If you’ve ever considered a career in tax preparation, you’ve likely wondered exactly what professional tax preparers do, what credentials they need, and how to become one. In this post, we answer some of the most common questions about becoming a tax preparer, showing you just how simple it can be to start your career as a tax professional.
Basics of Tax Preparation
- The work: Simply put, professional tax preparers help individuals and businesses file their tax returns in exchange for a fee.
- The title: You may hear tax preparers referred to as accountants and vice versa, but they aren’t always the same thing. While many accountants also prepare taxes, not all tax preparers are accountants. Similarly, some accountants do not do taxes.
- The seasons: Tax season is typically the busiest time of year for tax preparers and when they make most of their yearly income. However, many tax preparers earn money in other ways throughout the year by doing taxes for business or offering other services like bookkeeping, payroll, or accounting.
- The tools: Professional tax software is a tax preparer’s most essential tool, enabling them to quickly and accurately file taxes for both individual and business clients.
Of course, every tax preparer will have a slightly different to-do list, but these are some of the common tasks tax preparers complete during tax season and the off-season.
During Tax Season
- Meeting with clients
- Preparing returns through professional tax software and accompanying apps
- Helping clients receive refunds using bank products and tax refund advances
- Contacting clients who still need to file
In the Off-Season
- Preparing tax returns for late filers
- Preparing taxes for business clients
- Marketing your business
- Offering other services like bookkeeping or payroll
- Spending more time on family, travel, and hobbies
What Licenses and Certifications Do Tax Preparers Need?
Technically, tax preparers only need a PTIN (Preparer Tax Identification Number) from the IRS in order to legally prepare taxes. However, the IRS encourages taxpayers to choose well-qualified tax preparers, so many tax professionals choose to pursue some of the additional education and credentials listed below.
Different Types of Tax Preparers
Enrolled Agents (EA)
Enrolled Agent status is the highest credential awarded by the IRS to professional tax preparers. These tax professionals must pass a three-part exam and pursue continuing education each year in order to maintain their certification.
Certified Public Accountants (CPA)
CPAs are among the highest credentialed tax professionals. CPA requirements vary slightly by state but most require a bachelor’s degree, some graduate-level education, two years of professional experience, and a rigorous four-part exam.
Note that not all CPAs work as tax professionals.
Other Tax Preparers and Annual Filing Season Program Participants (AFSP)
Non-credentialed tax preparers can still pursue education through the AFSP. This optional program was created by the IRS and “aims to recognize the efforts of non-credentialed return preparers who aspire to a higher level of professionalism.” Participants must obtain 18 hours of continuing education, including a 6 hour Annual Federal Tax Refresher course.
How Long Does It Take to Become a Tax Preparer?
The tax preparation industry has a low barrier to entry both in terms of cost and experience, making it easy to get started even if you don’t have previous experience. After you’ve applied for a PTIN with the IRS (see below), you can get started immediately and begin pursuing additional education and credentials as you go.
How to Become a Tax Preparer
If you’re ready to pursue a career in tax preparation, get started by:
- Creating a PTIN (Preparer Tax Identification Number)
- Applying for an EFIN (Electronic Filing Identification Number)
- Choosing Your Tax Preparation Software
For more on how to get certified and ready to prepare taxes, see our How to Become a Tax Preparer quick guide and take a look at our library of premium resources for advice on choosing your tax software and starting your own tax preparation business.Still have questions about a career in tax preparation? We have answers to the Top 10 FAQs about Becoming a Tax Preparer.
This information in this article is up to date for tax year 2021 (taxes filed in 2022).