How to Become a Tax Preparer in 5 Steps

Do you have strong numerical and analytical skills? If you're good at math, bookkeeping, accounting, and other aspects of financial management, you might like becoming a tax preparer.

Read on to learn about what's involved in tax preparation to find out if this is the career for you.

What Is a Tax Preparer?

Tax preparers perform a very important function, and their services are especially in demand in the spring season leading up to the mid-April U.S. Internal Revenue Service's deadline for filing income taxes.

Many members of the public, whether individuals, couples filing jointly, or business owners, appreciate tax preparers.

They organize financial records, fill out and calculate their taxes, and file their taxes on time.

As professionals, they know and understand the tax codes and various federal and state tax laws.

They are also excellent with numbers, math, and accounting and have strong organizational skills and knowledge of the ins and outs of the tax structures.

It takes strong critical thinking and analytical skills to become a tax preparer. If you have what it takes, keep reading to learn how to go about becoming a tax preparer.

Step 1: Get Your High School Degree

To become a tax preparer, you'll need a high school diploma. Be sure to focus on mathematical and analytical courses and learn as much as you can as you hone your critical thinking skills.

Also, since most tax work is done online these days, taking courses in computer science and keyboard or data entry could be helpful.

Another area for gaining experience is customer service. You could gain this expertise through your part-time work while in high school as a cashier or clerk in a public-facing job.

The skills you learn as you deal with a wide variety of people from various backgrounds and with different personalities will come in handy when you become a tax preparer.

Step 2: Get Trained as a Tax Preparer

Take a tax training program at your local technical college or vocational school or even at a tax service franchise like H&R Block's Income Tax Course, a 60-hour, 10-week course that covers:

• tax theory
• tax laws and filing practices
• how to prepare tax returns, step-by-step
• communication techniques for working with clients

Having this credential will make you more competitive than someone who has no specialized tax knowledge.

In a tax preparation course, you'll learn about tax codes and laws, electronic filing, the various forms like W-2s and 1099s, income, dividends, exemptions, types of deductions, business tax laws, and more.

Step 3: Fulfill IRS Requirements

It's important to become familiar with the guidelines from the U.S. Internal Revenue Service (IRS), which is the government's tax agency.

Go to the page Understanding Tax Return Preparer Credentials and Qualifications on the IRS website. This article explains different levels of education, skills, and expertise as a tax preparer.

The IRS requires paid tax preparers to have a _Preparer Tax Identification Number (PTIN)_. This number enables the IRS to keep track of tax preparers to protect consumers and avoid tax fraud.

To receive a PTIN, you need to earn a specified number of continuing education credits and pass an evaluation exam.

Annual Filing Season Program Participants

These are entry-level tax preparers. The IRS awards an Annual Filing Season Program Record of Completion to preparers who obtain a specific number of continuing education hours each year.

Enrolled Agents

Enrolled Agents are IRS-licensed preparers who have passed a comprehensive Special Enrollment Examination.

They have demonstrated their ability in federal tax planning, individual and business tax return preparation, and client representation. Every three years, they must earn 72 hours of continuing education credits.

Certified Public Accountants (CPAs)

CPAs specialize in tax preparation have completed an accounting degree program at a college or university, have passed the Uniform CPA Examination, and are licensed by state boards of accountancy.

Tax Attorneys

Attorneys specializing in tax preparation and planning have earned an undergraduate and then a law degree and passed a bar exam to become licensed by state courts.

Step 4: Become Registered with the State

States often require tax preparers to be registered. Check the requirements for your state to find out if you need to have completed a certain number of hours in a state-accredited tax course.

You may also need to buy liability insurance.

Step 5: Get Clients or a Job with a Tax Service

A good way to start your career as a tax preparer is to work at a tax service for a few tax seasons.

By doing so, you'll get thorough on-the-job training in tax laws and regulations and gain significant experience working with more senior tax preparers.

After gaining experience, you might choose to start your own business or work for the IRS.

You can consider taking the IRS-sponsored Special Enrollment Exam to become an Enrolled Agent (see above). That way you can formally represent your clients during an IRS audit or tax investigation.

Other Associated Careers

If you enjoy being a tax preparer but feel that you want a job that is full-time all year round, you might want to study accounting or bookkeeping.

You could earn an associate degree in bookkeeping or accounting to get an entry-level job in either field, or you could earn your bachelor's degree in accounting, business, economics, or math.

Bookkeepers earn professional certification from the National Association of Certified Public Bookkeepers (NACPB) or the American Institute of Professional Bookkeepers (AIPB).

While not required, certification can bring you a higher salary and position.

A certified public accountant (CPA) is one of the most highly valued financial professionals. To become a CPA, you would need to meet the requirements of the state where you wish to practice.

For example, to become licensed in Georgia, you would need:

• a bachelor's degree or higher
• a total of 150 semester hours of education
• 30 semester hours in accounting courses above the introductory level
• 24 semester hours in business-related subjects
• a passing score on the Uniform CPA Exam
• one year (a minimum of 2,000 hours) of qualifying experience under the supervision of an active CPA in good standing

Become a Tax Preparer Today

To become a tax preparer, you'll need to be very familiar with the IRS guidelines and ensure that you can meet the requirements. Be sure to follow the steps listed above to become a tax preparer today.