How to Become a Tax Preparer In California

There are numerous qualifications you need to meet if you want to work as a tax preparer. You need to register with the IRS and in many cases pass the exams to become a Certified Public Accountant (CPA). You also need to comply with the regulations in your state.

In the State of California, any person that assists or prepares for another person in exchange for a fee must register as a professional tax preparer with the California Tax Education Council (CTEC). Local jurisdictions may have their own requirements for tax professionals.

In this post, we will outline a step-by-step process for how you can become a tax preparer in California.

Here’s what we’ll cover:

What are the requirements for a California tax preparer license?

California law states that anyone who assists or prepares tax returns for another person in exchange for payment or other consideration must register with the CTEC. There are some exceptions to this rule. 

If you meet one of the following conditions, you are considered an exempt tax preparer and do not need to register with the CTEC:

  • California Certified Public Accountants (CPAs)
  • Enrolled agents (EAs)
  • Attorneys that are members of the California State Bar
  • Specified banking or trust officials

Steps for obtaining a California tax preparer license

Step 1. Complete education requirements

The CTEC requires all non-exempt tax preparers to complete a 60-hour qualifying education course. This course must be issued by a provider approved by the CTEC.

There is a mix of self-study courses and in-person lessons taught by an instructor. You can find a list of CTEC-approved education providers on their website. 

Step 2. Get your Preparer tax identification number

If you want to get paid to prepare federal tax returns, you must obtain a Preparer Tax Identification Number (PTIN) from the Internal Revenue Service (IRS).

You can apply for the PTIN on the IRS website. The application takes about 15 minutes to complete. There is a $35.95 fee that you will need to pay.

Step 3: Get your Electronic filing identification number

Next, you will need to get your Electronic Filing Identification Number (EFIN) from the IRS. This will allow you to submit tax returns for your clients electronically.

To get the EFIN, you need to create an IRS e-Services account, submit an application, and pass a Suitability Check.

You can learn more about the process for becoming an authorized e-file provider on the IRS website.

Step 4. Obtain a tax preparer surety bond

The CTEC requires tax preparers to post a California surety bond before they can receive a tax preparer license. The bonds help protect taxpayers from misstatements, fraud, or other unlawful acts or omissions by the tax preparer.

California tax preparer bonds have a $5,000 total bond amount. You are responsible for paying a small portion of this amount as a premium in order to obtain your bond. Most tax preparer bonds do not require credit checks as part of the underwriting process. However, the surety may choose to do so if it deems it necessary.

EZ Surety Bonds offers the following prices for California tax preparer bonds:

  • 1-year term: $25
  • 2-year term: $35
  • 3-year term: $50
  • 4-year term: $64
  • 5-year term: $80

Step 5. Register with the CTEC

Once you complete the previous steps, you will be ready to register with the CTEC. The application for new tax preparers can be completed online using the CTEC website.

There is a $33 registration fee that you will need to pay when submitting your application. You will also need to provide a copy of your surety bond and the certificate of completion from your 60-hour education course.

How to renew a California tax preparer license

California tax preparer licenses are valid for a one-year period. To renew your license, you need to complete a minimum of 20 hours of continuing education from a CTEC-approved provider during the year.

This includes 10 hours of federal law topics, 5 hours of state law, 2 hours of ethics training, and 3 hours of tax law updates.

If you have more than two years of current experience preparing income tax returns, you may be exempt from the continuing education requirement. Tax preparers that meet this qualification can mail a petition to the CTEC who will decide whether to grant your exemption.

Renewing your license also requires you to submit a renewal application to the CTEC along with the $33 annual registration fee.

The renewal period begins on August 1. Tax preparers have until October 31 to renew their license. If you fail to renew by this time, you will have to pay a $55 late fee.

You can renew your license up until January 15. After that, you will need to start the whole licensing process over again.

You will also need to renew your PTIN with the IRS and ensure that your surety bond remains active. Tax preparer surety bonds can be issued for periods longer than one year so you may not need to renew the bond along with your license.

Get your tax preparer bond online with EZ Surety Bonds

You now know how to become a CTEC registered tax preparer in California. When you’re ready to register as a professional preparer with CTEC, EZ Surety Bonds can help you get your surety bond at an affordable price. Apply online today or let us know if you have any questions.