If you’re already a tax preparer, congrats! You’ve made a great career choice. And if you’re thinking about becoming a tax preparer, it’s really a great time! So kudos to you for being here! Tax preparers are in high demand right now and those with advanced tax knowledge are even more sought-after! Taxpayers are looking for tax professionals with credentials to handle their income tax matters.
Continuing Education is Necessary for Tax Preparers
One of the most important things you can do as a tax preparer is continue your tax education each year. This is super important because tax laws are always changing. You owe it to your clients to stay up-to-date on the tax laws that can impact them. The Internal Revenue Service (IRS) even created the voluntary Annual Filing Season Program (AFSP) to give unenrolled tax preparers a minimum standard they can meet each year, which includes a 6-hour federal tax refresher course with a test, plus 15 hours of continuing education. Both need to be completed annually to earn your AFSP Record of Completion. The biggest benefit of the AFSP program is that you can maintain limited representation rights for your clients…so you can talk to certain departments at the IRS on behalf of your clients. Without this minimum standard, you cannot! It’s pretty much a no-brainer to meet this minimum standard, for you and your clients. But if you’re going to complete the voluntary AFSP each year, you should really ask yourself why you wouldn’t want to work toward becoming an Enrolled Agent (EA).
An EA is the highest credential in the tax industry, awarded by the IRS
Enrolled Agents, or EAs, also have an exam and annual continuing education requirements. EAs must successfully pass a three-part exam (the three parts of the exam are taken one at a time and you have a total of two years to get a passing score on all three parts), and then complete 72 hours of continuing education (CE) every three years. A minimum of 16 of those hours must be earned each year. You only have to take and pass the three-part exam one time, as long as you maintain your CE requirements. Once you have the tax knowledge under your belt, an EA exam review really helps you prepare for the exams.
That’s only an additional 27 CE hours over a three-year period above and beyond the voluntary IRS Annual Filing Season Program (AFSP). If you do the math, that’s basically an additional 9 hours of CE per year above the AFSP, which is the minimum standard. When you look at it that way, it makes complete sense to work towards the EA credential! Putting in a few more hours each year can put you at the top of the tax industry!!
EAs have unlimited representation rights before the IRS
Enrolled Agents, along with attorneys and Certified Public Accountants (CPAs), are the only tax professionals with unlimited representation rights, meaning they can represent their clients on any matters including audits, payment/collection issues, and appeals. This means EAs can represent their clients on any tax issue. This is huge and you can add IRS representation to the list of services you provide! People pay top dollar for IRS representation services.
Becoming an EA increases your credibility
When you earn the Enrolled Agent status, you’re showing your clients you’ve worked hard and are at the top of the tax industry. Enrolled Agents are federally authorized by the IRS to practice in any state. Interestingly, CPAs have to be licensed separately in each state they wish to practice in.
EAs can expect more clients and continued job growth
EAs can have more tax knowledge, which means they can serve more clients and specialize in more complicated tax situations, which means more revenue. There is serious growth potential in the types of clients you can serve when you become an EA. You will be able to handle all kinds of tax issues.
EAs have a higher earnings potential
Being at the top of the tax industry, you’ll be able to charge more for your services, while serving fewer. People don’t want to mess around when they’re dealing with their finances. Think of a general doctor versus a specialist. A general doctor typically makes less money and sees more patients on any given day. A specialist usually makes more money and sees fewer patients in a day. The same is true for a regular tax preparer versus an Enrolled Agent.
Some quick facts and myth-busters about Enrolled Agents…
- You don’t need a college degree to become an Enrolled Agent.
- You don’t need to know accounting or high level math to become an Enrolled Agent.
- There is a shortage of Enrolled Agents, who can handle more complicated tax returns and represent clients before the IRS.
- Your earning potential is much greater when you become an Enrolled Agent because you have a higher level of tax knowledge and are an unrestricted, meaning you are able to do more things for your clients. You can easily work year-round assisting clients with tax preparation and many other different tax issues.
- You can pass the three-part Enrolled Agent Exam, also called the Special Enrollment Examination (SEE), one part at a time, and you have two years from passing the first exam to pass all three parts! This makes studying and passing the SEE exam much more manageable!