Is a tax prep career effective as a supplemental income?

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Tax Prep license

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what is this?

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In a world where TurboTax exists, I can’t figure out why so many still use tax services.

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Half of U.S. adults can’t read a book written at the 8th-grade level, according to the OECD.
The average American reads at the 7th- to 8th-grade level, according to The Literacy Project.

As a former owner of a CPA firm that did a lot of tax work, I think you are a little naive.

Turbotax is a wonderful tax prep program; however, if an individual is not very familiar with the tax law, it's usefulness is limited. You'll overpay your taxes 9 out of 10 times. And with the constant changes in the law, unless you are a tax professional, it is near impossible for the average person to keep up with the changes.

With that being said, what is a tax prep license? I assume you mean passing an exam to qualify you to prepare tax returns. It's a very difficult way to make extra income; since you would be preparing returns at night and on weekends, you will be working very long hours for a minimal return.

Yes, if you can find enough clients who have simple returns, then it may be worth your while.

When I had a practice, I had very few clients that had simple returns. As another poster said, if the returns are simple, then why not use Turbotax?

Probably too late to start this year, but work for Turbotax or some other tax prep outfit (HR Block, etc.) for one tax season, see if you like the work, before starting your own practice. Let them pay to train you.

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I assumed he could be preparing 2-3 of these per hour when they’re available and in front of him. That’s basically what I was hoping to do in the evenings and weekends.

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Where are you getting this customer base from? 2-3 per hour is extremely simple returns like single one W-2 and renting, that kinda simple. So simple if people knew you were charging them and then find out about Turbotax you are going to have pissed off clients.

They can be significant.

Unless you have a good core knowledge of tax law, I would not advise you to go this route. It will require a lot of study and you may need a mentor or someone else you can ask questions of on a regular basis.

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Tax Prep license.

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So one of the fun things about life is that there is no license or really any training requiried. You just have to pay a few bucks each year to the IRS for what they call a PTIN. A number of years ago the IRS tried to make you at least have some training / licnese but the courts shut it down.

So in Louisiana, you need a license to make flower arrangements, but not a license to handle people's confidential financial information and file taxed on their behalf. Fun times.

OP, if this is something you are serious about, consider the H&R block tax training. If you pass, you can then apply for a seasonal position with them.

LINK

I will say I have always been shocked at how little they pay their preparers, given how much Block charges for tax prep. But as another poster said, maybe take the class and work for them for a tax season and see what you think. You won't make a lot of money but you also won't have any costs, either.

The types of people you will work with will likely be the retail type... i.e. they show up or make an appointment, you do everything in front of them, and then they file your return, the end. So nights and weekends might be ok but it's going to be times when people can come to you. Not many people in that market want to drop off.

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I am currently a Nursing Home Administrator and work PT as a Respiratory Therapist. I am looking to get out of Respiratory Therapy as a second source of income and am considering acquiring a Tax Prep license. I feel that I could put together a pretty substantial clientele, but I would not be available Mon - Fri 8-4 like some others would be. I would be aiming to do that kind of work in the evenings and on weekends.

Can anyone who currently works in this field chime in on whether or not this proposition would be feasible or worth the while?

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My wife did HR Block for several years.

1) free training
2) very experienced office to help with questions that you will undoubtedly run across.
3) after 5pm hours isn't a problem. 9 to 5 punchers aren't walking in before then.

You won't make a ton of money the first year unless you are doing really complicated returns. And those often don't walk in and drop off for a first year prepper. You say you may have a good client base already and they may have to be that (complicated returns).

Long time preppers do well with return clientele and referrals.

It was a good job for my wife as she was a stay at home mom and had advanced to a stage of motherhood where people paying her to get a few hours away from the kids was a win. She has an accounting background and HR Block was a win on the resume' when the kids were old enough for her to get an actual part time accounting job.

Isn't the tax prep thing just about 3 months a year?