Tax preparation is ideal for anyone who enjoys organization, problem-solving, and helping others. Whether you want to launch your own business, work remotely, or join a firm, becoming a tax preparer offers flexibility, stability, and opportunity.
Below, we answer the most common questions about becoming a tax preparer including required qualifications, tools, and how AI is reshaping the profession.
What does a tax preparer do?
A tax preparer helps individuals and businesses prepare and file tax returns, ensuring compliance with IRS and state laws. They also advise on deductions, credits, and tax-saving strategies.
Depending on credentials, some tax preparers can represent clients before the IRS. This role requires balancing client advocacy with strict legal and ethical standards.
What do you need to become a tax preparer?
To become a tax preparer, you’ll need foundational tax knowledge, certification, reliable software, clients, and an official Preparer Tax Identification Number (PTIN).
Here’s a checklist:
- Learn the basics. Enroll in tax courses or certification programs to gain foundational knowledge of tax laws, filing requirements, and ethical standards. You’ll also get experience in preparing tax returns, using tax software, and staying compliant with IRS regulations.
- Get your credentials. While CPAs and Enrolled Agents (EAs) are the most recognized credentials for tax preparers, they aren’t the only options. You can also become an Accredited Tax Preparer (ATP) or earn an Annual Filing Season Program (AFSP) certificate from the IRS. Some states, like California and Oregon, also license tax preparers through their own education and exam requirements.
- Obtain a PTIN. Once trained, you’ll need to obtain a PTIN, which is required by the IRS for all paid tax preparers.
- Use professional software. Access to the right technology contributes to the general success of your new tax preparation business, helping you work more efficiently. Today, most tax professionals use AI-powered tax preparation software to manage day-to-day tasks and enable future growth.
- Build a client base. It might seem obvious, but you need to attract tax clients to succeed and become profitable. Many preparers start on a small scale by doing individual tax returns before moving on to bigger and more complicated tax matters. As your knowledge grows, so does the opportunity to offer your clients more personalized advisory services.
What is the best software for tax preparation?
Thomson Reuters UltraTax CS is the industry-leading tax preparation software. It automates your tax workflow and synchronizes data across accounting, document management, and tax compliance systems, eliminating manual entry, and reducing errors.
Integration with Thomson Reuters SurePrep enables speedy 1040 preparation with AI-powered document scanning and digital workpapers. Further integration with Thomson Reuters SafeSend enhances the client experience with secure e-signing, automated return delivery, and real-time tracking.
Together, these integrated software tools from Thomson Reuters offer the best tax preparation software by creating an end-to-end digital tax workflow that helps you work smarter, serve clients better, and stay competitive year after year.
What exactly is IRS tax preparer certification?
The IRS tax preparer certification refers to the official credentials and registration processes required, or recognized, by the IRS for individuals who prepare tax returns for compensation in the United States.
How do you get a PTIN?
You can apply for your PTIN through the IRS website in minutes. The process is free, straightforward, and must be renewed annually. Once approved, you must include your PTIN on every tax return you prepare.
Do you need a license to prepare tax returns?
In most states, no license is required. However, seven states do have additional requirements: California, Connecticut, Illinois, Nevada, New York, and Oregon.
Even in these states, the process is similar to the federal PTIN and typically involves a registration fee and basic training. CPAs, EAs, and attorneys are usually exempt.
What are the IRS e-file requirements for tax preparers?
To e-file tax returns professionally, you must obtain an Electronic Filing Identification Number (EFIN). Preparers who file more than 10 returns annually are required to e-file. The process involves submitting fingerprints, passing a suitability check, and registering through the IRS e-Services portal.
What is an Electronic Filing Identification Number?
An EFIN identifies your firm as an authorized IRS e-file provider. Each physical location typically requires one. You need a PTIN to prepare and an EFIN to e-file.
Once issued, an EFIN does not expire. However, if you change your employer identification number (EIN) or the name of your firm, you will have to get a new one or update it through the online portal.
Remember, a PTIN identifies the tax preparer; an EFIN identifies the firm. Together, these credentials allow you to prepare and e-file returns securely and professionally.
So, can you tell me how to get an EFIN?
The process to obtain an EFIN includes three steps:
1. Access IRS e-file application
2. Submit your application
3. Pass a suitability check
For additional step-by-step guidance on the e-file application, check out IRS Publication 3112, IRS e-file Application and Participation.
How can I become a virtual tax preparer?
To become a virtual tax preparer, you’ll need to meet the same IRS requirements as in-person preparers including obtaining a PTIN and, if you plan to e-file returns, an EFIN.
