This Prepares You on How to Become a Tax Preparer
Tax season tends to scare most people. For some, they are not frightened by taxes. However, there are some folks that actually enjoy processing tax returns. There is a significant need for individuals that are willing to process tax returns for other people.
You may be surprised at how simple it is to become a tax preparer. You should keep in mind that just because it is a simple process, that does not mean that just anyone should become a tax preparer. It is important that taxes are handled and appropriately filed. Otherwise, the individual will be held responsible for any incorrect information that is processed.
What Is a Tax Preparer?
When you are interested in how to become a tax preparer, it is important to understand what a tax preparer does.
A tax preparer is a person that provides basic tax services such as prepares, files, and assists with the filing of tax forms. This person can also help the taxpayer if there are any issues with the Internal Revenue Service (IRS).
A tax preparer works for a taxpayer, who is their client, but must follow the rules and tax codes set forth by IRS.
These issues may include tax court and audits. The tax preparer’s role is limited based on their credentials and rights as a representative.
A tax preparer is a professional that tries to reduce the tax burden of their client while remaining within the parameters set forth by the IRS. In addition, they make sure that they do not break the law or file a return that is fraudulent. A tax preparer may work for themselves or for a company or corporation.
Are There Requirements to Become a Tax Preparer?
When you are thinking about how to become a tax preparer, there are some requirements of which you should be aware. While some of these may not be requirements set forth by IRS, there are some items or qualities you need to become a qualified tax preparer.
First, you have to actually know how to file tax returns, including all of the different exemptions and deductions a taxpayer can take. Therefore, it would be best if you familiarized yourself with the language of taxes, tax returns, and the IRS.
If your goal is to become a tax preparer, you must have access to a particular technology. First, you must be able to file a tax return electronically. Second, you should have access to tax software and know how to use it. The tax software can help you learn as you use it. Many software options act as a tool to get the work done.
Finally, you must have clients for whom you do taxes and use these tax tools. If you do not have clients, then you will not have a job. If you are new to taxes, you should start small. Consider preparing the taxes of individuals and focus on only one at a time. You will need a preparer tax identification number (PTIN).
Is There a Certification to Become a Tax Preparer?
When you are thinking about how to become a tax preparer, you want to make sure you have all the licenses and certifications you need. At the same time, there is not a certification that you need, per se. However, there are some requirements set forth by IRS that you need:
For example, if you want to be a paid tax preparer, IRS requires that you pass a suitability check and receive a PTIN.
In addition, you may need a state license or an electronic filing identification (EFIN).
How Do I Get a PTIN?
To get a PTIN, you start by going to the IRS website and register for a PTIN. There is no charge for receiving a number. You will need to renew your number each year. There is also no fee for the renewal. Once you have been issued a PTIN, you must put it on every tax return you prepare and file.
Do I Need a License to Prepare Taxes?
It is important to know that a PTIN and license are not the same things. IRS does not require you to have any type of special license to become a tax preparer.
If you want the right to represent a client with IRS, you need to be an enrolled agent, attorney, or CPA.
However, some states require you to have a license to prepare taxes within their states.
The states that require you to have a different type of credential include:
California
Connecticut
Illinois
Maryland
Nevada
New York
Oregon
If you are already a CPA or have some other requirement, the states listed above will waive their credential requirement.
What Are the Requirements For a Tax Preparer to E-File?
The IRS understands that their e-file is important to those filing tax returns and must remain secure. In addition, it is an area that has the potential for fraud. For these reasons, they require tax preparers to complete a more in-depth process. These requirements are similar to those associated with a PTIN.
You must fulfill two more security assessments to be able to e-file:
You must first have a PTIN and a copy of your fingerprints before you can request the right to e-file as a tax preparer.
Once you have submitted all required PTIN documents, you will receive an electronic filing identification number (EFIN). Once you have the EFIN number, you will be able to access the portal to submit taxes via electronic modes.
If you file less than ten returns per year as a tax preparer, you do not have to e-file the documents. If you file more than ten returns per year, it is a requirement that you file electronically.
How Do I Receive an Electronic Filing Identification Number (EFIN)?
An EFIN is a number that the IRS assigns to a tax preparer once they are approved to file state and federal taxes through the electronic file program. When you receive your EFIN, it does not expire.
The PTIN allows you to prepare the return, and the EFIN will enable you to file electronically.
If you change your employer identification number (EIN) or change the name of your company, you will have to get a new EFIN. If you do not get a new number, you will have to update it through the portal.
If you work for a company or run your own company, everyone working for the company needs a PTIN. There is only one EFIN needed per company, not per person in the company.
The three step process to get an EFIN:
First, you must have an e-services account on the IRS website.
Second, you must complete an e-services application and submit it to IRS to become a provider able to handle e-filing. It could take as much as 45 days to get your approval, and you must allow for the time. You must also provide identifying information about your firm, as well as each principal and official within your company. You must also determine what type of e-file provide you would like to become.
Finally, you need to provide copies of your fingerprints, and all responsible parties of the company must pass a suitability check. The suitability check may include a credit check, criminal background check, and a tax compliance check.
How Long Does it Take to Become a Tax Preparer?
When you want to become a tax preparer, it really only takes as long as it takes to receive a PTIN and an EFIN. However, there is a drastic difference between being able to prepare taxes and being knowledgeable and experienced at following tax returns. The more skill and experience you have, the more potential you have to make a significant living filing a tax return for individuals.
Don't Stress over Taxes! We Help You Find the Best Offer.
The belief is that it will take at least two full tax seasons before you learn even the basics of filing and preparing tax returns.
The first year as a tax preparer will allow you to become proficient at entering data into the tax preparation software and learn to use the tax tracker.
In your second year, you grow and become better able to work on your own.
In the third year, you have enough experience and knowledge to be able to prepare taxes fully.
Beyond that, it will take you another five years to learn all the details of the different types of tax returns.
Where Can I Find Assistance?
When you are trying to determine if you want to become a tax preparer for others, you may also want to look for some resources that can help you on your path, no matter what that is. The Goalry Mall is here to help you find all the answers you need. We address just about every financial question, concern, or need you may have at the mall. In addition, we provide you information specific to tax services.
So no matter what goals you have, whether it is to learn more about taxes or how to save money to start up your own tax business, the Goalry Mall is here for you. So make sure you stop by today and see all the ways we can help you.
Conclusion
When you want to be a tax preparer, it is important that you know how to become the best preparer you can be. Understanding the certifications and identification numbers you need is important.
What is more important is that you actually have knowledge of how to prepare tax information. If you want clients to begin to trust you and feel confident bringing their taxes to you, you have to know what you are talking about. Tax preparation is not an area where you can fake it. You have to gain experience and knowledge to put yourself in the best possible place.