Updated on Monday, March 15, 2021
A tax consultant is a tax expert who can help you with tax preparation, tax laws and other tax-related issues. While filing your own taxes is easy for some, it can feel daunting for others, with tax laws changing every year and one error on your taxes potentially meaning a visit from the IRS.
Working with a tax consultant (sometimes called a tax advisor) can help to minimize your tax liabilities, saving you from paying more than necessary on your tax returns. In this article, we cover what a tax consultant does and when you might want to hire one.
A tax consultant advises people and businesses on federal and state tax law and liabilities. Each tax consultant has different specialties and a range of responsibilities, including:
Tax consultation experience is not universal. You may find one person who has more experience in serving businesses while others specialize in helping individuals prepare taxes.
|Tax Consultant vs. CPA: How They Compare|
|Advises on long-term planning, like estate planning and related estate taxes||Limited knowledge of estate and financial planning, if any|
|Can assist in filing taxes, among other tasks||Mostly handles tax preparation and little else|
|Extensive knowledge of tax law||Tax law not required but decent knowledge of accounting laws and practices as a whole|
|No continuing education required||Annual continual educated courses required to keep a CPA license|
Whereas CPAs are mainly focused on tax preparation, tax consultants are experts in tax-related laws and practices. They can give expert advice on how taxes can impact you and your family in the short and long term, like estate planning and investing.
Tax consultants usually have a degree in accounting or something similar. While thereâ€™s no formal tax consultant certification like there is for a CPA, some advisors may go on to get a Master of Science in Taxation. There are also professional designations for tax advisors, like the Accredited Tax Consultant credential. The best tax consultants have financial education and tax experience to serve in these roles.
Tax consultants can also be CPAs. Certified Public Accountants have to complete a minimum number of credit hours, work experience and pass the CPA exam. CPAs are required to take annual tests to keep their licenses. Tax preparers arenâ€™t required to get a CPA license, but itâ€™s beneficial for them to have the extra level of expertise that comes with it.
If youâ€™re struggling to do your taxes by yourself or find that new tax laws are confusing, you might benefit from using a tax advisor. But for some people, using a tax preparer, tax counselor or CPA would be enough.
You might need a tax advisor if you:
Not everyone needs a tax consultant. If you donâ€™t fall into any of these major categories, you may want to seek out other tax professionals for help.
How much you pay for a tax consultant varies greatly by the work you need, the advisorâ€™s level of proficiency and where you live. The average rate accountants charged to file individual federal and state tax returns was $158 an hour in 2019, according to the National Society of Accountants.
Some average fees for various services that tax consultants provide are:
Many professionals offer free consultations to see if you should work together. Take advantage of these consultations to see if a tax consultant is the right fit.
If youâ€™re looking for someone to help you file taxes, you may qualify for free tax preparation or you can hire an accredited professional to help.
Taxes arenâ€™t fun for most people. If you can get the help you need through a tax preparer or even a trusted relative, you might not need to pay a lot â€” if any at all â€” to file your taxes. You can also find an enrolled agent, or someone whoâ€™s passed the IRS taxation test. But if you need more help than what theyâ€™re willing to offer, you may want to find a tax advisor.
Hereâ€™s where to look if you do decide you need a tax advisor:
When youâ€™re looking for a tax consultant, ask friends for references. Read up on testimonials from former clients and look at reviews of their work, if available. Also verify if they are up to date on their credentials and certifications, like a CPA license.
Finally, itâ€™s important to discuss, up front, when the consultant will return all of the necessary documents related to your tax returns. If your tax information is not returned, you run the risk of someone committing tax fraud under your name.