What Does a Tax Analyst Do?
Find out what a tax analyst does, how to get this job, and what it takes to succeed as a tax analyst.
Tax analysts are responsible for analyzing and interpreting tax laws, regulations, and policies. They commonly work with a team of other tax professionals to ensure that their company is in compliance with all relevant laws and regulations.
Tax analysts may also be tasked with providing advice or guidance on specific tax issues or questions from individuals within the organization. This might include helping employees understand how certain aspects of their compensation package will be taxed, explaining how changes to tax policy will affect them, etc.
Tax Analyst Job Duties
Tax analysts typically have a wide range of responsibilities, which can include:
- Calculating payroll taxes, including federal and state income tax withholdings, FICA contributions, and other withholdings such as federal and state unemployment insurance taxes
- Performing audits of individuals or businesses to ensure compliance with tax laws and regulations
- Preparing tax returns for individuals or small businesses using computer software such as TurboTax or TaxCut
- Reviewing financial records to determine if they are accurate and complete
- Researching tax law changes and advising colleagues about how new laws affect their work
- Preparing tax returns for individuals or small businesses using computer software such as TurboTax or TaxCut
- Identifying potential tax issues for individuals or businesses and making recommendations for resolving them
- Identifying non-compliance with tax laws and recommending corrective action
- Reviewing applications for tax exempt status from charitable organizations and other nonprofit entities
Tax Analyst Salary & Outlook
Tax analysts’ salaries vary depending on their level of education, years of experience, and the size and industry of the company. They may also earn additional compensation in the form of bonuses.
- Median Annual Salary: $70,500 ($33.89/hour)
- Top 10% Annual Salary: $102,000 ($49.04/hour)
The employment of tax analysts is expected to decline over the next decade.
The need to automate tax analysis and collection processes will limit employment growth for tax analysts. Software automation will allow tax departments to process more information with fewer workers. In addition, the use of big data and analytics will allow tax departments to analyze large amounts of data and make better decisions.
Related: Tax Analyst Interview Questions and Answers
Tax Analyst Job Requirements
Tax analysts typically need to have the following background:
Education: Tax analysts typically need a minimum of a bachelor’s degree. Many employers prefer candidates who have a master’s degree in accounting or business administration with a concentration in taxation.
Some universities offer bachelor’s degrees in taxation, which include courses in accounting, business and economics.
Training & Experience: Tax analysts typically receive on-the-job training after being hired. This training may include learning the company’s specific software and procedures. It may also include shadowing a current employee to learn the basics of the job.
Certifications & Licenses: Certifications allow professionals to prove their qualifications and increase their earning potential. Tax analysts can earn certifications to gain more theoretical and practical knowledge of their responsibilities and further their career advancement opportunities.
Tax Analyst Skills
Tax analysts need the following skills in order to be successful:
Accounting skills: Accounting skills are the foundation of a tax analyst’s skillset. They use accounting skills to understand the financial records of companies and individuals. They use accounting skills to calculate taxes and other financial obligations. Accounting skills are essential for a tax analyst.
Communication skills: Communication skills are also important for tax analysts. They use these skills to communicate with clients, other members of their team and other stakeholders. They also use these skills to explain complex financial information in a way that is easy to understand.
Data analysis skills: Data analysis is the ability to interpret data and draw conclusions from it. This is a crucial skill for an accountant, as they need to be able to analyze financial data and determine if it is accurate and if it is being presented correctly.
Financial knowledge: Financial knowledge is the ability to understand the financial aspects of a company. This includes knowledge of how a company makes money, how it spends money and how it generates revenue. Having a strong financial knowledge can help an analyst make better decisions when analyzing data.
Problem-solving skills: Problem-solving skills are essential for an accountant, as they may need to find solutions to financial issues. For example, if a company’s financial records are incomplete, an accountant may need to find a way to fill in the gaps. Similarly, if a company is experiencing financial difficulties, an accountant may need to find a way to help them overcome their challenges.
Tax Analyst Work Environment
Tax analysts work in a variety of settings, including corporate offices, accounting firms, and government agencies. They typically work a standard 40-hour week, although they may have to work longer hours during tax season. Tax analysts typically work in cubicles or small offices and have little contact with the public. However, they may have to travel to meet with clients or attend conferences. Tax analysts must be able to work independently and have excellent analytical and research skills. They must also be able to communicate complex tax information to clients in a clear and concise manner.
