Before you can file your first tax return as a professional, you need several credentials from the IRS. Two of those are the Electronic Filing Identification Number (EFIN) and Preparer Tax Identification Number (PTIN).
These numbers serve as your legal authorization to prepare and file taxes for clients. Without them, you cannot use tax software professionally or e-file returns. It doesn’t matter how great your tax expertise is.
This guide walks you through exactly what these numbers are, how to apply for them quickly, and why they matter for your tax preparation practice.
What is an EFIN?
The Electronic Filing Identification Number (EFIN) allows tax professionals to e-file client tax returns with the IRS. You cannot submit electronic returns without this unique identifier. The IRS issues EFINs to verify that only authorized individuals and businesses transmit sensitive taxpayer information.
To get an EFIN, you must complete the IRS e-File application, pass a suitability check, and verify your firm’s ownership or employment status. The IRS reviews your criminal history, tax compliance record, and checks for any past fraudulent activities. This thorough process takes several weeks to months. Apply well before tax season to avoid client service delays.
What is a PTIN?
The Preparer Tax Identification Number (PTIN) identifies you personally as a tax preparer. If you’re paid to prepare federal tax returns, the IRS requires you to have one. Think of the EFIN as the firm’s credential, and the PTIN as yours.
Getting a PTIN takes less time than securing an EFIN. You can apply through the IRS website by providing personal and professional information and paying the application fee. Most approvals happen instantly, allowing you to start preparing returns immediately. Remember to renew your PTIN annually before the December 31 deadline to maintain your ability to prepare returns legally.
Why Do Tax Preparers Need Both an EFIN and PTIN?
Many new tax professionals wonder whether they need both credentials. Your business model determines the answer. If you work for an established firm, you might only need a PTIN since the company’s EFIN covers your electronic filings. However, independent preparers and new firms must obtain their own EFIN to submit returns electronically.
The IRS prohibits preparing returns for compensation without a PTIN. Similarly, you cannot e-file returns without an EFIN, and electronic filing has become the standard method for most tax work. If you plan to operate independently or build your own tax preparation business, secure both credentials early to avoid limitations during tax season.
How to Apply for an EFIN and PTIN
Follow these specific IRS procedures to secure your credentials:
- Get your PTIN first: Visit the IRS website and complete the online PTIN application. You’ll provide personal information, verify your tax compliance history, and pay the required fee. Most approvals happen instantly.
- Then apply for an EFIN: Create an IRS e-Services account and submit your e-File application. The IRS will conduct a thorough background check that typically takes 30-45 days to complete.
Tax season waits for no one, so apply for both credentials at least two months before you plan to start preparing returns. Using this timeline, you’re more likely to have everything you need when clients begin seeking tax help.
The Role of Professional Tax Software in Tax Preparation
After securing your EFIN and PTIN, you’ll want reliable software for tax preparers to run your business efficiently. The right software makes a significant difference in how many clients you can serve and how accurately you complete their returns.
Look for tax preparation software that offers:
- E-filing capabilities that work with your new EFIN
- Automatic tax law updates so you don’t miss important changes
- Error checking to catch potential issues before submission
- Multiple return type support for various client needs
- Strong security features to protect sensitive client data
As a new tax preparer, it’s helpful to balance software cost against features. Many vendors offer tiered pricing that lets you start small and add capabilities as your practice grows. Before making your decision, take advantage of free trials to test how different options fit your workflow and technical comfort level.
Key Benefits of Using Tax Software for Tax Preparers
Professional tax software saves you substantial time by automating calculations and data entry. Instead of manually working through every form, it handles the math and automatically populates related fields. This speed boost lets you serve more clients during the busy tax season.
Quality tax software also significantly reduces errors. Built-in checks flag potential mistakes before submission, and automatic updates mean you’re using the most current tax forms and following the latest regulations. This compliance protection is especially valuable as tax laws continue to change.
Most importantly, the right software for tax preparers improves your client experience. Your clients get faster processing, more accurate returns, and often electronic refund tracking. These benefits help you build a reputation for reliable service, which can lead to referrals and practice growth.
Common Challenges and Solutions for New Tax Preparers
New tax professionals face several critical hurdles when starting their practice. Most importantly, the EFIN processing delay can disrupt your business plans if not addressed early. It’s a good idea to apply at least 45 days before you intend to file returns.
Additionally, many preparers struggle with software selection given the overwhelming number of options. Prioritize finding software that specifically addresses your business model and typical client situations, rather than choosing based solely on price.
Your First Steps as a Professional Tax Preparer
Understanding EFIN and PTIN requirements is your first step toward becoming a successful tax preparer. While your PTIN identifies you personally as a tax professional, your EFIN enables electronic filing. Both are mandatory for independent practitioners.
Pairing these credentials with the right professional tax software gives you a strong foundation. Good software reduces errors, speeds up your work, and helps deliver better results for clients.
Apply for your credentials early and choose your software carefully. These initial decisions set the stage for a successful tax preparation career and help you build a practice that can grow year after year.
