Your Pathway to Becoming an Enrolled Agent
An enrolled agent is someone who works within the tax industry as an expert, and the title is the highest credential that you can get within this industry. It is awarded by the IRS, and you will be extremely looked up to within your sector.
With this being such a high title, it’s not easy to get there. However, with dedication and perseverance, you will be able to get there within your lifetime. Today we’re looking at how to become an enrolled agent, and what your journey might look like on the way.
Tell Me More About Being An Enrolled Agent
An enrolled agent is a privileged title given to those who represent taxpayers before the Internal Revenue Service (IRS). There are two ways that you can become an enrolled agent. The first is by having experience as a previous IRS employee, who knows the in’s and out’s of the business.
However, don’t panic if you don’t have this experience. You can still become an enrolled agent, but it might take you longer. You will need to pass three separate IRS tests, which will cover both individual and business tax returns.
Enrolled agents are offered unlimited practice rights, meaning that they can represent as many taxpayers as they like. They also don’t have to face restrictions on what type of tax matters they deal with, and which IRS offices they represent clients within. This is similar to attorneys and certified public accountants.
There are lots of interesting facts surrounding this job, such as the fact that you don’t need a college degree to be awarded the title of enrolled agent. You can also get this job title without knowing much about accounting or higher math, so it is a much more inclusive job than you might first think.
Another interesting fact is that your earning potential will be higher as an enrolled agent because you know more about tax, and you’re in a non-restrictive job role so you can help clients in many more ways. You can also work harder throughout the year to help more clients and take on more tasks.
The three-part exam to become an enrolled agent does not have to be completed all at once. You can pass it one part at a time throughout the course of two years. This allows you to study harder for the correct part of the exam, giving you a better chance of passing them and becoming an enrolled agent!
Starting Your Journey To Become An Enrolled Agent
As with any new job profession, it can be difficult to know where to start when becoming an enrolled agent. This job role makes most sense for people who are interested in becoming a tax preparer, or people who are already in this role. If this is you, then the IRS already has a voluntary program for tax preparers.
Completing this program allows you to have the recognized credentials to represent clients whose returns you have prepared. And if you can’t talk to the IRS for your clients, you’ll be more likely to lose them.
IRS examinations are also on the rise, making it even more important that you have these credentials. The voluntary program is 6 hours long and has a test at the end, along with 15 hours or CE. If you have completed this program, or are planning to, it just makes sense that you would then work towards the highest credential that you could - enrolled agent.
Becoming an enrolled agent requires you to further your education, but this is more than worth it for many people. It allows you to work with more complicated tax returns, which then helps you to grow and expand your business more.
Enrolled agents can also become specialists in different areas of the sector and become an expert.
A good example to put this into perspective is a family doctor vs a surgeon. A surgeon is going to see much more interesting cases in a day than a family doctor, and they’ll also get paid more for their time. They’ll also likely see fewer patients each day, but still be able to charge more than the family doctor.
This same logic can be applied to the tax industry - the more you expand your knowledge, the bigger you can grow your business, take on more clients, and charge more money.
Also read: Mandatory Deductions From Your Paycheck
Becoming An Enrolled Agent: Step By Step Guide
There are a few steps that you need to take to become an enrolled agent, which we will detail for you now.
Step One: Enrolling In The Chartered Tax Professional Certificate Program
The CTP is an online certificate program that consists of five courses, all totalling 157 hours of instruction. Here you will learn all about tax preparation from the start, and you will be able to complete these courses in less than 18 months.
Most of the topics that will come up in the CTP courses will also be touched upon in the enrolled agent exams, so this program will be helping you on your way to becoming an enrolled agent.
Also read: Are Moving Expenses Tax Deductible?
Are You Ready For The CTP Program?
This program is best for people who already have some knowledge of the tax industry. However, if you’re not sure whether or not you’re ready for it, you do have the option to test out the first part of the course, which is the Comprehensive Tax Course.
This taster course only requires 48 hours of your time and costs around $100 to complete. Once you have completed this, you should have a better idea of whether or not you are ready for this journey.
If you feel as though you are ready, you can upgrade to the whole CTP program without having to take the Comprehensive Tax Course again. If you feel as though you are not ready yet, however, there are other courses available to get your feet wet within the industry and work your way up to this point.
Requirements Needed To Start The CTP Program
Annual CE requirements beginning the year after you qualify as a CTP, including:
15 hours: 9 hours federal law tax, 3 hours federal tax law updates, 3 hours ethics
300 hours of experience must be finished before the final CTP certification is given to you. After the first tax course has been completed you can start to prepare individual tax returns, earning experience and money.
Step Two: Completing Your Surgent EA Review Course
Now that you have completed a few tax courses and have some good knowledge of the tax industry, it’s time to register for the first part of the Surgent’s EA Review Course. Completing this pushes you forward in your goal to becoming an enrolled agent.
Step Three: The IRS SEE Exam
This exam is for those who want to become an IRS enrolled agent. This is the exam that will give you the credential of enrolled agent. Again, you can take one part at a time to make it easier on yourself, and you have two years to complete it.
There are five steps to passing the SEE exam, which are as follows:
Creating your account.
Review the candidate information, which will give you important information on the exam and the process of becoming an enrolled agent.
Look through the exam content outlines, including the specifications for each part.
Study and prepare for the exam, as well as pay the fee for the appointment.
Take your exam at the Prometric Testing Center.
Step Four: Register As An Enrolled Agent
Now that you have successfully completed each part of the SEE exam, you should maintain your Preparer Tax Identification Number with the help of the IRS. You can then apply for your enrollment by filling out the Pay.gov Form 23, which is the Enrolled Agent application.
Once you have passed the suitability test, which will include a tax compliance certificate to ensure that you have no liabilities yourself, you will be successful to become an enrolled agent. From the passing of your exam to getting your credential, the process usually takes around 90 days.
Also read: Are Home Improvements Tax Deductible?
Step Five: Maintain Your Credential
To maintain your enrolled agent credential, you will need to follow the ethical standards of the IRS, as well as complete 72 hours of further education courses every three years. You will need to earn at least 16 of these hours each year, and two hours must be concerning ethics.
And there you have it - a step by step guide on how to become an enrolled agent. While the process may seem easy and straightforward, there is a need for a lot of training and studying.
With that being said, if you want to reach a higher level in your career, the enrolled agent credential is an excellent one to have. It allows you to work without any restrictions, earn more money, and grow your business.
As you can take the exam in three parts within two years, the studying process should be much easier on you. So, what are you waiting for? Good luck!
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