What You Need to Do to Become a Tax Preparer

Becoming a tax preparer requires passing a federal exam, registering with the IRS, and meeting state requirements that vary by location. The most common path is obtaining a Preparer Tax Identification Number (PTIN) from the IRS, which requires passing the Registered Tax Return Preparer (RTRP) exam or holding a professional credential like a CPA, enrolled agent, or attorney license. You do not need a college degree, but you do need to study tax law, pass a proctored test, and renew your credentials annually.

The timeline from starting study to your first client typically takes three to six months, depending on how much you already know about taxes and how quickly you prepare for the exam. Some states impose additional requirements beyond the federal PTIN, such as bonding or state-specific registration.

Key Takeaways

  • The IRS requires a PTIN and passing the RTRP exam for most tax preparers, though CPAs, enrolled agents, and attorneys can use their existing credentials instead.
  • The RTRP exam costs between $100 and $200 and covers federal income tax, business income, and ethics; you must score at least 70 percent to pass.
  • You must renew your PTIN and pass a continuing education requirement every year, or your registration lapses and you cannot legally prepare returns.
  • Some states require additional steps such as bonding, background checks, or state registration before you can charge clients for tax preparation.
  • You can work as an independent preparer, for a tax firm, or for a nonprofit that offers free tax preparation to low-income households.

The Federal PTIN and RTRP Exam Route

The Preparer Tax Identification Number is issued by the IRS and is required to prepare federal tax returns for payment. You obtain it by passing the RTRP exam or by holding a CPA, enrolled agent, or attorney license. The exam is administered by Prometric, a third-party testing company, and you schedule it online at prometric.com.

The Registered Tax Return Preparer exam covers federal income tax law, business income and losses, credits and deductions, ethics, and penalties. The test has 100 multiple-choice questions and you have three hours to complete it. You must score at least 70 percent to pass. The exam costs between $100 and $200 depending on your location and testing center.

After you pass, you register for your PTIN on the IRS website (irs.gov). The PTIN is issued immediately and is valid for one calendar year. You must renew it annually by December 31 and complete 16 hours of continuing education each year to keep it active. If you do not renew, your PTIN expires and you cannot legally prepare returns for clients until you register again.

Study Materials and Exam Preparation

The IRS does not provide official study guides, but several publishers offer RTRP exam prep courses and books. Common options include courses from tax education companies like H&R Block, Jackson Hewitt, and Liberty Tax, which range from $200 to $500 and typically take four to eight weeks to complete. Many include practice exams and video instruction.

You can also study independently using IRS publications, particularly Publication 17 (Your Federal Income Tax) and Publication 334 (Tax Guide for Small Business). The IRS website has a list of approved continuing education providers, many of which also offer exam prep courses. Some community colleges and online platforms offer tax preparation courses at lower cost, though they may not be RTRP-specific.

Most people spend 40 to 80 hours studying before taking the exam. If you fail, you can retake it immediately by scheduling another test date, though you will pay the exam fee again.

State Requirements and Additional Registration

Federal registration through the PTIN is required everywhere, but some states impose additional rules. A few states require tax preparers to register with the state tax authority, obtain a state license, or carry errors and omissions insurance or a surety bond. California, for example, requires a state-issued tax preparer license in addition to the federal PTIN. New York requires registration with the Department of State.

Before you start preparing returns, contact your state's tax authority or department of revenue to learn what is required in your location. You can find state contacts through the Federation of Tax Administrators (taxadmin.org) or by searching "[your state] tax preparer requirements."

Some states also have continuing education requirements that differ from the federal 16-hour minimum. A few states require background checks or proof of bonding before you can operate. These requirements change, so verify current rules with your state before you invest in exam prep.

Alternative Credentials: CPA, Enrolled Agent, and Attorney

If you already hold a Certified Public Accountant (CPA) license, Enrolled Agent (EA) credential, or law license, you do not need to pass the RTRP exam. You can register for a PTIN directly using your existing credential. CPAs must pass the Uniform CPA Exam and meet state licensing requirements, which typically requires a bachelor's degree with accounting coursework and one to two years of work experience. Enrolled agents must pass the Special Enrollment Examination (SEE), a three-part test administered by the IRS that covers individual income tax, business income tax, and representation and ethics.

These credentials take longer to obtain than the RTRP but provide broader authority. An enrolled agent can represent clients before the IRS in audits and appeals, while an RTRP can only prepare returns. If you are planning a long-term career in tax or accounting, a CPA or EA credential may be worth the additional investment.

Finding Work as a Tax Preparer

Once you have your PTIN and meet state requirements, you can work as an independent contractor, join an existing tax firm, or volunteer with a nonprofit. Tax firms like H&R Block, Jackson Hewitt, and Liberty Tax hire seasonal preparers during tax season (January through April) and sometimes year-round. These jobs typically pay hourly wages plus commission based on the number of returns you prepare.

Independent preparers can build their own client base and set their own fees, though you will need to handle marketing, client management, and business taxes yourself. Many independent preparers start by preparing returns for friends and family, then expand through referrals and online advertising.

Nonprofits and community organizations often recruit volunteer tax preparers for programs like the IRS Volunteer Income Tax Assistance (VITA) program, which offers free tax preparation to low-income households. VITA preparers do not need a PTIN if they are volunteering, but they must complete IRS training and certification. This is a way to gain experience and build skills before starting a paid practice.

Costs and Timeline Summary

The total cost to become a tax preparer ranges from $300 to $1,000 depending on your study method and state requirements. The RTRP exam itself costs $100 to $200. Study materials range from free (using IRS publications) to $500 (comprehensive online courses). State registration or bonding, if required, adds $50 to $300. Annual renewal costs are typically $50 to $100 for the PTIN plus the cost of continuing education courses, which range from free to $200 per year.

The timeline from starting study to your first client is usually three to six months if you study full-time or part-time while working. Exam registration to test date is typically two to four weeks. After you pass and register your PTIN, you can begin preparing returns immediately, though most preparers wait until the next tax season to build a client base.

Frequently Asked Questions

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

No. The RTRP exam does not require a degree. You need to pass the exam and register with the IRS. However, if you want to become a CPA or enrolled agent, those credentials do require specific education and work experience.

What happens if I fail the RTRP exam?

You can retake it immediately by scheduling another test date with Prometric. There is no limit on how many times you can attempt the exam, but you pay the exam fee each time. Most people pass on the first or second attempt.

Can I prepare taxes without a PTIN?

No, not for payment. The IRS requires a PTIN to prepare federal tax returns for clients in exchange for money. You can prepare returns for family members without a PTIN, but you cannot charge a fee.

How much can I earn as a tax preparer?

Income varies widely. Seasonal preparers at tax firms typically earn $15 to $25 per hour plus commission. Independent preparers charge $150 to $500 per return depending on complexity and location. Year-round income depends on how many clients you serve outside tax season.

Do I have to renew my PTIN every year?

Yes. Your PTIN expires December 31 each year. You must renew it and complete 16 hours of continuing education to keep it active. If you do not renew, you cannot legally prepare returns until you register again.