Once certified, the key is to build a secure, cloud-based workflow that allows you to serve clients remotely while maintaining compliance with IRS data protection and e-file security standards.
Tools like UltraTax CS, SurePrep, and SafeSend make this possible. UltraTax CS enables you to prepare and e-file individual and business returns securely from anywhere. SurePrep automates document collection and data entry through AI-driven scanning, while SafeSend streamlines digital delivery and e-signatures with IRS-compliant encryption.
Together, they provide a seamless, end-to-end virtual tax workflow — helping you stay efficient, compliant, and connected to clients, no matter where you work.
How can I start a tax preparation business from home?
Starting a tax preparation business from home is simple with today’s technology.
Follow these steps:
1. Register your business and obtain your PTIN and EFIN.
2. Choose secure, cloud-based tax preparation software.
3. Set up a virtual office with secure internet and encrypted file sharing.
4. Market your services via social media, community groups, and local ads.
As you grow, consider offering year-round client advisory or bookkeeping services for recurring income.
How do I prepare for tax season?
Preparation for tax season starts early. Begin with your tax software, review client organizers, and schedule appointments ahead of time.
By implementing solutions like UltraTax CS and SurePrep, you can streamline document collection and automate data entry — giving you more time to focus on client relationships rather than paperwork.
Will AI replace tax preparers?
No. AI will enhance, not replace tax preparers. AI tools can automate time-consuming research and calculations, but clients still need human judgment, interpretation, and advice. Tools like Thomson Reuters CoCounsel Tax use generative AI to summarize tax law updates in plain English, helping preparers serve clients faster and more confidently.
How long does it take to become a tax preparer?
You can start in just a few weeks — once you’ve applied for your PTIN and EFIN. However, mastering the profession takes time. Most preparers gain confidence after two or three tax seasons, often progressing from simple tax returns to more complex business filings and advisory roles.
What are the most common tax forms and returns?
New tax preparers typically handle Form 1040 (individual returns). As your experience grows, you may work on Forms 1120 (corporations), 1065 (partnerships), and 990 (non-profits). Working with a mix of clients helps you build expertise and increase your earning potential.
How much does a tax preparer make? And what’s the average salary for the role?
According to the U.S. Bureau of Labor Statistics, the average annual wage for tax preparers is $58,160, with the lowest 10% earning around $29,170 and the highest 10% earning up to $98,810.
The amount of money a preparer can make largely depends on whether they’re a sole practitioner or work for a public accounting firm, the number of clients they can handle, and the geographical location of their practice.
It’s also important to take into account experience and credentials, seasonal versus year-round work, and whether the role involves more complex work (business returns, advisory services) rather than just standard individual returns.
With the right tax preparation software and automation tools, tax preparers and accounting firms can scale their earnings significantly.
How much should tax preparers charge?
Typically, fees for tax preparation vary by region and complexity. The National Society of Accountants reports that the average price for 1040 tax preparation with a state tax return ranges from $200–$400.
While an hourly rate may seem more intuitive at first, many tax professionals eventually adopt value-based pricing, charging based on complexity and expertise rather than hourly rates. This approach rewards efficiency and strengthens client trust.
Once you’ve gained enough experience to advise your clients on tax-related decisions, you can open additional revenue streams, like client advisory services, based on your unique knowledge.
What does a tax preparer need to prepare tax returns?
A tax preparer needs a comprehensive tax preparation solution to manage data entry, review, and filing entirely through online tools.
With the ability to handle a wide range of tax returns, including individual (personal), business, partnership, trust, estate, and nonprofit returns, UltraTax CS streamlines the entire tax preparation process through automation, data import features, and cloud-based access.
In addition, an AI-powered tax research solution can simplify your tax research by delivering concise, professionally summarized answers complete with links to relevant primary and secondary sources materials. This technology empowers even new tax preparers to handle complex client queries confidently and quickly while ensuring you stay updated on the latest IRS rulings and tax regulations.
Finally, practice management software can simplify invoicing and enhance workflow efficiency, making your operational duties easier so you can focus on growing your business.
How do I keep up with new tax law changes?
An AI-powered tax research assistant built specifically for tax and accounting professionals can help you stay up to date with IRS changes, technical corrections, or any other state or local changes that might impact your tax preparation business.
Simply pose a question and quickly receive a relevant answer in everyday language, complete with citations from experts and primary sources, which you can copy and paste into communications to clients or colleagues.
In addition, continuing professional development through CPE courses, webinars, or communities can help you stay ahead of legislation and provide better client service.
