Everyone has to pay taxes, but the majority don’t have the time, skillsets, or desire to prepare and file them. As long as governments require tax payments (and all the many tax laws that accompany them), tax service professionals will be in high demand.
Learn how to become a tax preparer to develop your career and advance a tax preparer business.
Summary
While obtaining a Preparer Tax Identification Number (PTIN) is the only legal requirement to begin preparing tax returns, professionals can significantly expand their service offerings and salary potential by earning advanced credentials such as Enrolled Agent (EA) or CPA status.
What Are the Requirements to Become a Tax Preparer?
Legally, the only credential you need to prepare taxes is a Tax Preparer Identification Number (PTIN). This is the first crucial step in how to become a tax preparer, and the only thing that’s between you and preparing your first tax return on behalf of a client.
That said, a PTIN only authorizes you to prepare tax returns. You can offer no other services to your clients, such as representation before the IRS. When planning how to become a tax preparer, it’s therefore in your best interest to earn tax preparer certifications after you get a PTIN, which grant you more authority to expand you services and grow your tax preparer business.
How Do I Get a PTIN?
Getting your PTIN through the IRS is actually a simple, fairly fast process.1
- Open an online account through the PTIN system on the IRS website.
- Apply for your PTIN through the IRS online application form. You’ll provide personal information, the particulars of your previous year’s tax return, details about any criminal background and/or past issues you’ve had with the IRS, and a list of any professional credentials you possess.
- Pay the application fee of USD $19.75.
- Get your PTIN through your online account.
What Does a Tax Preparer Do?
Once you get a PTIN and become a tax preparer, you can get to work offering tax return preparation services. This means performing daily tasks such as:
- Meeting with clients to gather their documents, discuss their tax situation, explain calculations or developments in their cases, etc.
- Data entry in tax preparation software and IRS forms and schedules, and calculation of all credits, deductions, income, etc. to ensure accurate and optimized returns.
- Maximizing tax benefits and reductions to ensure that clients are getting the best tax savings.
- Double checking your work to make sure that it is entirely accurate. There is no room for error in tax preparation!
- Filing and organizing data, as your clients or the IRS may need to revisit and review documents. It’s extremely important that you keep your data stored and organized for easy future access if need be.
What Is the Tax Preparer Salary?
Tax preparers can make good wages, but salary potential depends heavily on your career growth through earning additional tax certifications and credentials—most notably, the Enrolled Agent (EA) designation or Certified Public Accountant (CPA) license.
If you stick with just a PTIN, remember that you’re only authorized to prepare tax returns. You cannot offer services like audit support, representation before the IRS, or complex advisory; nor take on any positions within firms or companies that require advanced tax expertise. Likewise, it is likely difficult to compete for clients in the world of tax return preparers when you do not have any additional credentials and can’t offer “all-in-one” tax services.
Therefore, the average annual salary for tax return preparers in the US is around $43,000,2 while the average Enrolled Agent salary is $72,000 and the average CPA salary is $80,000 - $100,000.
Other Credentials Needed to Expand Your Tax Services
Based on salary potential, services you can offer, job opportunities, and more, it's important to consider growing your career with tax preparer certifications.
Just three credentials grant you to unrestricted right to provide any tax services: prepare tax returns, represent before the IRS (whether or not you prepared their taxes), and represent clients during an IRS audit, appeals, etc.
In essence, these three credentials give you unlimited tax representation authority nationwide, unlimited tax services that you can offer clients, and unlimited potential in your tax preparer business:
- Enrolled Agent (EA)
- Certified Public Accountant (CPA)
- Tax attorney
An Enrolled Agent credential is the most accessible of the three. It’s generally faster and cheaper to become an EA than either a CPA or tax attorney, because the credential focuses on equipping you with tax expertise. Becoming an Enrolled Agent requires only that you pass the EA Exam, with no additional education or experience requirements. On the other hand, the CPA license and Juris Doctorate both include knowledge and topic areas beyond just the tax field and require additional education and experience requirements, plus longer exams.
Additional tax certifications for tax preparers can also help you hone your expertise, once getting the authority to provide your clients with a wide range of services. For example, the Certified Tax Representation Consultant (CTRC) certification trains you with exceptional representation skills to guide your clients through IRS audits, collections, payroll taxes, and more. If you plan to focus on the individual and small business audience, the Chartered Tax Professional (CTP) certification will help you gain specialized knowledge and reputability in the area; while the Accredited Tax Advisor (ATA) certification gains you advantage in tax consulting for businesses.
Tax Preparer Course to Grow Your Career
Becker helps you answer the question of how to become a tax preparer by giving you the tools to become a successful Enrolled Agent and unlock limitless opportunity for your tax preparer business.
Becker's EA Exam Review helps you pass the EA Exam the first time, with a solid foundational knowledge in tax law, tax representation, and more. Then, maintain your credential and specialize your expertise with Enrolled Agent Continuing Education.
Download our free EA Exam Guide to learn more about the Enrolled Credential, EA Exam, and how to plan your path to a successful career in tax preparation!
Start your EA Exam prep with the information to succeed.
Download our FREE EA Exam Guide ebook.
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