How to become a tax preparer

[Rapid Robert]

As it is not yet what I would consider the busy period for this filing season, I thought the following was an interesting read to share, to remind us all of the paths we followed to get here.

Disclaimer: there are two brief mentions near the end for Thomson-Reuters Ultra Tax software, but no ads, pop-ups, or anything like that, so I hope this signal-to-noise ratio allows this article to be considered not spam.

https://tax.thomsonreuters.com/en/insights/articles/how-to-become-a-tax-preparer

[kathyc2]

Lot of info as to how to get PTIN, software, etc. but very little on how to gain knowledge.

Software is a great time saver and can be a double check of understanding. I fear there are too many people holding themselves out to be preparers when in fact they are little more than software operators. Garbage in, garbage out is what I see often on returns previously prepared by "professionals".

A friends daughter moved out of state and took her simple return to H&R. She had a W2 and a 1099SA. They didn't indicate that 1099SA was for medical expense or even ask her. She owed and sent her info to me for an opinion. I told her to go back and have them correct it thinking it may be a learning experience for the preparer. They told her they prepared the return correctly, as they input the info from the 1099SA into system by what was on it. At that point I'm pretty hot and call the office to speak to the manager. Manager was also clueless as to how HSA and 1099SA works.

Local person here that I know I will likely be amending return when I see they were previous preparer. Not picking up capital loss carryforward, having Treasury bond interest not exempt for state, clergy exempt from SS without a 4361, mileage deduction to get to job for 1099 person who should be W2 employee to name a few.

Back when we had 2% business deductions local CPA told OTR W2 driver he couldn't take per diem deduction. They took it back for him to amend, and he then took the 50% allowance for meals rather than higher amount allowed for OTR.

Fly by night "preparer" who didn't sign return, entered 1099R twice because there were two copies of form.

By comparison one of the stupidest thing I've seen from self prepared is they entered their 401K amount from W2 as an IRA deduction. Or, the one with rental property take a deduction for their time spent repairs at rental.

IMO if a person can't prepare simple return such as having W2, basic investment income and SS by hand they have no business having people pay them for prep.

[Dude]

A paradox of unintended consequences that limits the ability of the free market to correct the situation: The easier it is to self prepare the more you need a paid preparer BUT the easier it is to self prepare the less you are willing to pay a paid preparer. Thus even though the need for paid tax preparers has increased due to continuous changes in tax law, experienced preparers are diminishing due to the downward trend in compensation. The mechanism that would correct the situation is to increase the rate of audits. If audits increased then the value of experienced preparers would increase. Yet increasing the rate of audits especially among lower income groups has become politically untenable. The design to limit tax increases by increasing regulation leads to more tax increases because these regulations are not enforced. “Laws without enforced consequences are merely suggestions.” ― Ron Brackin. I may be wrong but isn't suggested tax law an oxymoron?

[TaxGuyBill]

For anybody considering getting into tax preparation, this video came to mind: :-)

https://www.youtube.com/watch?v=7FPELc1wEvk

[Dude]

For anybody considering getting into tax preparation, this video came to mind: :-)

https://www.youtube.com/watch?v=7FPELc1wEvk

LOL! I would have better luck asking for a shrubbery than a 1098T

[kathyc2]

There is a difference between price and value. People will pay for all kinds of things they can do themselves but don't want to or take the time to.

If your current clients see the value in you and feel valued by you, they will send referrals and you won't need to worry about DIY software.

[Rapid Robert]

It was interesting to me that kathyc2 mentioned H&R Block, I don't see them mentioned in tax forums I view very often these days. My experience, in a state with a long history of regulating paid tax preparers (unlike the IRS and most other states), is that H&R was a good place to learn taxes, but that was then (well over a decade ago), and this is now. Intuit with its "live" EA/CPA support and H&R with its DIY software seem to be meeting in the middle. Like I said, we all took different paths to get here, mine included a lot of positive knowledge and experience from working in H&R office (where almost everyone was an EA). Back then the CE was top notch and written in-house. I think it's harder to find that quality of in-person, basic tax prep education these days, at least in states without a mandated CE requirement.

[kathyc2]

Like other preparers some H&R people are good. Others are clueless. For the fees they charge they should be better trained.

[Twin Turbo Z]

The real test would be when a solar flare or magnetic pole flip wipes out all technology could you prepare taxes by hand ? In the old days the post man would bring us boxes and boxes loaded with IRS forms ! Carbon paper out the wahoo ! But the ability to do returns by hand would be the so called "Litmus" test in my opinion.

[kathyc2]

Yep. The problem is when if people don't know what the answer is supposed to be, they won't know if they entered something incorrectly in software, checked or didn't check a box, etc. I know I've fought with software at times to get the correct boxes checked so it comes out right. And there have also been times when software returns something different than what I've expected and after further research found it was correct. Those are learning experiences.

I would say all new preparers should read Pub 17 in it's entirety for the first couple years. I still always read the what's new section to see if I missed some changes though the year. Then they should prepare some returns by hand. Put those returns through the software and if the answer is different go through the differences line by line to see if they need to further their understanding. If software puts a number on a line, take the time to understand where it comes from even if it means going through software worksheet calculations to understand or print out a blank IRS worksheet to complete. Two in particular people should understand is SS taxable worksheet and LTCG worksheet.

The main thing, that I seldom see mentioned is that people are entrusting us with their money. Anyone who isn't willing to put the same care in a clients return as they would their own should probably be in another line of work.