What you need to do to become a tax preparer

Becoming a tax preparer does not require a college degree, but it does require passing a federal exam and registering with the IRS. The most common path is to obtain a Preparer Tax Identification Number (PTIN), which the IRS issues after you pass the Registered Tax Return Preparer (RTRP) exam or meet alternative credential requirements. You do not need to work for a tax firm — you can work independently, from home, or as a sole proprietor.

The IRS sets the rules, but your state may add its own licensing requirements on top of federal ones. Some states require additional registration or continuing education beyond what the IRS mandates. Before you start, check your state's tax preparer rules with your state's Department of Revenue or Board of Accountancy, because requirements vary significantly.

Key Takeaways

  • You must pass the IRS Registered Tax Return Preparer exam or hold a CPA, Enrolled Agent, or attorney credential to get a PTIN.
  • The RTRP exam costs money to register for and requires study time; you can retake it if you do not pass on your first attempt.
  • Your state may require additional registration, bonding, or continuing education hours beyond the federal PTIN requirement.
  • Once you have a PTIN, you can prepare tax returns for clients, but you must renew your PTIN every year and meet continuing education requirements.
  • Working as a tax preparer does not require an office or employees — many preparers work independently or from home.

The RTRP exam and how to register for it

The Registered Tax Return Preparer exam is a three-hour, 100-question test administered by Prometric, a third-party testing company. The exam covers federal tax law, filing requirements, deductions, credits, and ethics. You must score at least 70 percent to pass. The exam costs approximately $100 to $150 to register, though the exact fee varies by testing center.

To register for the exam, you create an account on the Prometric website, select a testing date and location near you, and pay the registration fee. You can take the exam at a Prometric testing center in most cities. Study materials are available through the IRS website, tax education providers, and commercial study guides. Many people spend 40 to 80 hours studying before taking the test.

If you do not pass on your first attempt, you can retake the exam. There is no limit to how many times you can sit for it, but you must pay the registration fee each time. After you pass, you are may be able to access to apply for your PTIN.

Alternative credentials that skip the RTRP exam

If you already hold a Certified Public Accountant (CPA) license, an Enrolled Agent (EA) credential, or a law degree, you do not need to pass the RTRP exam. You can apply directly for a PTIN using your existing credential. The IRS recognizes these three credentials as meeting the competency requirement.

An Enrolled Agent credential is issued by the IRS itself and requires passing a three-part exam called the Special Enrollment Exam (SEE). Some people pursue the EA credential specifically to become tax preparers, because it carries more authority than the RTRP and allows you to represent clients before the IRS in audits and appeals. The EA path takes longer but opens more doors in tax practice.

Getting your PTIN from the IRS

Once you pass the RTRP exam or hold an alternative credential, you apply for your PTIN through the IRS website at irs.gov. You create an IRS online account, provide your exam results or credential information, and submit your application. The IRS typically issues your PTIN within a few business days if your application is complete.

Your PTIN is valid for one calendar year. You must renew it every year by December 31 to continue preparing returns. Renewal requires paying a fee (currently around $50, though this varies) and confirming that you have met the continuing education requirement for that year. If you let your PTIN lapse, you cannot legally prepare tax returns until you renew it.

Continuing education requirements each year

To renew your PTIN, you must complete 16 hours of continuing education in federal tax law and ethics during the calendar year. These hours must come from IRS-approved providers. The IRS publishes a list of approved continuing education sponsors on its website. Many providers offer courses online, in person, or through self-study materials.

The 16 hours break down as follows: at least 2 hours must cover ethics and professional conduct, at least 2 hours must cover federal tax law updates, and the remaining 12 hours can cover any federal tax topic. You must keep records of your continuing education — the provider gives you a certificate or transcript showing the hours and topics completed. When you renew your PTIN, you confirm that you have met this requirement.

State-specific requirements and licensing

Some states require tax preparers to register with the state, obtain a state license, or meet additional education requirements beyond the federal PTIN. A few states require bonding or errors and omissions insurance. Others have no state requirements at all and defer entirely to the federal PTIN system. You must check your state's rules before you start preparing returns.

Contact your state's Department of Revenue, Board of Accountancy, or Secretary of State office to learn what your state requires. Some states have a specific tax preparer license; others regulate tax preparers under general business licensing rules. If your state has requirements, you typically must meet them before you can legally prepare returns for clients in that state, even if you have a federal PTIN.

Setting up your tax preparation business

Once you have your PTIN and meet any state requirements, you can begin preparing returns. You do not need to form a business entity or rent an office — many tax preparers work as sole proprietors from home. However, you should register your business name with your state if you plan to use a name other than your own, and you should obtain an Employer Identification Number (EIN) from the IRS even if you have no employees.

You will need to track your income and expenses for tax purposes, maintain client records and copies of returns you prepare, and carry errors and omissions insurance if your state requires it or if you want to protect yourself from liability. The IRS requires you to keep client records for at least three years. You should also understand your obligations under tax preparer conduct rules, which prohibit certain practices like charging contingent fees or guaranteeing refund amounts.

Frequently Asked Questions

Do I need a college degree to become a tax preparer?

No. The IRS does not require a degree. You only need to pass the RTRP exam, hold a CPA or EA credential, or be a licensed attorney. Many tax preparers have high school diplomas or some college education but no degree.

How long does it take to become a tax preparer?

If you study for four to eight weeks and pass the RTRP exam on your first attempt, you can have your PTIN within two months. If you pursue the Enrolled Agent credential instead, the process typically takes six months to a year because the EA exam has three parts. State registration, if required, may add another few weeks.

Can I prepare taxes part-time while working another job?

Yes. Many tax preparers work part-time, especially during tax season (January through April). You must renew your PTIN and meet continuing education requirements regardless of whether you work full-time or part-time, but there is no minimum number of returns you must prepare.

What happens if I prepare a return incorrectly and the client gets audited?

You are responsible for the accuracy of returns you prepare. The IRS can impose penalties on you, and the client may hold you liable for damages. This is why errors and omissions insurance is important — it covers legal costs and settlements if a client sues you over a mistake on their return.

Do I need to renew my PTIN every year?

Yes. Your PTIN expires on December 31 each year. To renew, you must pay the renewal fee and confirm you have completed 16 hours of continuing education. If you do not renew by the deadline, you cannot legally prepare returns until you do.