Understanding The Differences Between Tax Accountant Jobs

Because so many different tax accountant jobs exist, challenges abound when determining in what direction to take an accounting career. It’s critical from the outset to weigh the differences between financial accounting and tax accounting. In financial accounting, several components are considered, including investments, both taxable and non-taxable deductions, accrual, cash, and expenses. In tax accounting, only the methods required for reporting on an IRS return are used because the focus is on taxable income for business or personal expenses. Financial accounting gives a wider perspective on how a business is faring; however, the complexities of it can make the work tedious and difficult. On the other hand, keeping financial accounts based on tax status streamlines the process for those who work in or advise businesses.

One big advantage to tax accounting is the abundance of concrete rules by which to abide. True, much information and systems must be memorized, but it remains clearer at any point throughout a year where one stands in regards to taxable income. Another benefit to tax-based accountancy is that accrual basis reporting is unnecessary in most cases—except in the one exception: if the business is reported on a return as an accrual-basis taxpayer.

Interestingly, definitions sometimes differ between these two subcategories. For example, the common accounting word “depreciation” means something different in each method. More specifically, tax accountant jobs require individuals to understand the Modified Accelerated Recovery System (MACRS), which uses declining percentages that are defined by the IRS, and not GAAP.

IRS rules govern tax reporting and can be best addressed with accountants and firms like KPMG that focus on tax accounting and issues. This means businesses will benefit from understanding what the laws are and how to comply—because advice from our professionals is invaluable considering the constant flux of laws and regulations. If a rule is disregarded or used incorrectly, a company can be charged large fines and/or penalties. In addition, the most commonly taxed items are financial transactions that result in a company's value increasing.

Financial accounting and tax accounting are two very different sides of accounting, and each has their own benefits and complexities. Tax accounting does ensure a clearer view of how one is performing in regards to taxable income and revenue, and it’s subject to constantly revised regulations imposed by Congress and the IRS.

By: Big4.com

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Kristy Short www.Big4.com/ Currently, Big4.com, a website focused solely on available positions at the Big Four accounting firms, lists 300+ job openings for KPMG.