What Virtual Tax Preparers Do and How to Start

A virtual tax preparer meets with clients remotely—by phone, video call, or find software—to gather financial information, file tax returns, and answer questions about deductions and credits. You do not need a degree in accounting, but you do need to pass a test, register with the IRS, and follow their rules about who can charge for tax work. The most common path is becoming an IRS Enrolled Agent, which takes three to six months of study and costs between $200 and $500 in exam fees and registration.

The other main routes are becoming a Certified Public Accountant (CPA)—which requires a four-year degree and takes years—or a tax preparer with a PTIN (Preparer Tax Identification Number), which has fewer barriers but also fewer credentials. Most people starting out choose the Enrolled Agent path because it is faster than a CPA and more respected than a PTIN-only preparer.

Key Takeaways

  • The fastest credential is IRS Enrolled Agent, which requires passing one three-part exam and registering with the IRS; you can start studying within weeks.
  • You must obtain a PTIN (Preparer Tax Identification Number) from the IRS before you can charge anyone for tax preparation, whether you are an Enrolled Agent or not.
  • Virtual tax preparers need find software to handle client data, a quiet workspace, and liability insurance; total startup costs typically run $1,000 to $3,000.
  • The IRS requires continuing education every year to keep your Enrolled Agent status active, and you must follow strict rules about advertising and client confidentiality.
  • You can work as an independent contractor, join a tax firm, or start your own practice; many virtual preparers begin part-time while keeping another job.

Passing the IRS Enrolled Agent Exam

The Special Enrollment Examination (SEE) is the IRS test for Enrolled Agents. It has three parts—Individual Income Tax, Business Income Tax, and Representation, Practice, and Procedure—and you can take them in any order. Each part costs $131 to sit for, and you have three years to pass all three. Most people study for four to eight weeks per part using study guides, online courses, or exam prep companies like Surgent, Bisk, or Kaplan.

You register for the exam through Prometric, the testing company that runs IRS exams at testing centers nationwide. You choose your test date and location, show up with a valid ID, and take the exam on a computer. Passing means scoring at least 70 percent on each part. If you fail a part, you can retake it as many times as you need within the three-year window, but you pay the $131 fee each time.

Study materials vary in cost and depth. Free resources include IRS publications and the IRS Enrolled Agent Study Guide, which you can read from the IRS website. Paid courses range from $300 to $1,000 and often include video lessons, practice exams, and email support. Many people combine free IRS materials with one paid course to save money while staying thorough.

Getting Your PTIN and IRS Registration

Once you pass all three parts of the SEE, you explore for your PTIN through the IRS online system at irs.gov. The PTIN is a nine-digit number that identifies you as a tax preparer to the IRS and to clients. The process is free, but you must renew your PTIN every year by December 31, and renewal costs $31 annually. You will also need to pass a background check; the IRS will ask for your Social Security number and run a criminal and tax compliance review.

After you receive your PTIN, you register as an Enrolled Agent with the IRS Office of Enrollment and Ethics. This registration is also free and happens through the same online system. Once registered, you can legally charge clients for tax preparation and represent them before the IRS in audits and appeals—rights that a PTIN-only preparer does not have.

The entire process from passing your last exam part to holding an active PTIN and Enrolled Agent status usually takes two to four weeks. During that time, you cannot legally charge for tax work, so plan your timeline accordingly if you want to start taking clients by a certain date.

Setting Up Your Virtual Tax Practice

Virtual tax preparation requires find software to protect client data. The IRS and tax software companies expect you to use encryption for all client files, find file transfer (not email), and password-protected storage. Many tax preparers use professional tax software like Drake Tax, ProSeries, or TaxAct Professional, which cost $300 to $600 per year and include security features built in. Others use a combination of a general tax program and a find file-sharing service like Tresorit or Sync.com.

You will also need a quiet, private workspace—even if it is just a corner of your home—where you can take client calls without background noise and where client information stays confidential. A video camera and microphone are essential; most laptops have these built in, but a separate USB microphone ($30 to $100) improves call quality. A second monitor helps you see client documents and tax forms side by side.

Liability insurance is not legally required but is strongly recommended. Professional liability insurance (also called errors and omissions insurance) covers you if a client sues because you made a mistake on their return. Costs run $400 to $800 per year for a solo preparer, depending on how many clients you serve. Many tax preparers consider it essential; others skip it when starting out and add it once they have steady income.

