Becoming an enrolled agent can be a multi-step process, and not all of those steps are common knowledge. Due to how obtuse the process can be, it’s necessary to know how to prepare for your EA exam, what you need to do before, and the steps following your exam completion.
We can break these steps down into three parts, the first being what you need to do before taking your enrolled agent exam. Second, be ready for the material on that exam and know the proper study habits to help you pass. Third and final, what you need to do once you pass your exam. Utilize this article as a checklist to keep you focused on your goal and as a reminder of where you are in the process.
What To Do Before the Exam
The first critical step to prepare for your future as an enrolled agent is to obtain a Preparer Tax Identification Number (PTIN). This is an ID number that comes straight from the IRS, and prospective tax professionals who intend to work in the field need to have one. Without the PTIN, you can’t prepare taxes for clients or even register to take the exam, which makes this ID necessary to continue in the profession.
How To Apply
The IRS website provides access to a simple online application that can be used to request a PTIN.. There are several pieces of information you need to provide, including:
- Social security number
- Name, mailing address, and date of birth
- Businesses’ name, mailing address, and telephone number (if applicable)
- Previous year’s individual tax return, including address and filing status
- An explanation of previous tax obligations and felony convictions if they exist
After you fill out and submit all the necessary information and documents, the IRS will send you a PTIN in four to six weeks.
What To Do for the Exam
Once you have your PTIN, you can focus on the biggest challenge you need to face: taking the enrolled agent exam. This test will examine your competency with tax-related subjects, testing you on several aspects of the tax world. There are no formal education requirements you need to hold in order to take the test but having a background in the field can be beneficial to the process.
Prepare For the Exam
To focus your study efforts, you need to know what the test includes and how the overall exam structure looks. The test contains three parts, including tax knowledge as it relates to individuals, tax knowledge as it relates to businesses, and representation, practices, and procedures. Each part has an exam with 100 multiple choice questions and a three and a half hour time limit for completion.
Do You Need To Take the Entire Test in One Sitting?
A common question potential enrolled agents ask is if they need to complete the entire test in one session. The EA exam is a three-part exam. Assuming you use up all the allotted time for each part, this results in over 10 hours of test-taking, which is an extreme feat for anyone. Luckily, the IRS doesn’t expect anyone to take all three parts in one sitting, allowing students to schedule and complete one part at a time.
However, this doesn’t mean you have an unlimited amount of time to complete everything. Once you register to take the exam, you must schedule your first part within a year of that registration. After you pass your first part, you must complete the other two parts within three years. This allows you to take time between exam parts to deal with life’s situations or to decompress after the prior exam part. With a little breathing room, you can start studying for the next part refreshed. Keep in mind, once you pass one exam part, you have a finite timeframe to get them all done.
Know How To Study for the Test
Independently, it’s going to be a challenge to prepare for the test. It covers so much material that you will inevitably forget to prepare for some topic or another that will be included on the test. Because of how difficult the studying process can be, it’s essential to look into tax and accounting exam prep.
Online courses can connect you to other industry professionals and instructors in the field, providing you with an invaluable resource to build your preparatory education on. Utilizing these courses gives you the opportunity to take practice tests that offer some insight into your strengths and areas where you need to improve.
What To Do After the Exam
Once you complete all three parts of the exam with passing scores, the following step is quite simple and can be done online at pay.gov. Fill out and submit Form 23, along with the applicable fee, which is currently roughly $70. After submitting Form 23, the IRS will perform a suitability check, which is the final step. The suitability check covers your background and tax history. This part makes sure you don’t have any unfiled return or unaddressed tax liabilities. Tax liabilities may prevent an application from being approved unless acceptable payment arrangements have been established.
The Years Following Your Exam
The process doesn’t end with passing your exam, as there are still some requirements you must regularly fulfill. You must renew your PTIN every year to keep it current and submit the IRS Form 8554 every three years to renew your enrollment. To renew enrollment, you must also complete 72 hours of continuing education every three years, with a minimum of 16 hours of continuing education every year. These processes ensure your credentials and knowledge stays up to date, so you don’t continue in a professional capacity with outdated and inaccurate practices.
Set Yourself Up for Success
An enrolled agent exam prep list will provide you with the assistance you need to get your professional tax career going. Use this article as a guide to navigate your way through your preparatory work, examinations, and reenrollments through the years. It’s an ongoing process essential to maintain your credentials and continue to effectively work in the industry.
The hardest part is passing the three-part exam, but even that won’t be a challenge with the right resources to help you study. Give yourself the best chances at success possible and use the tools and mentors around you to help shape your professional career.