The beginner has to learn the basic rules of income, deductions, credits, exemptions and exclusions and must become familiar with the basic income tax forms and how information flows between the forms.
Computer software has come a long way in minimizing errors and omissions, but it still takes an in-depth understanding of the rules and the forms to prepare accurate returns. One thing you have to remember is that you are dealing with other people's money, and they take it very seriously.
So should you.
You can begin by self-study with IRS materials, then move on to taking a course in tax return preparation, then get hands-on experience either with relatives and friends or with a small local business that needs help.
Self Study
A great way to get started is to get on the internet and download IRS tax return forms and instructions. Read through the instructions line-by-line and familiarize yourself with the purpose of each form and the information needed to complete each form. If you've been preparing your own return, you probably are already somewhat familiar with Form 1040 or 1040-EZ.Purchase the H and R Block Income Tax Book or the J.K. Lasser Income Tax Book. Become familiar with each section.
Buy a copy of Turbo Tax software and install it on your computer. Explore the "Forms" view and learn your way around the forms and data entry methods. Create some phony return fact patterns and prepare the returns. Play around with different income amounts, deductions, learn to enter assets, stock sales, calculate depreciation, learn how and where to enter "office in the home" deductions, rental real estate income and income from a sole proprietorship.
Stick to individual income tax returns in the beginning. Corporate and Partnership returns have a completely different set of rules and will come later. It is true that a basic corporate return is simpler than many individual returns, but it is best to have a thorough understanding of individual tax returns before attempting corporate returns.
If your state has an income tax, download their forms and instructions and spend some time on their website learning the in's and out's of filing their forms. State income tax returns often start with federal taxable income and then make adjustments to determine state income tax liability.
Take a Course on Income Tax Preparation
There are many courses on how to prepare income tax returns. Most will offer some type of "certificate of completion," but such a certificate has little or no worth in the marketplace. The only titles that really command respect (and higher fees) are CPA, Enrolled Agent, or Attorney. But you certainly don't need any of those designations to get started and make serious money.
Most cities have courses offered by various tax franchise operators. H and R Block is the most famous. Their income tax preparation courses are very good and I highly recommend them for beginners. They often advertise that they may offer you a job upon completion, but don't count on that.
Another option is to take a course that is offered by companies that operate over the internet. Often the course will be delivered via workbooks and DVD's and you will have access to internet forums where you can ask questions. The better courses will also make teachers available to you on the phone to answer your questions and help you with any problems you may encounter.
