diff --git a/src/rubrix/client/datasets.py b/src/rubrix/client/datasets.py
index bed1913c32..c892dd7311 100644
--- a/src/rubrix/client/datasets.py
+++ b/src/rubrix/client/datasets.py
@@ -66,6 +66,14 @@ class DatasetBase:
 
     _RECORD_TYPE = None
 
+    @classmethod
+    def _record_init_args(cls) -> List[str]:
+        """
+        Helper the returns the field list available for creation of inner records.
+        The ``_RECORD_TYPE.__fields__`` will be returned as default
+        """
+        return [field for field in cls._RECORD_TYPE.__fields__]
+
     def __init__(self, records: Optional[List[Record]] = None):
         if self._RECORD_TYPE is None:
             raise NotImplementedError(
@@ -185,9 +193,7 @@ def from_datasets(
         )
 
         not_supported_columns = [
-            col
-            for col in dataset.column_names
-            if col not in cls._RECORD_TYPE.__fields__
+            col for col in dataset.column_names if col not in cls._record_init_args()
         ]
         if not_supported_columns:
             _LOGGER.warning(
@@ -251,11 +257,12 @@ def from_pandas(cls, dataframe: pd.DataFrame) -> "Dataset":
             The imported records in a Rubrix Dataset.
         """
         not_supported_columns = [
-            col for col in dataframe.columns if col not in cls._RECORD_TYPE.__fields__
+            col for col in dataframe.columns if col not in cls._record_init_args()
         ]
         if not_supported_columns:
             _LOGGER.warning(
-                f"Following columns are not supported by the {cls._RECORD_TYPE.__name__} model and are ignored: {not_supported_columns}"
+                f"Following columns are not supported by the {cls._RECORD_TYPE.__name__} model "
+                f"and are ignored: {not_supported_columns}"
             )
             dataframe = dataframe.drop(columns=not_supported_columns)
 
@@ -638,6 +645,12 @@ class DatasetForTokenClassification(DatasetBase):
 
     _RECORD_TYPE = TokenClassificationRecord
 
+    @classmethod
+    def _record_init_args(cls) -> List[str]:
+        """Adds the `tags` argument to default record init arguments"""
+        parent_fields = super(DatasetForTokenClassification, cls)._record_init_args()
+        return parent_fields + ["tags"]  # compute annotation from tags
+
     def __init__(self, records: Optional[List[TokenClassificationRecord]] = None):
         # we implement this to have more specific type hints
         super().__init__(records=records)
@@ -871,8 +884,8 @@ def _parse_tags_field(
         import datasets
 
         labels = dataset.features[field]
-        if isinstance(labels, list):
-            labels = labels[0]
+        if isinstance(labels, datasets.Sequence):
+            labels = labels.feature
         int2str = (
             labels.int2str if isinstance(labels, datasets.ClassLabel) else lambda x: x
         )
diff --git a/src/rubrix/client/models.py b/src/rubrix/client/models.py
index 77e8a3c7e6..0e3e749c3c 100644
--- a/src/rubrix/client/models.py
+++ b/src/rubrix/client/models.py
@@ -331,15 +331,16 @@ def __tags2entities__(self, tags: List[str]) -> List[Tuple[str, int, int]]:
         entities = []
         while idx < len(tags):
             tag = tags[idx]
-            prefix, entity = tag.split("-")
-            if tag == "B":
-                char_start, char_end = self.token_span(token_idx=idx)
-                entities.append(
-                    {"entity": entity, "start": char_start, "end": char_end}
-                )
-            elif prefix in ["I", "L"]:
-                _, char_end = self.token_span(token_idx=idx)
-                entities[-1]["end"] = char_end
+            if tag != "O":
+                prefix, entity = tag.split("-")
+                if prefix == "B":
+                    char_start, char_end = self.token_span(token_idx=idx)
+                    entities.append(
+                        {"entity": entity, "start": char_start, "end": char_end}
+                    )
+                elif prefix in ["I", "L"]:
+                    _, char_end = self.token_span(token_idx=idx)
+                    entities[-1]["end"] = char_end
             idx += 1
         return [(value["entity"], value["start"], value["end"]) for value in entities]
 
diff --git a/tests/client/test_models.py b/tests/client/test_models.py
index 3f09fee969..2363742c6a 100644
--- a/tests/client/test_models.py
+++ b/tests/client/test_models.py
@@ -114,6 +114,21 @@ def test_token_classification_record(annotation, status, expected_status, expect
     assert record.spans2iob(record.annotation) == expected_iob
 
 
+@pytest.mark.parametrize(
+    ("tokens", "tags", "annotation"),
+    [
+        (["Una", "casa"], ["O", "B-OBJ"], [("OBJ", 4, 7)]),
+        (["Matias", "Aguado"], ["B-PER", "I-PER"], [("PER", 0, 12)]),
+        (["Todo", "Todo", "Todo"], ["B-T", "I-T", "L-T"], [("T", 0, 13)]),
+        (["Una", "casa"], ["O", "U-OBJ"], []),
+    ],
+)
+def test_token_classification_with_tokens_and_tags(tokens, tags, annotation):
+    record = TokenClassificationRecord(tokens=tokens, tags=tags)
+    assert record.annotation is not None
+    assert record.annotation == annotation
+
+
 def test_token_classification_validations():
     with pytest.raises(
         AssertionError,