How Much Money Does a Tax Return Preparer Make?

As much as he or she can earn. Earnings and profits are directly related to the value your clients receive from you.

It also depends a lot on the following factors:

• Do you work full or part time; year-round or seasonally?
• Do you specialize or are you a generalist?
• Do you charge what you're worth?
• Do you follow the 80/20 rule and weed out less profitable clients?
• Do you stay on the cutting-edge of knowledge?
• Do you use the value-based pricing model?

If you work all year round, specialize in a good niche, charge what you're worth, fire the least profitable 20% of your clients each year, and stay on the cutting edge of knowledge in your niche, you can make a lot of money.

At a seminar I met a return preparer who...
Click here to learn more about the earning potential of tax return preparers.

Pricing Your Tax Preparation Services

Many tax preparers don't charge enough for their services. A tax return preparer has two things to sell: time and value.

Pricing Your Time

Time is extremely limited. There are only about eight hours in an honest working day, and part of those hours are spent doing mundane office administration that you can't charge anyone for. So you're lucky if you can bill six hours out of eight.

When you quote hourly rates to most people, the first thing they'll do is compare your rate to what they earn on their job. If they earn $25 per hour and you quote a rate of $175 per hour, it can be sticker shock for most folks. It's often better to quote a fixed fee up front, so there are no surprises.

Value Billing

Value, on the other hand, can be priced much higher than time. Let's say you have an hour-long meeting with a client, and after looking over their information and interviewing them, you discover a way to save them $3,500 in taxes each year over the next 5 years. That's a total savings of $17,500. How much are you going to charge them for that?

Click here for some ideas on how much to charge for your tax return preparation services.

Competing Against TurboTax and DIY Software

Today the same powerful, feature-rich tax return preparation software that is used by seasoned professional tax preparers is available to the do-it-yourself preparer. How can a preparer compete against this? Doesn't this make everyone an expert?

Does having a stethoscope and a tongue depressor make you a doctor? No.

And here's an appropriate observation from the world of fashion: "Just because they make it in your size doesn't mean you should wear it."

In other words, just because the software is available doesn't mean everyone should be using it to prepare their returns.

Click here to learn more about competing with the DIY tax return software.

What Kind of Education is Required for Tax Return Preparers?

The more you learn about tax laws and regulations and how to apply them to help your clients, the more money you will make. Don't skimp on educating yourself. Constantly improve.

If you hold an Enrolled Agent or CPA license, you will be required to take a certain number of "continuing professional education" hours of coursework. As a CPA you'll need 80 hours every two years. As an Enrolled agent you'll need 70 hours every three years. The courses you take will have to be approved by the authorities that regulate your license.

If you are not taking courses to maintain your license, you should still pursue education and training. Education is directly related to your earning potential.

You don't have to spend a lot of money. There are plenty of books and websites you can read to improve your knowledge and abilities for very little money.

Click here to learn more about what you'll have to study to be a tax preparer.

The Future of Tax Preparers Looks Bright

The future for tax return preparers looks very bright. This, in my opinion is a sad commentary on the state of affairs in the USA, that so much money is spent calculating and collecting taxes, which are largely wasted and diverted for political gain.

I don't make the rules and neither do you. And we don't have to like the rules or agree with them. But we have no choice but to play by the rules. If you don't know the rules, you get owned.

Dealing with taxes is much like dealing with the weather. If you don't want your picnic to be ruined, if you don't want to get caught in a storm just as you leave for work, if you don't want to get stuck in a snow storm without a coat, you have to know what is in the weather forecast. Same with taxes.

The three major financial factors in our lives are:

• Taxes
• Inflation
• The cost of money (interest rates)

Click here to find out why I think the future of certain tax preparers is so bright.