Tax preparers help businesses and individual taxpayers navigate the technical details of their tax returns. Their duties mainly involve performing calculations, ensuring compliance and accuracy, and handling filings. These tax professionals also apply their specialized knowledge of tax law to help clients maximize deductions to save money.
While software advancements and artificial intelligence are poised to change the role, tax preparers still have a stable job outlook. The U.S. Department of Labor's O*NET Online resource projects job growth of 2-4% for tax preparers from 2022-2032.
To become a tax preparer, you need a combination of technical education, experience, and Internal Revenue Service (IRS) documentation. The career might be right for you if you have a penchant for numbers, a sharp eye for detail, and enjoy helping people. Use this guide to explore every facet of becoming a tax preparer.
How To Become a Certified Tax Preparer
- Get a Tax-Focused Education. Tax preparers usually come from accounting backgrounds, and an associate or bachelor's degree in accounting makes a good start. Other relevant majors include business, finance, or pre-law with a tax focus. Some tax preparers hold advanced degrees and work high-level accounting, law, or business jobs while doing tax prep on the side.
- Gain Experience. Enter the workforce and develop experience in accounting-focused support roles. You can work as an accounting assistant, accounting clerk, bookkeeper, or other similar positions.
- Obtain a PTIN. Anyone who receives financial compensation for preparing a tax return must have an IRS-issued Preparer Tax Identification Number (PTIN). If you are qualified, the process is relatively quick and easy.
- Add State-Level Credentials. In California, Connecticut, Illinois, Nevada, New York, and Oregon, tax preparers may need licenses or credentials that function like state-level PTINs.
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Required Education for a Tax Preparer
To receive compensation as a tax preparer, you need a PTIN. The IRS does not identify any specific educational requirements to qualify for this status. Focus on acquiring the knowledge you need to succeed as a tax professional through an associate, bachelor's, and/or master's program in accounting.
With a bachelor's degree or higher, you will meet the educational requirements for other accounting licenses and certifications. This route gives you the flexibility to consider other paths or work as a tax preparer while pursuing advanced accounting careers.
As an alternative to an accounting degree, you could also combine tax-focused training with a degree in business, finance, taxation, or tax law.
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Required Credentials to be a Certified Tax Preparers
No matter your location, you must have a PTIN to receive pay in exchange for preparing a tax return. You may also need other credentials, depending on your state.
To obtain a PTIN, follow this basic process:
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1
Gather Your Documentation.
You will need to provide your Social Security number, address, and most recent tax return, among other personal documents. -
2
See AlsoAbout - MBA TaxesAccounting Degree with a Focus on Taxation GuideIRS Exam 2024 - Syllabus, Eligibility, Exam Date, NotificationCreate an Online IRS Account.
You will need to provide your Social Security number, address, and most recent tax return, among other personal documents. -
3
Submit Your Application.
Use the IRS' online system to complete your application and submit supporting documentation. -
4
Pay the Required Fee.
As of 2024, a non-refundable fee of $19.75 applies, which you must pay with a credit or debit card.
The IRS will review your application and issue your PTIN through your online account if your request gets approved. After receiving your PTIN, you will need to renew it annually.
Other steps apply if you live in a state that requires additional tax preparer licensing or documentation. Use these links for further information:
- State of California Franchise Tax Board
- State of Connecticut Department of Revenue Services
- Illinois Department of Revenue
- Nevada Secretary of State
- New York State Department of Taxation and Finance
- Oregon Board of Tax Practitioners
Optional Certifications and Degrees
You will need a PTIN to launch your career as a tax preparer, but optional certifications can help you grow that career. Professional certifications also inspire confidence in your abilities and services, which may boost your ability to attract and retain clients.
For example, the IRS offers an enrolled agent (EA) designation. EAs can represent their clients in official dealings with the IRS. Certified public accountants (CPAs) and tax attorneys also share this ability.
You can also pursue other widely recognized certifications, including:
- Accredited tax advisor (ATA) and accredited tax preparer, both offered by the Accreditation Council for Accountancy and Taxation
- Certified tax coach, offered by the American Institute of Certified Tax Planners
- Chartered tax professional, offered by The Income Tax School
Each credential is subject to different eligibility guidelines and certification processes. In general, though, you will need to accrue several years of relevant professional experience and pass an examination to become certified.
As you research how to become a tax preparer, you should also know that PTIN requirements are waived for licensed CPAs. If you become a CPA, you can also work professionally as a tax preparer without additional documentation.
