How Much Money You Can Make Preparing Tax Returns Part-Time
"Learn to prepare income tax returns, you can make an extra $40,000 in ONLY three days, working only two hours per year!!!"
But of course that's not how life works and we are not here to propagate any bogus sales pitches like that. As you may have noticed, there is no shortage of competition in almost any field these days, and consumers are extremely value-conscious always wanting to get the best deals, so you definitely have to work hard for what you get in the tax business as in other fields.
Nevertheless, there are some jobs out there that can enable you to make good money without committing to full-time work. Tax preparation, as it happens, is one of the professions that is most hospitable to part-time workers.
In this article, we'll tell you without any B.S. how much money you can expect to make as a part-time tax preparer, and we'll give you some tips about how to maximize your part-time tax preparation pay.
Your First Year as a Part-Time Tax Preparer
When you're a first year tax preparer, you need the experience of doing tax returns and dealing with clients, so you should ideally work full-time during tax season in your first year. There is so much learning that goes on during that first tax season if you can get a good teacher/mentor.
That being said, some new tax preparers are only able to work part-time because of other obligations. (You can still try to work 40 hours per week when it's really busy, though.) Maybe you have another full-time job and you are looking to make extra money on the side.
This is doable. From experience, we would say that you can expect to make about $3,000-$5,000 as a part-time tax preparer, during your first tax season. If you are good, you can probably make like $7,000, but that would probably be on the high end for a part-time tax preparer.
Typically, a tax preparation company with enough clients to support paying a new tax preparer $7,000 for a month or two of work will give the clients to the tax preparers who are there full-time, because these tax preparers may have seniority or be more schooled in the tax laws.
Realistically, if you're a first year tax preparer working 2-3 days per week, or 15-20 hours per week if you want to look at it like that, you can expect to make around $3,000-$5,000 per tax season.
Your Second Year as a Part-Time Tax Preparer
If you decide to work part-time during tax season again for a second year, this year will be crucial to your long-term earning power. There are several factors that can impact your ability to earn extra money doing taxes in this crucial second year:
The company you work for, do they pay commission, hourly, what is the pay mechanism?
Are there established senior tax preparers who are taking the bulk of the clients?
Are there enough new clients coming into the firm for you to have a shot to pick up new clients that don't already have a favorite tax preparer at the firm?
Are you receiving good training even when you're not doing actual tax returns, are senior tax professionals helping you prepare for your chance when you do get a new client that has some tax issues to handle and is therefore a valuable client to serve?
Are you in a positive office environment? Do you like and respect the people you work with?
Are you eligible for an end-of-tax season bonus?
What hours are you working? Nights, mornings? Weekends? Weekends are usually the busiest days for tax preparation.
Needless to say, there can be plenty of variables that affect your ability to make money part-time as a second year tax preparer!
In our experience, though, to put some hard numbers to a somewhat fuzzy and variable scenario, a capable second year, part-time tax preparer can expect to make $5,000-$10,000 during that second tax season. That's assuming 2-3 days per week, 15-20 hours per week, more hours during "peak times" such as February and April, and this is also assuming that you are working for a halfway decent company that tries to give you opportunities.
Your Third Year as a Part-Time Tax Preparer
By your third tax season, you should have a pretty good idea what you can expect to earn working as a part-time tax preparer, and hopefully you will have started to establish yourself among the clients that you serve.
Of course you can still earn more money each year working part-time, but it's hard to earn a LOT more unless you're working full-time for at least a few tax seasons. It's tough to pick up a ton of new clients each year unless you're widely available January-April and working pretty much all the time during those months.
Many clients always want to feel like they are bringing their tax return to someone who is the "consummate professional," and part of being professional is being present.
In our experience, a third year part-time tax preparer should make $7,000-$12,000 per tax season, working around 20 hours per week on average. A mediocre tax preparer at a mediocre company will of course earn less than that, but a good third year part-time tax preparer should definitely be able to pull at least $8,000 of each tax season.
If you're a third year part-time tax preparer and you're making less than $5,000 per tax season, it may be time to either hang up the keyboard or at least take a hard look at what you can do to grow your client base.
Other Factors to Consider Working Part-Time During Tax Season
A couple other factors that should be considered, when you look at these numbers, is how many hours it requires to make extra money doing people's income taxes, and how consistently you can rely on this money coming in every year.
Consistency of income is definitely a plus and the tax biz has that. Over the years, tax season has been one of the most "recession-proof" things in the world. And it's hard to think how that would totally go away, considering that people are always looking to protect their money in one way or another from the perpetual funding needs and general voraciousness exhibited by the various taxing authorities.
So in this sense, $7,000 per year that you can count on may be more desirable than $40,000 in "real estate riches" that may or may not materialize, and even if they materialize one year, may not materialize the next year.
Keep in mind, too, that working part-time during tax season may enable you to receive unemployment income during the off season months, so this may allow you to add on a few thousand dollars per year of tax preparation-related income.
On an "hour for hour" basis, then, your hourly rate as a part-time tax preparer may be quite high relative to other employment options you may have.
Lifestyle is also important. Many tax employers are fairly flexible as far as if it's not busy that day, you can feel free to take off. Some part-time tax preparers we know only work 2-4 weeks per tax season, just when it's very busy, to pick up that extra $3,000-$5,000.
So let's say you're a part-time tax preparer with decent knowledge and experience. If you work 100 hours and make $5,000, that's a pay rate of $50 per hour. That's not too shabby for part-time work.
This ability to work part-time and have a flexible schedule while still making decent money is one reason why we feel like semi-retired seniors, college students, and stay-at-home moms or dads are three groups that can benefit from taking Pronto Tax Class.
In summary, that is the low-down on how much money you can expect to earn preparing tax returns part-time during tax season. For information about earning potential for full-time seasonal tax preparers, visit our page about how much money full-time tax preparers can make, but here, again, are the "ballpark" figures for a good part-time tax preparer:
First year, $3,000-$5,000.
Second year, $5,000-$10,000.
Third year, $7,000-$12,000.
When you consider that if you work at least three tax seasons, that should bring in at least $15,000 of income, on the low end, and then you consider that you can take and pass Pronto Tax Class for as little as $137, well then the product kind of starts to sell itself, no?
Sorry for the shameless sales plug, but you know we had to do it! :)
Register for Pronto Tax Class now to explore your options for making money as a part-time tax preparer.