What you need to become a tax preparer

To prepare taxes for others, you need a Preparer Tax Identification Number (PTIN) from the IRS, which costs $203 annually and requires passing the IRS Competency Exam or holding certain credentials. You do not need a PTIN if you only prepare taxes for yourself, your spouse, or your employer's employees as part of your job. Most tax preparers also obtain state licensing or credentials — the requirements vary widely by state, and some states have no specific requirement beyond the PTIN.

The path splits into three main routes: becoming an Enrolled Agent (the most common choice for independent preparers), pursuing a CPA license (which requires a college degree and state board exam), or taking the IRS Competency Exam alone (the minimum to get a PTIN). Each route has different costs, time commitments, and what you can legally do once licensed.

Key Takeaways

  • You must obtain a PTIN from the IRS and pass the Competency Exam, or hold an EA, CPA, or attorney credential, before you can prepare taxes for clients.
  • Enrolled Agent status requires passing a three-part exam (the Special Enrollment Exam) and costs roughly $500 to $2,000 in study materials and exam fees.
  • A CPA license requires a bachelor's degree, 150 college credits in most states, passing the Uniform CPA Exam, and state board approval — a process that typically takes three to five years.
  • The IRS Competency Exam is the fastest entry point but limits what you can do; you cannot represent clients before the IRS without an EA, CPA, or attorney credential.
  • State requirements vary: some states require continuing education, some require bonding or insurance, and some have no additional rules beyond the PTIN.

The Enrolled Agent route: fastest for independent preparers

An Enrolled Agent (EA) is a federally licensed tax practitioner authorized by the IRS to represent clients in audits, appeals, and other IRS matters. Most independent tax preparers choose this path because it takes one to two years, costs less than a CPA, and gives you the broadest authority to practice without a law degree. You do not need a college degree to become an EA.

To may have access to, you must pass the Special Enrollment Exam (SEE), a three-part test administered by Prometric testing centers. The three parts cover individual income tax, business income tax, and representation, ethics, and practice procedures. You can take all three parts in one testing window (usually open for a few weeks each year) or spread them across multiple windows. The exam costs $181 per part, or $543 total. Most people study for three to six months using study guides from the National Association of Enrolled Agents (NAEA), online courses, or exam prep companies like Surgent or Bisk.

After you pass all three parts, you explore for your EA credential through the IRS, which involves submitting Form 23 and paying a $185 process fee. Once approved, you renew your EA status every three years by paying a renewal fee (currently $135) and completing 72 hours of continuing education per three-year cycle. The NAEA offers study materials and a directory of EA members.

The CPA route: broader authority and higher earning potential

A Certified Public Accountant (CPA) can do everything an EA can do, plus provide accounting services, audit financial statements, and offer broader business consulting. The CPA path takes longer and costs more, but opens doors beyond tax preparation. Most states require a bachelor's degree with 150 college credits (not just 120), which often means a fifth year of study or a master's degree.

After meeting the education requirement, you sit for the Uniform CPA Exam, a four-part computerized test administered by the National Association of State Boards of Accountancy (NASBA). Each part costs roughly $100 to $150 depending on your state, so the total exam cost is $400 to $600. Most candidates study for four to six months. Once you pass all four parts, you explore for your CPA license through your state board of accountancy, which may require additional work experience (typically one to two years under a licensed CPA) and a background check.

CPA licensing requirements vary by state. Some states require 150 college credits before you sit for the exam; others allow you to sit first and complete the credits afterward. Some require one year of work experience; others require two. Check your state board of accountancy's website for the exact rules in your state.

The IRS Competency Exam: minimum entry point

If you want to prepare taxes quickly and with minimal study, you can take only the IRS Competency Exam, which covers individual income tax basics. This exam costs $181, takes about three hours, and you can study for it in a few weeks. Once you pass, you can get a PTIN and prepare individual tax returns for clients.

The catch: you cannot represent clients before the IRS in an audit or appeal, and you cannot prepare business returns or complex returns. You are limited to straightforward individual returns. Many preparers use this as a stepping stone to the EA exam, which is why the Competency Exam is less common as a final destination. If you later decide to become an EA, you do not have to retake the Competency Exam — passing any one part of the SEE counts as passing the Competency Exam requirement.

State licensing and continuing education requirements

Beyond the federal PTIN, some states impose their own rules. A few states (including California, New York, and Illinois) require tax preparers to register with the state and complete state-specific continuing education. Other states have no additional requirement. A handful of states require errors and omissions insurance or bonding. Check your state's Department of Revenue or Board of Accountancy website to learn what applies where you live.

Continuing education is mandatory for EAs and CPAs but not for PTIN-only preparers. EAs must complete 72 hours of approved continuing education every three years; CPAs must complete 40 to 80 hours per year depending on the state. The NAEA, state CPA societies, and online providers like Surgent and Bisk offer courses that count toward these requirements.

What to study and how to prepare

If you are aiming for the EA exam, start with a study plan that covers all three parts. The NAEA publishes a recommended reading list that includes IRS publications (free from IRS.gov), the Internal Revenue Code sections relevant to each part, and study guides. Most people use a combination of self-study books and online courses. Surgent, Bisk, and the NAEA itself offer structured courses that cost $300 to $800.

For the Competency Exam or CPA Exam, the same principle applies: use official study materials (IRS publications for Competency, AICPA resources for CPA) plus a commercial prep course. Budget three to six months of study time if you are working full-time. Many preparers study in the off-season (roughly July through November) when tax work is slower.

Getting your first clients and building a practice

Once you have your PTIN and (ideally) your EA credential, you can start taking clients. Many new preparers begin by working for an established tax firm — H&R Block, Jackson Hewitt, and local CPA firms all hire seasonal and year-round preparers. This gives you experience, a steady client base, and a paycheck while you build your own practice. After a year or two, you can move to independent practice or open your own firm.

If you want to go independent when ready, you will need a business license (usually from your city or county), a business bank account, tax software (like ProSeries, TurboTax for Professionals, or UltraTax), and liability insurance. Many preparers start with a home office and a handful of referral clients, then grow from there. The IRS requires you to renew your PTIN every year and keep records of your clients and the returns you prepared.

Frequently Asked Questions

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

No. You can become an Enrolled Agent or pass the IRS Competency Exam without a degree. A CPA license does require a bachelor's degree and 150 college credits in most states, but that is only one path. Many successful tax preparers have only a high school diploma and an EA credential.

How much does it cost to become a tax preparer?

For the EA route, expect $500 to $2,000 total: study materials ($200–$800), exam fees ($543), PTIN ($203), and EA process fee ($185). For a CPA, the cost is much higher because you need a college degree first, plus exam prep, exam fees ($400–$600), and state licensing. The Competency Exam alone costs roughly $400 to $500 including study materials.

Can I prepare taxes while I am studying for the EA exam?

No. You must have a PTIN before you prepare any tax return for a client. You can get a PTIN by passing the Competency Exam, passing any part of the SEE, or holding an EA, CPA, or attorney credential. You cannot prepare returns while studying.

How long does it take to become an Enrolled Agent?

Most people complete the EA exam in one to two years of part-time study. The exam itself is offered once or twice per year, so timing matters. After you pass all three parts, the IRS processes your process in a few weeks. Total time from start to licensed EA is typically 12 to 24 months.

What is the difference between an EA and a CPA for tax preparation?

Both can prepare taxes and represent clients before the IRS. A CPA can also provide accounting services, audit financial statements, and offer broader business consulting. A CPA typically earns more but requires more education and training. For tax-only work, an EA is often the better choice.