) made more than this amount.
Tax Preparer Salary by Experience
Experience can help a tax preparer become more efficient and this will typically increase his/her hourly rate.
According to accounting.com tax preparers with less than 1 year of experience made approximately $11.04 per hour, on average, while the mean hourly rate for tax preparers with 10-19 years of experience was $16.46 per hour.
The mean hourly rate was $12.18 for tax preparers who have between 1-4 years of experience and $15.02 per hour for those with 5-9 years of experience.
The total compensation varies depending on the number of billable hours and a tax preparer with 4 years of experience, for example, can make more than one with 8 or 9 years of experience if he/she has more clients and more billable hours.
Tax Preparers Salary by Industry
According to the United States Bureau of Labor Statistics, there were approximately 66,700 salaried tax preparers in 2019, most of them working for companies that provide accounting, tax preparation, bookkeeping, and payroll services.
The annual mean wage for tax preparers in this industry was $49,230 a year or $23.67 per hour.
Businesses that provide management, scientific, and technical consulting services hired only 560 tax preparers who were paid, on average, with $56,990 per year.
A higher annual salary was reported by tax preparers employed in the field of securities, commodity contracts, and other financial investment and related activities.
In this sector, the mean annual salary for tax preparers was $74,920, higher than the average for all industries.
However, there were only 500 tax preparers employed in this sector, and finding a job as a tax preparer in this field may require special training and a few years of experience in a different sector.
About 170 tax preparers were employed in the field of legal services and were paid, on average, with $59,260 per year.
There are many other factors that determine a tax preparer’s salary.
For example, holding a master’s degree in finance or accounting will help prove your skills to potential clients and increase your earnings.
After gaining a few years of experience as a tax preparer and building a client base you can become a self-employed tax preparer by applying for a preparer tax identification number through the IRS.
Your earnings as a self-employed tax preparer will depend on your skills but also on your communication and marketing abilities.
Commissions, Bonuses and Other Benefits
Some employers also offer bonuses, commissions, and profit-sharing to tax preparers.
According to a report published in May 2020 by payscale.com, tax preparers earned $1,020 on average in bonuses, $2,023 in commission, and $2,035 in profit sharing.
These numbers also vary depending on the tax preparers’ education, experience, and level of skills.
Tax preparers have made between $103-$5,041 in bonuses between $200-$20,161 per year in profit sharing and between $173-$16,281 in commission.
Only 15 percent of tax preparers reported that they have received medical insurance and only 8 percent of them had dental insurance, according to payscale.com.
* Based on information from the May 2019 salary report from the BLS. The figures represent accumulated data for all states of employment for Tax Preparers. BLS data represents averages and medians for workers at all levels of education and experience. This data doesn't represent starting salaries.
* Employment conditions in your area may vary.