Below are the most important steps you’ll need to take to become a professional tax preparer. The steps we cover are unique to tax preparation, especially meeting IRS requirements. Show
The information presented here applies to any new tax preparation business, whether you’ll be a solo preparer or will have a much larger staff. We’re going to cover the five steps below, presented in the order you’ll probably have to do them, or that makes the most sense for doing them. 1. Get an EFIN for Your FirmThese days, becoming a tax preparer is usually synonymous with e-filing. In fact, if you file 11 or more returns—or expect to—the IRS wants you to e-file. Becoming an e-filer takes three steps:
This process can take up to two months, and applying to become an ERO (step 2) takes most of that time, 4 to 6 weeks on average. So it’s best to not procrastinate until late in the calendar year, because if the IRS gets a backlog of applications at that time of year, you could face a delay in being able to e-file live returns. Once approved, your firm will receive an Electronic Filing Identification Number, or EFIN. This number identifies the firm as the sender of any e-filed returns. If you don’t already have an EFIN when you purchase Drake Tax, you’ll be assigned a temporary EFIN, which you can use to test e-filing. You'll also use the temporary EFIN as your username when signing into the Drake Support website and using other Drake web-based tools. Remember, before you can e-file actual customer returns, you must apply for an EFIN with the IRS. When you receive your EFIN, provide your E-File Application Summary with a status of "Completed" to Drake Software. Watch this video for important information. You may send the EFIN document by:
You will receive a confirmation email once your document has been accepted and uploaded on your account. Please allow 4 hours for processing. E-filing State ReturnsUsually, getting an EFIN also enables you to e-file state returns, but you should know that some states have different or additional e-file requirements. For example, some states “encourage” e-filing much more forcefully than other states, and may even go so far to penalize preparers who send a paper return without a good reason. A handful of states also require preparer registration at the state level: California, Maryland, New York, Oregon, and Virginia. So if you’re a preparer in one of these states, see your state’s tax department website for registration details. (A registration is not required to prepare a return for one of these states if your business is not located in the state.) 2. Get a PTIN for Each PreparerJust as each firm that e-files must register with the IRS and get an EFIN, each paid preparer must also register and get a Preparer Tax Identification Number (PTIN). If you are paid to prepare or to help prepare a return — even if you don’t sign it — the IRS requires you to get a PTIN. The key factor is whether you take an action or make a decision that affects the outcome of the return. PTINs are issued for one calendar year, and must be renewed annually. For details on who is required to have a PTIN, see PTIN Requirements for Tax Return Preparers. How to Apply for a PTIN
PTIN-Related QuestionsIf you apply by mail and have not heard from the IRS within 6 weeks, you may call the PTIN help phone number to check on the status of your application: Primary: (877) 613-PTIN (7846) Hours: Monday – Friday, 8 am – 5 pm (CST) 3. Get Drake Tax SoftwareSince being an e-filer requires submitting returns with a computer, you’ll need tax software for preparing and e-filing returns. When you comparison shop, we’re confident you’ll see these benefits to choosing Drake Tax as your tax software:
Our trial version of Drake Tax lets you learn to enter data and prepare returns, as well as to explore all of Drake’s built-in client management features. 4. Get TrainingOther than getting an EFIN and PTIN(s), plus getting Drake Tax, you'll need training. Tax laws and professional responsibilities are always changing, making it essential to stay educated and informed. Drake Software provides numerous training opportunities, including many that allow you to earn Continuing Professional Education (CPE) credits. Web-based TrainingDrakeCPE.com offers quality CPE-eligible courses that are affordable and flexible enough to fit any schedule. Choose from a variety of e-learning formats that suit your learning style and schedule.
Use DrakeCPE.com to complete your Annual Filing Season Program (AFSP) CPE requirements. The IRS AFSP is a voluntary program to recognize the efforts of non-credentialed tax return preparers who aspire to a higher level of professionalism. Preparers who voluntarily meet annual requirements outlined by the IRS are awarded an Annual Filing Season Program Certificate of Completion. They are also listed in a public database of credentialed preparers and will have limited representation rights before the IRS. Complete a standalone Annual Federal Tax Refresher (AFTR) course or choose from a variety of bundles to suite your CPE and learning style needs. Classroom TrainingClassroom training events are presented live as well as by webcast. Visit Training.Drakesoftware.com to find and register for these events:
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5. Where to Go NextWe have lots of other information that is particularly relevant to new preparers or new preparation businesses. Click the links below to find out more about us and what we offer to the professional tax preparer:
Talk to UsDrake is dedicated to being a partner after the sale, to serving you and helping you grow as a business. Need more information? Our helpful and knowledgeable sales representatives are standing by to help. Just call (800) 890-9500. What is the best tax preparer program?ProSeries Professional: Best overall professional tax preparation software. ProConnect Tax Online: Best for QuickBooks Online ProAdvisors. TaxAct Professional: Best value for preparing unlimited returns.. 150, 300, or 500 returns.. All states.. All types of returns.. Can you use preparation software for federal taxes?Check back January 2023 to prepare and file your federal taxes for free. Welcome to IRS Free File, where you can electronically prepare and file your federal individual income tax return for free using tax preparation and filing software.
What is the most popular software used for filing taxes?Best tax filing software. Best overall tax software: TurboTax.. Runner-up: H&R Block.. Best free tax software: Credit Karma Tax.. Best affordable tax software: TaxSlayer.. Best for accuracy guarantee: TaxAct.. What is a con to tax preparation software?The software may try to upsell you features you don't need. DIY filers with the more complex returns (itemized deductions, self-employed, small business owners) will pay more and save less time.
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