Tax Analyst Trends
Here are three trends influencing how tax analysts work. Tax analysts will need to stay up-to-date on these developments to keep their skills relevant and maintain a competitive advantage in the workplace.
The Use of Artificial Intelligence in Tax Preparation
The use of artificial intelligence (AI) in tax preparation is becoming increasingly popular as it can help to automate many of the more tedious tasks involved in preparing taxes. This allows tax professionals to focus on more important tasks, such as providing advice and guidance to their clients.
As AI becomes more prevalent in the tax preparation industry, tax analysts will need to learn how to use these tools in order to stay competitive. They will also need to be able to assess the accuracy of AI-generated results and make sure that they are in line with current tax laws.
More Focus on International Tax Planning
Tax planning has become an increasingly important part of business operations for companies that do business internationally. This is due to the fact that there are a number of different ways that businesses can reduce their tax liability by taking advantage of differences in tax laws between countries.
As tax planning becomes more important, tax analysts will need to develop expertise in this area. This includes understanding the various tax laws that apply to different countries and how to structure transactions in a way that minimizes the company’s tax burden.
Greater Scrutiny of Corporate Taxes
Corporate taxes are coming under greater scrutiny from both governments and the public. This is due to the fact that corporations have been able to take advantage of loopholes and other incentives in order to lower their tax bills.
As a result, tax analysts will need to be able to find new and innovative ways to ensure that their clients are paying the correct amount of taxes. This may include developing new strategies for structuring deals or finding new ways to utilize tax incentives.
How to Become a Tax Analyst
A career as an tax analyst can be a great way to start your career in accounting. As a tax analyst, you’ll work with both individuals and businesses to help them understand their tax obligations and find ways to minimize their tax liability.
To become a tax analyst, you’ll need to have a degree in accounting or business administration. You’ll also need to pass the Certified Public Accountant (CPA) exam. Once you have these qualifications, you can begin your career as a tax analyst.
Advancement Prospects
Tax analysts typically start their careers in entry-level positions. As they gain experience and knowledge, they may be promoted to senior tax analyst or manager positions. Some tax analysts may move into supervisory or executive positions in their companies. Others may open their own tax consulting businesses.
Many tax analysts have a bachelor’s degree in accounting, business, finance, or a related field. Some employers may prefer candidates who have a master’s degree in business administration (MBA) with a concentration in accounting or taxation.
Tax Analyst Job Description Example
At [CompanyX], we are looking for a Tax Analyst to join our team. The Tax Analyst will be responsible for preparing and filing tax returns, as well as researching and resolving tax issues. The ideal candidate will have experience in tax preparation and filing, as well as tax research. He or she will be detail-oriented and have strong analytical and problem-solving skills. The Tax Analyst will report to the Tax Manager and will work closely with the Accounting and Finance departments.
Duties & Responsibilities
- Prepare and file tax returns for individuals, businesses, and organizations in a timely and accurate manner
- Stay up-to-date on changes to tax laws and regulations, and ensure compliance with all filing requirements
- Research complex tax issues and develop creative solutions to minimize liability
- Identify opportunities for clients to maximize deductions and take advantage of tax incentives
- Negotiate with taxing authorities on behalf of clients to resolve disputes
- Maintain complete and accurate records of all tax-related transactions
- Prepare financial statements and other reports as needed
- Assist clients in preparing for audits by collecting relevant documentation and providing guidance on what to expect
- Represent clients during audits, if necessary
- Manage and train junior staff, as needed
- Stay abreast of industry developments and trends through continued education and professional networking
- Provide expert testimony on tax matters, if requested
Required Skills and Qualifications
- Bachelor’s degree in accounting, finance, or related field
- 3-5 years professional experience in tax preparation and/or analysis
- CPA or CPA candidate preferred
- Proficient in Microsoft Office, with advanced Excel skills
- Strong analytical and problem-solving skills
- Attention to detail and accuracy
- Excellent written and verbal communication skills
Preferred Skills and Qualifications
- Masters degree in taxation or LLM
- 5+ years professional experience in tax preparation and/or analysis
- Experience with tax software programs, such as ProSeries, Lacerte, or TaxWorks
- Working knowledge of federal, state, and local tax laws
- Ability to research complex tax issues