How To Be A Tax Preparer In 6 Steps

Are you looking to learn how to be a tax preparer?

The U.S. Bureau of Labor Statistics (BLS), say the highest annual mean wage among tax preparation, bookkeeping and payroll services was: $83,710.

The mean annual wage for non cpa tax preparer overall was $46,740.

That's because tax preparers can have many different job titles and certifications. There are CPAs, enrollment agents (EAs), tax attorneys and those who are non-credentialed but still qualified.
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How to Be A Tax Preparer In 6 Steps

Preparing tax returns is a varied career, meaning the actual path can take many different turns. But if you want to know the beginning steps, here is how to start your path to becoming a tax preparer.

1. Complete Minimum Education Requirements

Obviously, you're going to need some particularly strong math skills if you want to spend your career preparing tax returns for individuals or small businesses.

Despite that, you may be surprised to find that a bachelor's degree is not required to become a tax preparer.

The minimum education requirements for this line of work are a high school degree or GED.

Take some time on your own to familiarize yourself with how taxes work, and what goes into preparing the returns. The more knowledge you have, the better advantage you'll likely have for job opportunities and certifications.

If you believe you're able to take on whatever student loans come with your degree, it gives you the potential for a much higher salary.

2. Tax Preparation Courses

Though you can learn plenty in your high school and college education about math and taxes, there are still a lot of specifics that go into tax return preparation that they don't cover. For this, you'll need tax preparation courses to fill you in on vital information.

Look into nearby universities and community colleges, as many have a tax preparation course that ends with a certification. These courses break down many of the specifics that come with preparing a tax return. You'll be familiarized with major forms like the 1040, and learn about the various tax credits like the Earned Income Tax Credit and the Child Tax Credit.

You'll likely learn about tax deductions, how to file taxes for different people and businesses and the many laws that have to be followed. Effectively, you can take the initial knowledge you've gotten from your high school and/or college education, from math to law, and apply them to information more directly relevant to tax preparation.

3. Get A Preparer Tax Identification Number (PTIN)

You can't get that tax preparer job, however, without having a Preparer Tax Identification Number (PTIN) through the IRS.

Applying for your PTIN is easy enough, though depending on your situation you may have to explain certain things on your application.

To fill out your PTIN application you will need the following:
• Name
• Mailing address
• Date of birth
• Phone number
• Social Security number
• Explanation of felony convictions, if applicable
• Explanation of any discrepancies in your taxes, if applicable

Those last two, should they apply to you, don't automatically disqualify you from a PTIN. But they may stall the process of getting your PTIN.

Once you have your PTIN, you are registered by the IRS as an "unenrolled preparer," which is the minimum level of clearance the IRS grants individuals that allows them to file federal taxes.

If you plan on starting your own tax preparation firm, you will also need to get an Electronic Filing Identification Number (EFIN) from the IRS. This gives your firm the ability to e-file tax returns, which is generally required of a firm that files 11 or more income tax returns.

To do this, you will need an IRS e-services account, where you submit an application to become an authorized e-File provider by the IRS. You'll also have to pass a "sustainability check," which can include a credit check and a criminal background check.

4. Become Licensed in Your State

Depending on where you live, if you are a non-credentialed tax preparer (as in you have your PTIN but are not a CPA, EA or attorney) you may have to get licensed or registered to practice tax preparation.

These states are:
• California
• Connecticut
• Maryland
• Nevada
• New York
• Oregon

Though many of these states have the same general requirements with variations on the details, certain requirements can be totally unique.

For example, New York requires that prospective tax preparers submit proof that they either do not have child support obligations or, if they do, that they are up to date (they cannot be four or more months overdue).

The amount of required training may also vary by state.

California requires a 60-hour educational course (one with approval by the California Tax Education Council) for tax preparers, but Oregon requires at least 80 hours of training education on taxes.

These are, again, requirements for non-credentialed preparers. More credentialed ones will of course require more.

Enrolled agents and CPAs have their own exams to pass before they can have that title.

5. Get Tax Preparation Experience

You've got your education finished, you have your PIN and you've done the work to become authorized to prepare tax returns in your state.

Now it's time to actually put that to use.

The tax preparation firms that offer training and education can also be, at minimum, a great place to start your career as a tax preparer.

Firms like H&R Block (HRB) - Get Report and Liberty Tax Service (TAXA) are nationwide, and practicing tax preparations at a place like this is perfect for a non-credentialed tax preparer with their PTIN ready.

You can gain a lot of experience in a short amount of time, and depending on your job title or office you may find yourself becoming a specialized tax preparer, especially if you are doing tax returns for businesses.

All of this has the potential, if you have the ambition, to be the prelude to eventually opening your own tax preparation business.

6. Choose The Right Tax Software

Having the right tax software that is easy to learn and use will help make running your tax business much easier.

Our tax preperation software ProTenForty is:

Easy to use.
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There you go, 5 simple steps on how to be a tax preparer.

Hopefully this post will help you get started on your tax preparer journey.