As the owner of a tax school, one of the questions I hear the most from prospective students is “What kind of education do I need to become a tax preparer?” Most are surprised when I give them the answer.
More people ask me how to become a tax preparer during the first four months of the year than at any other time. I think it’s because we are in the midst of tax season and taxes are on people’s minds. The trigger seems to be getting the bill from the tax preparer. “You’re charging me $200 for less than an hour’s worth of work? I’m in the wrong business!”
And then they begin to think that maybe tax preparation is something they can do in their part time. Eventually the question always comes around to the educational requirements for the job.
Do I Need a College Degree to Become a Tax Preparer?
Like many professions, a college degree can be a tool to help you get a foot in the door or advance in your career but strictly speaking, a college degree is not required in order to become a tax preparer. That doesn’t mean you don’t need an education.
Preparing taxes requires an extensive knowledge of federal and state tax law. You must be able to understand the tax code, research tax problems, and find solutions to your client’s tax problems. This requires a solid foundation in tax law.
Unless you plan to become a CPA or an attorney, you can get the basic knowledge you need in a tax preparer course like those offered by the national tax preparation companies and smaller, independent tax schools. These programs will teach you the basics of preparing taxes for an individual. Your goal is to learn how to prepare the Form 1040 (and state equivalent) including all of the forms, schedules, and worksheets that go along with it.
While the tax code is constantly changing, the foundational principles of tax preparation seldom change. In other words, once you know the technical aspects of calculating tax and preparing the tax return, you can apply the current year tax law to your client’s situation. Most individual income tax courses will teach you these fundamental principles of tax return preparation.
Most tax schools focus their curriculum on individual taxes, but if you plan to prepare business tax returns or tax returns for estates and trusts, you will need to take additional courses to become proficient.
Need for Continuing Education
Congress likes to pass new laws every year. Many of the laws they take on have tax consequences. As a result, tax laws change every year. Not only do laws change, but many of the amounts used to calculate tax are adjusted each year due to inflation. This means that tax preparers have to constantly spend time throughout the year learning new things. Continuing your education each year is critical to your success.
Fortunately, the IRS and education providers all over the country offer continuing education programs that you can take advantage of. Some of these programs are offered in resort locations like Hawaii or Las Vegas and give you the opportunity to combine business with some exciting travel. Of course, there are other continuing education programs you can learn from closer to home – even in the comfort of your own home thanks to online training programs.
You may be required by your state to complete a certain number of hours of continuing education each year, but even if you are not, you should be looking at ways to enhance your knowledge. Both you and your clients will appreciate it when you have the right answer to their tax problem.
California Standards
At the time of this writing, California and Oregon are the only states that mandate education for tax preparers. California requires a 60-hour qualifying education course with 20 hours of continuing education each year after the first.
Because of the rigorous requirements that education providers in California must meet, tax preparers in California are especially well trained. In fact, most of the national tax preparation companies use training materials that meet the California requirements to train their tax preparers in other states.
People who want to become tax preparers in California must tax a course that has been approved by the California Tax Education Council (CTEC). Even if you don’t live in California, you should consider a school or tax course that has received CTEC approval. You will benefit tremendously from the higher standards imposed on tax schools in that state.
Carefully Research Online Schools
With the ease of delivering instructional content online, there are a number of online tax schools that promise to give you the foundational knowledge you need to become a tax preparer. The fees for these courses run anywhere from $39 to $1500. Many of these online programs have been approved by the California Tax Education Council and meet the eduction requirements for California.
When shopping around for an online tax course, it pays to be cautious. The quality of the training varies from school to school. Obtaining approval from CTEC to provide qualified education requires a significant investment of money and resources on the part of the school. Approved schools are constantly reviewed to ensure that they meet the state’s rigorous standards for quality. Even so, not all schools are made equal – even CTEC approved schools.
One reason for the discrepancy in tuition fees between schools is the quality of the materials each school provides. Many schools do not provide students with textbooks. Instead, they require the student to download forms and publications from the IRS and state tax agencies. Students read government publications and take a test to show proficiency. The tuition fee is nothing but a grading fee. Many of these schools don’t have instructors you can call if you have questions.
On the other end of the spectrum are schools that offer custom curriculum, meaning the student uses a textbook written especially for the course. The class material includes examples, learning exercises, and interactive quizzes and activities. These programs may or may not have an instructor you can call or email with your questions.
In the middle of the pack are tax schools that use a published textbook available from a local bookstore or by ordering through the school. This is similar to schools that use IRS publications with the notable exception that many published books simplify the tax concepts presented in the course.
With such a wide variety of options available to the student, be sure to ask questions before you enroll in any tax course. You can usually get a good response by email or by calling the school. Here are some things to look for:
* Does the school have a physical address and a phone number? Not that these things necessarily mean the difference between a legitimate school and a fly-by-night operation, but a school can’t become approved (at least in California) without a physical address or phone number.
* Look for a school that will take time to answer your questions.
* Many tax school are run by tax preparers as a year-round business. Be sure to ask if this is the school is their only business or if they also prepare taxes. (It might be difficult to get a response to a question or a problem you are having during tax season.)
* Find out what they use for a textbook. Is the textbook included in your tuition fee or do you have to buy the book or download publications from the IRS.
* Be careful of schools that use only IRS publications. While a school that uses only IRS publications can still be approved by CTEC, it’s the quickest and easiest way to get approved. This means that the school hasn’t invested a lot of resources in their curriculum. They simply want to collect a grading fee. If you choose to go this route, don’t pay more than $70 or $80.
* You can expect to pay more in tuition for a school that offers a custom curriculum. These schools charge anywhere from $199 to $400 or more. Realize that you’re paying for quality and for course materials that are revised each year due to changing tax laws.
* Is an instructor available to answer your questions. With most online programs, you should be able to get your questions answered by phone or by email. Find out how long it usually takes for an instructor to return your call or email.
* Finally, if you’re looking for a CTEC-approved school, check the approved education provider list on the CTEC website (www.ctec.org). This list is maintained regularly and education providers who don’t meet the standards for the State of California are removed immediately.
While there are no educational requirements to become a tax preparer in most states, you should at least be willing to obtain some basic education in the fundamental principles of tax preparation. Fortunately, there are a number of good online schools that will train you how to become a tax preparer for relatively little cost. Do your homework when it comes to finding a good school. Of course, if you live in California, make sure you find a CTEC-approved education provider.
