CareerExplorer’s step-by-step guide on how to become a tax preparer.
Is becoming a tax preparer right for me?
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If you're interested in a career as a tax preparer, there are several courses you can take in high school that can help you prepare. Here are some suggestions:
- Accounting: This is a fundamental course for any career in finance or business, including tax preparation. In accounting, you'll learn how to prepare financial statements, balance sheets, and income statements, which are essential skills for tax preparers.
- Business: Business courses can provide a broad overview of the financial and legal principles that underpin tax preparation. You'll learn about marketing, management, entrepreneurship, and finance, all of which are relevant to a career in tax preparation.
- Math: Strong math skills are important for tax preparation, so consider taking advanced math courses in high school, such as calculus or statistics. You'll need to be comfortable with numbers and able to perform complex calculations.
- Economics: Economics courses can help you understand the principles of taxation and the broader economic context in which tax preparation occurs. You'll learn about supply and demand, market equilibrium, and government policies that impact the economy.
- Computer Science: Many tax preparation tasks are done using software programs, so taking computer science courses can be beneficial. You'll learn how to use spreadsheets, databases, and other software programs that are commonly used in tax preparation.
The education requirements for tax preparers can vary depending on the state and employer, but generally, there are several education paths you can take to become a tax preparer:
- High School Diploma: Some tax preparation firms may require only a high school diploma or equivalent, although having additional education and training can be beneficial.
- Post-Secondary Education: Many tax preparers hold an Associate or Bachelor's Degree in Accounting, Finance, or a related field. These programs can provide a comprehensive understanding of tax laws and regulations, as well as accounting principles and practices.
- Certificate Programs: There are also certificate programs available that specifically focus on tax preparation. These programs typically provide training in tax laws, regulations, and software programs commonly used in the industry.
- Professional Certification: While certification is not required to work as a tax preparer, it can demonstrate expertise and provide a competitive edge. Certification options include becoming an Enrolled Agent (EA), Certified Public Accountant (CPA), or Chartered Tax Professional (CTP).
In addition to formal education, tax preparers may also receive on-the-job training and continuing education to stay current with tax laws and regulations. Many tax preparation firms offer training programs for new hires and ongoing professional development opportunities.
There are several certificate programs available for individuals interested in pursuing a career as a tax preparer. These programs are typically offered by community colleges, vocational schools, and online education providers. Here are some examples of certificate programs for tax preparers:
- H&R Block Income Tax Course: H&R Block offers an Income Tax Course that provides training on tax laws, regulations, and preparation methods. The course is offered in-person and online and includes both classroom instruction and hands-on experience with tax preparation software.
- National Tax Training School: The National Tax Training School offers a Tax Preparation Certificate program that covers federal tax laws and regulations, tax preparation methods, and software programs commonly used in the industry.
- IRS Volunteer Income Tax Assistance (VITA) Program: The IRS offers a VITA program that provides free tax preparation services for low-income individuals and families. The program also offers training and certification for volunteers who provide tax preparation services.
- American Institute of Professional Bookkeepers (AIPB): The AIPB offers a Certified Bookkeeper Certificate program that covers accounting principles and practices, financial statements, payroll, and taxes.
- National Association of Tax Professionals (NATP): The NATP offers a Tax Preparation Certificate program that covers federal tax laws and regulations, tax preparation methods, and software programs commonly used in the industry.
IRS & State Registration
The Internal Revenue Service (IRS) and some states have registration requirements for tax preparers. Here is an overview of the requirements:
- IRS Registration: The IRS requires all paid tax preparers who prepare, or assist in preparing, federal tax returns to obtain a Preparer Tax Identification Number (PTIN). The PTIN is a unique identification number that is used to identify the tax preparer when filing tax returns with the IRS.
- IRS Annual Filing Season Program (AFSP): The AFSP is a voluntary program that recognizes tax preparers who complete a certain amount of continuing education each year. The program includes a minimum of 18 hours of continuing education, including six hours of federal tax law updates, two hours of ethics, and 10 hours of other federal tax law topics.
- State Registration: Some states have registration or licensing requirements for tax preparers. These requirements vary by state, but may include education, experience, and examination requirements. States with registration or licensing requirements for tax preparers include California, Maryland, New York, Oregon, and Vermont.
It's important to note that not all states have registration or licensing requirements for tax preparers. However, even if your state does not require registration or licensing, obtaining a PTIN and completing continuing education through the AFSP can demonstrate your professionalism and expertise as a tax preparer.
Consider Becoming an Enrolled Agent
There are several reasons why someone might want to become an Enrolled Agent (EA):
- Expertise in Tax Laws: Becoming an EA demonstrates a high level of expertise in federal tax laws and regulations. EAs are authorized to represent taxpayers before the IRS for tax issues, including audits, collections, and appeals. This expertise can be beneficial for clients who need help navigating complex tax issues.
- Competitive Edge: In the tax preparation industry, having professional credentials such as the EA designation can provide a competitive edge. Clients may be more likely to choose a tax preparer who has demonstrated a high level of expertise and professionalism.
- Career Advancement: For individuals working in the tax preparation industry, becoming an EA can open up opportunities for career advancement. EAs can provide tax preparation and advisory services to individuals, businesses, and other entities.
- Flexibility: EAs have the flexibility to work for themselves or for tax preparation firms. They can also provide tax services to clients across state lines, as the EA designation is recognized by the federal government.
- Professional Development: As an EA, you are required to complete continuing education to maintain your certification. This ongoing education can help you stay up-to-date with changes in tax laws and regulations, and can also provide opportunities for professional development.
Note: Certification typically refers to a credential that is required by law. In general, certification is a mandatory requirement that is established by law or government agencies. Voluntary certification, on the other hand, is a credential that is not required by law, but is offered by private organizations or associations. These credentials are voluntary and can demonstrate a tax preparer's commitment to the profession and their level of expertise in the field.
There are several voluntary certifications available for tax preparers who want to demonstrate their expertise and professionalism in the industry. Here are a few examples:
- National Tax Preparer's Association (NTP): The NTP is a voluntary certification offered by the National Association of Tax Professionals (NATP). To obtain the NTP certification, tax preparers must pass an exam covering federal tax law, ethics, and tax preparation. They must also meet education and experience requirements.
- Accredited Tax Preparer (ATP): The ATP is a voluntary certification offered by the Accreditation Council for Accountancy and Taxation (ACAT). To obtain the ATP certification, tax preparers must pass an exam covering federal tax law and ethics, and meet education and experience requirements.
- Certified Tax Specialist (CTS): The CTS is a voluntary certification offered by the Institute of Business and Finance (IBF). To obtain the CTS certification, tax preparers must complete a tax education program and pass an exam covering federal tax law and ethics.
- Chartered Tax Professional (CTP): The CTP is a voluntary certification offered by the American Institute of Tax Studies (AITS). To obtain the CTP certification, tax preparers must complete a tax education program and pass an exam covering federal tax law, ethics, and tax preparation.
These voluntary certifications can demonstrate a tax preparer's expertise and professionalism in the industry, and may provide a competitive edge in the marketplace. However, it's important to note that these certifications are not required by law and do not replace any registration or licensing requirements set by the IRS or state tax authorities.