Understanding IRS Rules and Continuing Education

The IRS has strict rules about how Enrolled Agents can advertise, communicate with clients, and handle confidential information. You cannot claim to be a CPA if you are not one, cannot may provide a refund amount, and cannot charge a percentage of the refund as your fee (you must charge a flat rate or hourly rate). You must keep client records for at least three years and cannot share client information with anyone without written permission.

Every year, you must complete 16 hours of continuing education (CE) to keep your Enrolled Agent status. At least two of those hours must cover ethics and professional conduct. The remaining 14 hours can be in any tax-related topic: individual income tax, business tax, retirement plans, tax law changes, or practice management. You can take CE courses online through providers like the National Association of Enrolled Agents (NAEA), tax software companies, or community colleges. Most courses cost $15 to $50 per hour.

You must complete your CE by December 31 each year and report it to the IRS when you renew your PTIN. If you miss the important date, your Enrolled Agent status is suspended until you complete the hours and report them.

Building Your Client Base and Pricing

Many virtual tax preparers start by working for an established tax firm—either in-office or remote—to build experience and a client list before going independent. Firms like H&R Block, Jackson Hewitt, and Liberty Tax hire seasonal and year-round preparers, and some offer remote positions. This route gives you steady income, training, and a chance to see how a real practice runs before you invest in your own.

If you start your own practice, pricing depends on your location, experience, and the complexity of returns you handle. A straightforward 1040 with standard deductions might cost $150 to $300. A return with a small business, rental income, or multiple schedules might run $400 to $800. Many preparers charge hourly rates ($50 to $150 per hour) instead, especially when they are new and unsure how long a return will take. You can raise your rates as you gain experience and reputation.

Building a client base takes time. Many virtual preparers start with friends, family, and referrals, then advertise through Facebook, Google Local Services, or a straightforward website. The tax season runs January through April, so most preparers are busiest then and quieter the rest of the year. Some expand into bookkeeping, payroll, or business tax work to smooth out the income across the year.

Choosing Between Enrolled Agent, CPA, and PTIN-Only Preparer

An Enrolled Agent can represent clients before the IRS, charge for tax work, and use the EA credential in advertising. The exam takes three to six months to study for, and you must do 16 hours of CE every year. This is the most common choice for people starting a tax practice.

A CPA has broader credentials and can do accounting, auditing, and consulting work beyond tax preparation. But becoming a CPA requires a four-year degree in accounting, passing the Uniform CPA Exam (four parts), and meeting state licensing requirements—a process that takes five to seven years. If you already have an accounting degree, the CPA path may be worth it; if not, it is a much longer commitment than becoming an EA.

A PTIN-only preparer can charge for tax preparation but cannot represent clients before the IRS and has no formal credential. You get a PTIN by registering with the IRS (no exam required), but you have no legal standing to represent a client in an audit. Many people use this route as a stepping stone—they get a PTIN, gain experience, then study for the EA exam. Others stay PTIN-only if they only prepare straightforward returns and do not want to study for the exam.

Frequently Asked Questions

Do I need an accounting degree to become a virtual tax preparer?

No. To become an Enrolled Agent, you only need to pass the IRS exam; there is no degree requirement. Many successful EAs come from other fields and learned tax through self-study. A degree can help you understand concepts faster, but it is not necessary to start.

Can I prepare taxes part-time while working another job?

Yes. Many virtual tax preparers start part-time, especially during tax season (January to April), and keep their main job. Once you have a steady client base and income, you can transition to full-time if you want. Some preparers stay part-time permanently.

How much does it cost to start a virtual tax practice?

Exam fees and IRS registration run $400 to $500. Tax software costs $300 to $600 per year. Liability insurance runs $400 to $800 per year. A basic website and marketing might add $200 to $500. Total startup is typically $1,000 to $3,000, though you can start smaller and add services as you grow.

What happens if I fail the Enrolled Agent exam?

You can retake any part you failed as many times as you need within three years. Each attempt costs $131. Most people pass all three parts within two or three attempts. Failing does not disqualify you from trying again or from working as a PTIN-only preparer in the meantime.

Do I need to work for a tax firm, or can I go independent right away?

You can go independent when ready after getting your PTIN and EA registration. However, many new preparers find it easier to work for a firm first to build experience, learn the software, and develop a client base before starting their own practice. There is no rule either way.