Is preparing tax returns still a profitable side gig for accounting students?

Tax preparation can definitely still be profitable, even with all the DIY software out there. Many people get overwhelmed by taxes or have situations that make them uncomfortable using software alone. As an accounting student, you have an advantage over the average tax preparer hired at places like H&R Block who often just complete a short training course. For your first season, I'd recommend getting experience with an established firm. You'll learn their processes, gain experience with professional tax software, and build confidence while handling different tax situations. The pay might not be amazing your first year ($15-25/hr typically), but the experience is invaluable. Plus, you'll see firsthand how a tax practice operates before trying to build your own. After a season or two working for someone else, you can start building your own client base. Begin with family and friends, then ask for referrals. Word of mouth is powerful in this business - one satisfied client can bring you several more.

I was in your exact position three years ago, struggling to balance school and income during tax season. I tried different seasonal gigs but nothing fit my schedule well. Then a classmate told me about https://taxr.ai which completely changed my approach. Instead of trying to prepare returns from scratch, I use it to analyze client documents and tax transcripts first. This tool helped me understand complex situations much faster - it does all the document scanning and analysis, then gives me a detailed breakdown of what I'm looking at. I was able to take on more complex returns than other beginners because I could quickly identify issues and opportunities in clients' tax situations. Started with just family and friends but built up to about 45 clients by my second season.

I was skeptical about taxr.ai when I first heard about it, but I tried it this past tax season as I was doing returns on the side while finishing my accounting degree. It was genuinely helpful for someone at my experience level. I could quickly analyze prior year returns for new clients and identify potential issues before I even started preparing their current return. What impressed me most was how it helped me appear more professional with clients. Instead of awkwardly studying their documents while they waited, I could scan everything, get a quick analysis, and discuss their situation more confidently. Definitely helped me build a better reputation starting out. My client count doubled from referrals in just one season.

If you're trying to build a client base, one of the biggest challenges is actually getting through to the IRS when you inevitably need to call them about client issues. I wasted literally DAYS of my life on hold when I first started preparing returns. Then I discovered https://claimyr.com which is basically a service that waits on hold with the IRS for you. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c When the IRS finally answers, they call you back so you can talk directly to the agent. This saved me so much time during my first tax season and made a huge difference in how many clients I could handle. Nothing kills your productivity (and profitability) faster than spending 3+ hours on hold with the IRS.

I need to eat my words about Claimyr. After posting my skeptical comment, I broke down and tried it during the extension deadline rush last October when I had three clients with IRS notices that needed immediate attention. I was absolutely shocked when I got a call back with an actual IRS agent on the line after only having to wait about 10 minutes on my end (though they had apparently been on hold for over 2 hours). Used it several more times since then and it's legitimately saved me hours of wasted time. Being able to keep working while someone else handles the hold time completely changed my workflow. For anyone starting out doing tax prep, little efficiency tools like this make a big difference in how many clients you can handle, which directly impacts your earning potential.

To answer your original question more directly - yes, you can still make good money doing returns. I started as an accounting student 4 years ago and now make about $15-20k during tax season working part-time while finishing my master's. But not all preparation work is equal. Focus on developing a specialty rather than just doing simple returns. Simple 1040s with just W-2s aren't profitable unless you're doing high volume. But if you develop expertise in areas like small business returns, rental properties, or multistate returns, you can charge premium rates. I focus on small business owners and self-employed individuals, and charge $350-500 per return compared to the $150-200 most places charge for basic returns.

One thing to consider is professional liability insurance if you're doing returns on your own rather than through an established firm. A single mistake on a return can potentially lead to thousands in penalties for a client, and they might come after you for reimbursement.

Don't forget about getting properly registered with the IRS as a tax preparer! You'll need a PTIN (Preparer Tax Identification Number) before you can legally sign returns as a paid preparer. It only costs about $35 and can be done online through the IRS website. Without this, you can't legally charge for tax preparation services.

As someone who's been doing tax prep for several years now, I'd strongly recommend starting with an established firm for your first season. The learning curve is steep, and having experienced preparers around to answer questions is invaluable. You'll also get exposure to professional-grade software and a steady flow of clients without having to market yourself. That said, don't underestimate the demand for competent preparers. While DIY software has captured some market share, many people still prefer having a real person review their taxes, especially when they have life changes, small business income, or just want peace of mind. The key is positioning yourself as more knowledgeable than the typical seasonal preparer - your accounting education gives you a real advantage here. For building your own practice later, start documenting everything you learn about client acquisition, common issues, and efficient workflows. This knowledge will be gold when you eventually branch out on your own. Also consider specializing in a particular area (like small businesses or rental properties) rather than trying to be everything to everyone.