How much money do tax preparers make? The answer is more complicated than it seems.
Tax preparation is a seasonal trade, and there is very little consistency from one year to the next, causing many tax professionals to search for alternative ways to steady their income long after that final deadline to file.
Even when tax season is in full swing, tax preparers are forced to compete with the ever-increasing popularity of online services like TurboTax and TaxSlayer.
When your tax preparer salary depends on your ability to find new clients (and hold on to the ones you already have), the rise of a multi-billion dollar industry designed to steal your current clientele is more than a little problematic.
So, how do you compete with something that many would-be clients already believe to be a smarter, more affordable option? First, it’s helpful to understand how these companies became so powerful.
How Online Tax Preparation Became The New Normal
The evolution of tax preparation, from hiring a real person with an accounting degree to using paid tax software to keep the IRS at bay, didn’t happen by accident. In fact, companies like Intuit and H&R Block have a lot to do with why taxes are so difficult to file in the first place.
A lot of what people plan to include on their tax forms has already been reported by their employers or other organizations. In countries like Japan, Israel, Britain, and Sweden, the government fills out your tax documents with the information they already have and sends them to you for review.
In America, however, the major players in online tax preparation spend millions of dollars lobbying Congress to prevent this from happening here at home. This is technically good news for tax preparers with the expertise needed to navigate current tax laws and maximize returns, but only if you can convince your clients that you’ve got something to offer that tax preparation software doesn’t.
What Tax Preparers Offer That Online Services Don’t
In 2016, nearly 132 million Americans filed their taxes using tax preparation software. What’s the catch? 79 million of those returns were completed by tax professionals.
A computer algorithm can only do so much. It doesn’t understand the nuances of more complex tax laws or how to capitalize on them. More importantly, it doesn’t always know how to anticipate red flags or deal with the IRS when something goes awry. The reality is, when someone chooses a professional tax preparer over an online service, they get:
- The potential for a larger return
- Added protection against IRS audits
- More free time and greater peace of mind
- Personalized service and a friendly face
While it is entirely possible to compete with online services by making your clients more money and keeping them out of trouble, this largely applies to businesses or individuals with complex tax situations. There is, however, something you can offer lower-income clients that will make them loyal to your business for years to come, something no tax preparation software ever could: financial security.
How To Boost Your Tax Preparer Salary by Offering Credit Repair Services
There are plenty of opportunities for tax preparers to supplement their income in the offseason, but how do you offer your current clients enough value to keep them coming back to you when taxes are due?
By providing credit repair services, you can improve your clients’ long-term financial standing. When you help them reduce their debt, increase their savings, and improve their borrowing potential, you do a lot more than help them through another tax season, you:
- Reduce customer churn
- Increase potential commission
- Increase referrals
- Create a new revenue stream (year-round)
So, how much can you make as a tax preparer? That depends on what you are willing to do to set yourself apart from the crowd. There is no end in sight for some of the most prominent online tax preparation services but there is plenty you can do to keep your clients loyal.
Click here for more tips on how to maximize your tax preparer salary in the offseason!