Helping people file their taxes can be a great career! Here is your step-by-step guide to becoming a tax preparer.
1. Training
The first step on your journey to becoming a tax preparer is your training. You can find tax preparation training online or at a campus near you. Online tax preparer training courses are our recommended option because you can learn at your own pace in the comfort of your home.
Online tax preparer courses nowadays have a wealth of resources for you to sharpen your skills and prepare for this new career. Look for something that is an approved IRS continuing education provider and recognized in your state. For example, the California Tax Education Council (CTEC) should approve it.
2. Exam
Once you have gotten your training, you need to apply for the Registered Tax Return Preparer Test. There is a moderate fee for the test. It’s about three hours and has multiple choice and true and false format questions.
You can only bring resources that are allowed during the test, but it is a partially open-book test. You need to score at least 75% to pass this test. Given the latest pass and fail rates of this test, it is not one to take lightly, so you should study hard for it.
3. PTIN
Once you have passed the test, the next step is to get your Preparer Tax Identification Number. All tax preparers who accept compensation must have a valid PTIN. For the next state of your professional progression, you need to apply for it and pay a fee that varies from state to state.
This is not a lengthy process. There is an application process on the IRS website that doesn’t take much more than fifteen minutes. You will have to renew your PTIN number annually before preparing returns.
4. License or Registration
Now that you have your PTIN, you can finally get licensed or registered in your state as a tax preparer. Every tax preparer who wishes to collect compensation for their services must go through this process. It is set up to protect future clients from tax fraud and to maintain a list of practitioners in the State.
To get your registration in California, you had to have taken a CTEC-approved course in the last 18 months. You must purchase a $5,000 tax preparer bond from an insurance/surety agent, have an approved live scan, and pay a $33 dollar registration fee.
5. Find a Job and Continue Education
Now that you are Licensed or Registered in your state as a tax preparer, you can go out and get a job. The average tax preparer’s job description involves handling tax payments, estimating returns, advising on strategies, and ensuring compliance.
To maintain your license or registration, you need to apply for it annually, so that means you will need to get a certain number of hours of continued education depending on the state you reside it. In California this is no longer necessary once you’re a member of the State Bar or become a California Certified Public Accountant (CPA).
