If you become a tax preparer, it is important to have the skills to effectively and accurately do clients’ tax work. Potential clients need to know they can trust you and that you are qualified for the task. Luckily there are several routes that aspiring tax entrepreneurs can take to gain that trust. Let’s dive in.
First option: Enrolled agent
Enrolled agents get their certification through the IRS. As tax specialists, they typically focus their careers on tax preparation and planning, though some specialize further into areas such as tax resolution. Through the IRS, they are awarded with unlimited practice rights, such as who they represent, the type of tax matters they handle, and the right to represent clients throughout the entire nation.
There are two ways to become an enrolled agent: the first is to work at least five years with the IRS in a position where you interpret tax code; the second is to pass the three-part Special Enrollment Exam, or SEE, and a background check. You can’t forget about the background check.
In order to maintain their status and practicing rights, enrolled agents are required to complete 72 hours of continuing education every three years.
Second option: Certified Public Accountant
Option #2 is to become a certified public accountant. Certified public accountants, also known as CPAs, must pass the uniform certification test and any other criteria set forth by their state. That being said, CPA exams are only considered valid within the state that the test was given. The CPA exam isn’t specialized on tax accounting, but many CPAs will later choose to specialize in tax planning or preparation.
To keep their certification, CPAs are required to complete continuing professional education, or CPE, credits each year. The specifics of these credits differ by state. You can find the specific requirements for your state here.
Third option: Tax attorney
Becoming a tax attorney is another great option for becoming a tax preparer. Tax attorneys are legal professionals who have a law degree and have passed the bar exam. They specialize in the legal side of tax preparation. Not only are these attorneys registered tax return preparers, but they can even prepare a legal defense for a client involved in a tax-related court case. So, if you are ever in trouble with the IRS, a tax attorney is probably who you should call.
Fourth option: No certifications required
Finally, if you do not want to go through any of the previously mentioned options, there is still a fourth option. In current legislation, you don't need an official license or title to prepare taxes. In fact, you don’t even need to have previous tax experience. What you do need is a willingness to work hard so you can learn the necessary skills. No one will pay you if they don’t see the value in your services, so do your part to thoroughly learn the trade.
If you are getting paid to prepare other people's taxes, you do need to get a Preparer Tax Identification Number, also known as a PTIN, from the IRS. Some local communities do have additional requirements for preparing taxes. Before starting your business, check to see if there are any extra qualifications in your own area.
In summary, if you want to become a tax preparer, you have options. You can start preparing taxes with as an enrolled agent, CPA, tax attorney, or even with no official certifications. All of these options will require a lot of hard work and effort, but they will take you one step closer to having the tax business you’ve dreamed of.
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