Content of the material
- What does a tax preparer do?
- How Much Money Can a Tax Preparer Make?
- What exactly is IRS tax preparer certification?
- HR Block tax course topics:
- What Is Needed to Maintain Tax Preparation Certification?
- Step 2: Obtain a PTIN
- You’ll need the following for your PTIN application:
- Seek Volunteer Income Tax Assistance
- What Is a Tax Preparation Course?
- How Do You Qualify for a Tax Preparer License?
- Professional Requirements
- Courses about taxes
- Consult IRS Publications
- Federal tax law update test for Circular 230 professionals
- Why study taxes?
- Frequently Asked Questions
What does a tax preparer do?
Most tax preparers prepare, file, or assist with general tax forms. Beyond these basic services, a tax preparer can also defend a taxpayer with the IRS. This includes audits and tax court issues. However, the extent of what a tax preparer can do is based on their credentials and whether they have representation rights.
In a way, tax preparers are asked to serve two masters – their clients and the IRS. They must assist their clients in complying with the state and federal tax codes, while simultaneously minimizing the client’s tax burden. While they are hired to serve their client, they must also diligently remember their obligation to the IRS and not break any laws or help others file a fraudulent return.
How Much Money Can a Tax Preparer Make?
According to data from the U.S. Bureau of Labor Statistics (BLS), tax preparers’ median annual salary is estimated at $43,080. Overall, BLS annual tax preparer salary estimates range from a low of $21,750 to a high of $87,060.
The amount you can make as a tax preparer depends on your experience, qualifications, and geographic location. The more experience you have and the better your qualifications, the more money you’ll make. Similarly, if you live in a higher-cost area of the U.S. (e.g., California), you can expect to make more money than if you live in a lower-cost area (e.g., West Virginia).
What exactly is IRS tax preparer certification?
The basic IRS requirement for all paid tax preparers is to pass the suitability check and get issued a PTIN. However, once you start talking about the work of an enrolled agent, there will be additional requirements such as a state license or an electronic filing identification numbers (EFIN).
HR Block tax course topics:
After completion of the course, you’ll be able to understand federal and state tax laws, conduct a thorough taxpayer interview, offer tax advice, and comply with ethical and due diligence obligations for paid tax preparers.
What Is Needed to Maintain Tax Preparation Certification?
The EA certification lasts for three years. Enrolled agents can renew by filling out a form and paying the required fee. The IRS also requires EAs to take two hours of ethics and at least 14 hours of other credits each year. This totals 72 hours of continuing education per renewal cycle. EAs can pursue these credits through approved continuing education providers or the National Association of Enrolled Agents.
CPA license duration depends on the state but often lasts 1-3 years. Each state board generally requires continuing education hours, often including ethics courses. CPAs can join AICPA or their local state CPA association.
Step 2: Obtain a PTIN
A PTIN – also known as a Preparer Tax Identification Number – is issued by the Internal Revenue Service (IRS) to paid preparers. IRS regulations requires anyone who prepares, or assists in preparing, federal tax returns for compensation to have a valid PTIN before preparing returns. You must renew your PTIN annually.
Applying for your PTIN is easy, and only takes about 15 minutes online. There is a $35.95 nonrefundable fee, which can be paid by Credit/Debit/ATM card.
You’ll need the following for your PTIN application:
- Your Social Security Number
- Your Personal Information (name, mailing address, date of birth)
- Your Business Information (name, mailing address, telephone number)
- Your previous year’s individual tax return (name, address, filing status)
- Explanations for any felony convictions
- Explanations for any problems with your U.S. individual or business tax obligations
- If applicable, any U.S.-based professional certifications information (CPA, attorney, Enrolled Agent, enrolled retirement plan agent, enrolled actuary, certified acceptance agent, or state license) including certification number, jurisdiction of issuance, and expiration date.
IMPT: You should obtain your PTIN as soon as possible to get things moving along. You don’t need to wait until you complete Step 1.