Learn how to earn EA certification
Learn how to earn ATA certification
Required Experience for a Tax Preparer
You do not need any specific experience level to obtain a PTIN from the IRS. However, your clients will expect expertise, which you can gain through experience. Consider accounting internships and supporting professional roles with taxation-facing duties. Examples of these roles include:
- Payroll clerk
- Accounting clerk
- Auditing clerk
- Tax associate
Alternatively, you can pursue a combination of education and certification before launching your career. Many certifying bodies, private education providers, community colleges, and degree-granting institutions offer programs that teach the knowledge and skills tax preparers need. You can then pursue one or more recognized professional certifications and market yourself that way.
Should I Become a Tax Preparer?
Consider future growth prospects and job security for the profession, which both appear encouraging. First, explore the pros of the career path:
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Businesses and individuals pay taxes every year, creating built-in demand for tax preparers. -
Taxation continues to become more complex, suggesting a greater need for specialists. -
The job path has low barriers to entry.
Then, consider the following potential downsides and disadvantages:
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Full-time tax preparers earn modest salaries, and you may need to supplement your income. -
If you do not invest in earning professional certifications or other credentials, you may make less money. -
Artificial intelligence may evolve to automate many tasks tax preparers perform, which could affect job prospects.
As you plan your career, remember that demand for your services may not be as high outside of tax season. Many tax preparers work part time or offer their services on the side as they pursue other careers in accounting, business, and tax law.
The Job Hunt
You can use several strategies to find your first tax preparer job. Many accounting programs — which make excellent educational backgrounds for tax preparers — include internships and practic*ms. These experiences allow you to make valuable professional connections that could help you down the line.
If you have the right credentials, large companies that specialize in tax preparation may hire you. Other options include joining professional organizations, attending job fairs, and seeking opportunities on specialized job boards.
These four job boards may help your search:
- ETaxJobs: This globally focused job board advertises tax-focused vacancies in multiple countries, including the United States. It claims to be the largest online job board specifically for tax professionals.
- TaxTalent: TaxTalent maintains a job board and offers career development opportunities. You can view and use the job board free of charge or unlock additional services with a paid membership.
- National Association of Tax Professionals: NATP's website includes a "Classified Ads" section, where businesses often post notices seeking tax professionals to join their teams. You can also enroll as a member and list your services with the site's "Find a Tax Preparer" feature.
- iHireAccounting: This accounting-focused job board also includes listings for tax professionals. To access this site, provide an email address or log in with your Google, LinkedIn, or Facebook account.
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Upward Mobility
After working as a tax preparer, you can advance to a tax consultant or tax manager role. Both positions build on tax preparation experience to involve hands-on strategy and more complex applications of technical tax knowledge.
Consider the following elements of working as a tax consultant:
- Tax consultants deploy targeted technical strategies to help businesses and individuals minimize their tax obligations while remaining legally compliant.
- A CPA or ATA certification may boost your employability.
- According to May 2024 Payscale data, tax consultants make an average of about $69,560 per year.
Tax managers can work as department leaders and independent professionals. Here is a snapshot of what you might expect by pursuing this role:
- Tax managers supervise business tax planning. They provide expert guidance, direct staff, and review and optimize filings before submission.
- You can pursue specializations in areas like international, corporate, and property taxation.
- Tax managers earn an average salary of about $105,650 per year, according to Payscale data from May 2024.
- Many tax managers come from CPA backgrounds and hold master's degrees in accounting and taxation.
FAQ About How to Become a Tax Preparer
Do you need a license to prepare taxes?
The credential you need to work as a paid tax preparer is not a license. It is known as a Preparer Tax Identification Number, or PTIN. You can obtain one by applying to the Internal Revenue Service.
What does the IRS require to be a tax preparer?
You need only a PTIN, which you can obtain online in about 15 minutes if you meet the eligibility requirements. However, you cannot represent clients in dealings with the IRS if you only have a PTIN. For representation rights, you must be an enrolled agent, certified public accountant, or tax attorney.
Does the IRS have a training program?
The IRS offers multiple professional development and continuing education programs for tax professionals. Options include live forums, webinars, courses, and outreach programs. Certified IRS volunteers can access additional learning opportunities free of charge.
What software do tax professionals use?
Tax professionals use various programs and platforms, depending on their needs and personal preferences. You can review and compare the features of multiple popular programs using this tax software resource. It covers Intuit, Drake Tax, TaxSlayer Pro, and more.
