What are the Requirements to Become an IRS Tax Preparer?
If you are considering earning your income as a future IRS Tax Preparer, there are number of requirements you must meet in order to start working with clients in need of a tax service.
Categories of Tax Preparers
The IRS classifies qualified tax preparers into several distinct categories. These categories are:
- Enrolled Agents
- CPAs
- Attorneys
- Supervised Preparers
- Non-1040 Preparers
Each category has its own set of qualifications which must be met in order to prepare individual or corporate tax returns.
Enrolled Agents
Enrolled Agents are the most rigorously qualified preparers of tax documentation. They must pass a three-part, comprehensive IRS exam which covers both individual and corporate returns. They are required to take a minimum of 72 hours of continuing education courses every three years, and must adhere to strict ethical standards. As a result, these preparers have unlimited rights before the IRS.
CPAs and Attorneys
CPAs and attorneys must pass a tax compliance check and a background check, but they are not required to take an IRS exam. Some may be required to complete continuing education courses in order to remain complaint with US law, but this varies. Both have unlimited rights before the IRS.
Supervised Preparer and Non-1040 Preparers
Both the supervised preparer and non-1040 preparer positions require the least amount qualifications. As a result, their ability to represent their clients concerning tax matters is severely limited in dealing with the IRS.
If you are looking for a career in tax preparation, these are the paths you can consider for employment.
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Should You Pay Your Taxes with Your Credit Card?
While you should have the necessary funds in a traditional bank account to pay your tax liabilities, this is not always an option. You cannot use a debit card to pay your taxes, but credit cards are accepted. The drawback of using a credit card is that you have to pay back the credit card company plus interest; this ultimately results in a higher cost.
Personal Credit Card Interest Not Tax Deductible
Interest accrued on personal credit cards for tax payment purposes is not tax deductible. The only credit card interest that is tax deductible is when the expense is for a business purpose, and this must be documented. Obtain a statement from your credit card company for tax purposes to determine the actual amount of business expense interest that was paid.
Small Tax Debt
Now, if you only owe a small amount of taxes, using a credit card is okay. However, at the same time, you should only use the credit card if you will be able to pay the balance off in-full at statement time, or before the bill even comes.
Use Only Zero Interest Accounts
Only pay your taxes with a credit card if it is a zero interest account. Otherwise, you end up paying more than you owed to begin with. This doesn’t make much sense, but for some individuals, it is the only option.
Closing Thoughts
Only use your credit card to pay your taxes if you have no other choice. If you end up having to make payments to the IRS and a credit card, you’re really getting hit with a double whammy. You end up paying one and half times (minimally) your original debt owed.
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How Back Taxes May Literally Ground You
Owing taxes isn’t a big deal if you work them out as soon as you realize that you owe. Often, you can pay your taxes quarterly or take a small amount in penalties for paying slightly late as long as you come to an agreement with the IRS. If you owe back taxes and they have not been worked out, this can develop into a big issue down the line. Here are some consequences which may result from owing back taxes.
Getting a Lien on Your Home
Buying your home is something that you are likely proud of. The IRS can put a lien on your best possession if you do not pay your tax debts. This means that the sale of your home will result in money going into the hands of the IRS first. If your home sale is not as much as you were expecting, this can result in money still being owed after the sale of a home.
Paycheck Garnishment
Owing the government is a quick way to get your paycheck garnished. The process of getting payments garnished from the government versus private companies is much easier. If you are trying to get yourself together financially, this can cause a shutdown of any of your personal plans.
No Passport
There never used to be any issues with getting a passport due to money, other than child support cases. As of 2016, if you owe at or around $50,000 in taxes, the IRS has the ability to seize your passport. This means no more trips to see family or friends out of the country and no more overseas vacations until your tax debt has been settled.
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