Seek Volunteer Income Tax Assistance
The IRS has a program for providing assistance to low-to-moderate-income individuals with their tax returns. This program is called Volunteer Income Tax Assistance (VITA). Volunteers specifically trained by the IRS help taxpayers answer their tax questions and prepare their tax returns. There is a special emphasis in this program on helping low-income taxpayers understand what possible advantages the tax code may include for individuals specifically in their situation, like how to claim the earned income credit (EITC) and the child tax credit.
Help is available for free to qualified taxpayers. Individuals typically qualify based on their income; for tax year 2022, if your income does not exceed $58,000, you may qualify for assistance through VITA. The tax preparers that work for VITA are volunteers, and they may not have professional-level tax training, so it's possible they may not always give correct advice. In addition, their training is typically only intended to help with relatively simple tax returns.
What Is a Tax Preparation Course?
A tax preparation course will teach you how to prepare federal income taxes. You typically don’t need any experience to take these courses except a high school education and basic math knowledge.
After completing a beginning tax preparation course, registering with the IRS as a tax return preparer, and receiving a preparer tax identification number (PTIN), you’ll be ready to begin your career as a tax preparer.
How Do You Qualify for a Tax Preparer License?
Tax preparers fall into one of two categories: limited or unlimited representation rights. Those with limited representation require no license or certification, but they can only work with clients whose tax returns they personally have completed and signed.
Tax preparers with unlimited representation rights can take new clients regardless of who signed their tax returns. These professionals can also handle audits and appeals for their clients.
To hold unlimited representation rights, tax preparers must earn certification as enrolled agents (EAs), certified public accountants (CPAs), or attorneys. Each of these career paths requires candidates to pass an exam and acquire an IRS preparer tax identification number (PTIN).
However, educational, professional, and examination requirements for these career paths vary, sometimes depending on location.
To hold unlimited representation rights, tax preparers must earn certification as enrolled agents (EAs), certified public accountants (CPAs), or attorneys.
EA candidates need no professional experience. However, former IRS employees may qualify for enrollment without taking the required exam.
As with the educational requirements, each state determines the necessary professional experience to qualify for a CPA license. Candidates generally need at least one year of accounting, taxation, financial advisory, or consulting experience. Some states also accept government, private industry, academia, or public practice experience.
Courses about taxes
IUx offers a professional certification in Personal Finance. This three-course series teaches about taxes as part of an overall financial strategy. Students study tax filing, federal government standards, accounting best practices, and finance tools.
Learners can also study taxes from a business perspective with NYIF's Reporting Use of Firm Resources and Taxation. The program introduces concepts such as assets, deferred taxes, and liabilities. The program also introduces basic concepts in tax law.
edX also offers courses in accounting, financial planning, and even government planning. Students can learn about the tax year, tax forms, and the details of specific tax plans. The self-employed, small businesses, and individuals can learn how to prepare for taxes.
Consult IRS Publications
There are IRS publications that provide interpretations of the tax code. They are summed up in booklets that are available in print or to access online on the IRS website.
The publications are readily available, free, and relatively concise. They are also easier to understand than the tax code itself. However, for some people, the publications are still quite obtuse.
Federal tax law update test for Circular 230 professionals
The test covers new provisions and tax law changes. Volunteers with the professional designation of Attorney, Enrolled Agent or Certified Public Accountant have the option of certifying via the Circular 230 Federal Tax Law Update Test. A volunteer who completes this certification level can prepare all tax returns that fall within the scope of the VITA/TCE program as well as perform all volunteer roles such as tax preparer, quality reviewer and/or instructor. This is an optional test for Circular 230 professionals. Volunteers who would like additional training beyond this certification can choose the traditional certification paths (Basic, Advanced, etc.) available to all new and returning volunteers. Please refer to Publication 5363PDF for additional information.
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Why study taxes?
To pay taxes is a part of nearly every adult's life. Whether it's income tax, state tax and federal tax, or business tax, taxpayers must plan for these payments. The internal revenue service (IRS) keeps records and ensures that everyone who owes taxes pays them.
When everyone begins to work, they must learn to fill out income tax returns. Both individuals and businesses should understand tax filing to reduce the burden and to keep in compliance with government regulation.
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