How to Become a Certified Tax Preparer
Each year, tax preparers help tens of millions of Americans prepare and file their taxes. They use their experience and expertise to ensure that clients pay the correct amount to the government. To regulate the tax preparation profession, the IRS and many state governments grant qualified professionals certifications and licenses. While you do not need a certification to prepare taxes in many states, earning one can bring valuable benefits, including a higher salary and job security.
Accountants who earn a tax preparation certification do so for many reasons. Certification yields more job opportunities and allows tax professionals to represent clients in front of the IRS. The following sections cover how to become a tax preparer, exams and credentials, and professional organizations that can assist you in your new career. As you read, please keep in mind that the requirements to become a tax preparer in your home state may vary slightly from what this article describes.
Why Become a Tax Preparer?
Tax preparers enjoy many benefits throughout their careers, like increased job security, salary, and flexibility. The benefits below represent just some you can expect from entering the tax preparation field. As you review the information in this section, keep in mind that certified tax preparers (e.g., authorized agents, CPAs, and tax attorneys) enjoy even greater benefits, making the certification process a wise investment that can grow your career and allow you to make a more positive impact on your clients.
- Job Security: As a tax preparer, you should always have clients. Nearly half of all Americans file tax returns each year, and many of them turn to these professionals for guidance. Changes in tax laws and regulations mean that even tax filers who once filed their taxes may need your services.
- Salary: Tax preparer careers often boast high salaries, especially for CPAs and authorized agents who complete rigorous training courses and exams. Even noncertified preparers can benefit from high hourly salaries if they possess specialized training and experience. Employment in large metropolitan areas often makes for some of the highest tax preparer salaries.
- Flexibility: As the IRS requires that Americans pay their federal income taxes by April 15, most Americans need tax preparation services only in the spring months. For the remainder of the year, tax preparers can pursue other professional and personal opportunities while still offering their services to people in need.
- Larger Client Base: An accountant who becomes a tax preparer can offer their services to a larger client base to increase their job security and salary. More clients can also result in positive word-of-mouth, allowing accountants to build their personal brands faster than if they had not become tax preparers.
- Lifelong Learning: Accountants in all specialties can complete professional development courses to learn the latest best practices and laws in the field. Certified tax preparers must complete these courses to keep their certifications active. With an emphasis on lifelong learning, tax preparation professionals always possess an in-demand skill set that employers and clients need.
Understanding Tax Return Preparer Responsibilities and Qualifications
Throughout their careers, tax preparers can enhance their qualifications and expand their services by earning professional certifications. This section contains vital information on what differentiates noncertified and certified professionals in this field.
Types of Tax Return Preparers and Their Responsibilities
Tax preparers fill out and submit their clients' tax returns. This process involves reviewing financial documents, interfacing with clients, and in some cases, representing clients in front of the IRS. To stay up to date with the rapidly evolving accounting field, tax preparers earn certifications and further their education through professional development and continuing education courses. Certification and professional development can often lead to managerial job opportunities, a higher salary, and greater responsibilities.
Tax preparers fall into two categories: certified and noncertified. Certified tax preparers have unlimited representation rights. Continue reading to learn more about this important designation and what it means for professionals.
- Unlimited Representation Rights: As the name implies, professionals with unlimited representation rights can represent their clients in front of the IRS on any issue (e.g., audits, appeals, etc.).
- Enrolled Agents: Each enrolled agent must pass a rigorous examination and complete 72 hours of professional development every three years. Other requirements include criminal and financial background checks. Review this guide to learn more about how to become an enrolled agent and how this in-demand credential can advance your career.
- Certified Public Accountants: CPAs must first earn a bachelor's or a master's degree with an emphasis in accounting. They then qualify to take the Uniform CPA Examination. Once professionals pass this exam, they can earn CPA licensure. Learn more here about how to become a CPA.
- Tax Attorneys: Tax attorneys must pass the bar exam in their home states and often become CPAs. Other tax attorneys can gain their tax expertise by interning at law firms that specialize in taxation. As lawyers, they can represent their clients in court and in front of the IRS, even if they did not prepare those clients' taxes.
- Limited Representation Rights: Tax preparers who are not enrolled agents, CPAs, or tax attorneys possess limited representation rights. They can file clients' taxes and represent their clients in specific circumstances. However, these rights extend only to clients whom tax preparers have already worked with directly. Most professionals who work for tax preparation companies have limited representation rights.
- Annual Filing Season Program Participants: The IRS created the AFSP to raise knowledge and professionalism among tax filers with limited representation rights. Tax preparers can first earn 18 continuing education credits from IRS-approved providers and must pass an exam. To maintain an AFSP credential, professionals are required to earn an additional 15 continuing education credits each year.
- Preparer Tax Identification Number Holders: Possessing a PTIN is the minimum federal requirement to file taxes on someone else's behalf. PTIN holders who do not possess an AFSP cannot represent their clients in any way. However, as all tax preparer positions require a PTIN, it is wise to request one from the IRS as soon as possible so that you can start working towards other tax preparation credentials.
Common Credentials for Tax Preparers
Tax preparers often need specific credentials to practice, especially if they want to work independently. To earn credentials, professionals can complete training courses, register with the IRS, and follow their states' laws and regulations. In addition to the credentials outlined in this section, many tax preparers also become CPAs or enrolled agents.
Tax Preparer Professional Organizations
As you prepare for your career as a tax preparer, consider joining organizations that represent tax preparers, CPAs, and other accounting professionals. While membership may require a fee, you can receive access to networking events, professional development courses, mentors, and private job boards, among other valuable benefits. The seven professional organizations below represent just a few that can help you fulfill your dream of working as a certified or noncertified tax preparer.
- American Academy of Attorney - CPAs: This organization represents talented professionals who possess both law degrees and CPA licenses. Membership benefits include discounts on professional liability insurance and marketability courses.
- American Institute of Certified Public Accountants: The AICPA represents thousands of CPAs, many of whom work as tax preparers, throughout the United States. The AICPA provides its members with certification programs and publications detailing the latest news in the CPA and tax preparation fields.
- National Association of Enrolled Agents: NAEA represents enrolled agents, who are federally certified professionals qualified to represent clients in front of the IRS. NAEA members receive marketing tools, discounts on continuing education courses, and access to a members-only forum.
- National Association of Tax Professionals: NATP boasts members from all 50 states and 11 foreign countries. Members can receive discounts on office supplies, continuing education courses, and health insurance. NATP prides itself on educating members about the latest tax laws and regulatory developments.
- National Conference of CPA Practitioners: CPAs join NCCPAP for the organization's excellent networking resources. Members regularly turn to NCCPAP's online forum for advice from peers. They can also join a local chapter to receive in-person mentoring services.
- National Society of Accountants: Accountants of all specialties join the NSA. The organization's Tax Help Desk provides tax preparers with expert advice. Other membership benefits include a discussion board and significant discounts on office supplies and liability insurance.
- National Society of Tax Professionals: NSTP advocates for the tax preparation profession and provides tax preparers with tools to grow their careers. Members can receive access to a tax helpline and discounts on professional development courses.