What is the AFSP-AFTR, and how it can improve your tax career.

By Ferey Kian EA, NPTI Fellow

Kian Finance Authority

To become a tax professional, the initial step involves obtaining credentials from the IRS.

Here’s how?

  1. Attend a three-day workshop at an IRS-approved Education Provider, which provides 18 hours of Continuing Education (CE) credits along with an additional two hours of Ethics training*.
    Complete a 3-hour test consisting of 100 questions, requiring a passing grade of 70%.
    Revisit your courses during the annual PTIN renewal process in October.
    Ensure compliance with Circular 230.

Here are the major topics in AFSP/AFTR for 2024 Tax Season

  1. The discussions regarding inflation adjustments cover various areas, including increases in standard deductions, exemptions for the Alternative Minimum Tax, and adjustments in the Earned Income Tax Credit (EITC).
  2. When it comes to income, it’s crucial to determine its taxability, whether it’s considered taxable or not, and whether it falls under the category of earned or unearned income. Understanding the taxability of each type of income and the applicable tax rates is a key aspect of any AFSP coursework. This typically involves studying tax brackets for both income and capital gains, supported by practical examples to reinforce your understanding.
  3. An important focal point for tax professionals involves ethics, particularly in the context of tax preparers’ responsibilities. This includes a comprehensive examination of the penalties associated with mistakes and deviations from Circular 230, albeit briefly discussed.Help your clients to stay audit free: 

Step one:

To effectively prepare an income tax return for a client, it’s important to follow these general steps as part of your due diligence:

  1. Begin by reviewing the accuracy of the prior year’s tax return, making comparisons, and identifying any carryovers that are relevant to the current year’s return.
  2. Gather the client’s personal information, including details such as date of birth, age, marital status, citizenship, and information about dependents.
  3. At a minimum, ensure that form 13614-c is completed and signed by the client.
  4. Examine all sources of income, both taxable and non-taxable, such as wages, interest, business income, property sales (sometimes referred to as Sale of Assets), dividends, rental income, income from flow-through entities, alimony, government payments, and pension distributions.
  5. Determine any adjustments to gross income that apply, including self-employed health insurance, self-employment tax, student loan interest deduction, alimony paid, tuition and fees deduction, and more.
  6. If itemized deductions on Schedule A are necessary, review both the previous year’s and the current year’s deductions. This includes deductions for state and local taxes, real estate taxes, cash and non-cash contributions, unreimbursed employee expenses, medical expenses, and mortgage interest.
  7. Identify any tax credits that may be applicable, such as the earned income tax credit, child tax credit, education credits, retirement savings credits, and dependent and child care credits.
  8. Inquire about any tax payments made, including withholding and estimated payments.
  9. Recognize items that may impact future tax returns, including carryovers and depreciation.
  10. Determine whether there are any special filing requirements, such as those related to presidentially declared disaster areas.\
  11. Assess the overall filing requirements, including considerations for extensions and amended returns.
  12. Be aware of the due dates for filing, including any extensions that may be needed.
  13. Verify if the client meets the qualifying child or relative tests for the Earned Income Credit.
  14. Finally, review any pertinent information related to digital assets (cryptocurrency) and foreign accounts.

prepare an income tax return for a client, these are general steps for your due diligence.

  1. Begin by carefully examining the previous year’s tax return to verify its accuracy, make comparisons, and identify any items that need to be carried over to the current year’s return.
  2. Collect important biographical information from the taxpayer, including details like their date of birth, age, marital status, citizenship status, and information about any dependents.
  3. At the very least, make sure to have the client complete and sign form 13614-c.
  4. Review all sources of income, both taxable and non-taxable. This includes wages, interest, income from businesses, proceeds from property sales (sometimes referred to as Sale of Assets), dividends, rental income, income from flow-through entities, alimony, government payments, and pension distributions.
  5. Determine any adjustments that should be made to the gross income, such as those related to self-employed health insurance, self-employment tax, student loan interest deductions, alimony payments, and deductions for tuition and fees.
  6. If you are using Schedule A for itemized deductions, carefully review both the deductions from the previous year and those applicable for the current year. This includes deductions for state and local taxes, real estate taxes, cash and non-cash contributions, unreimbursed employee expenses, medical expenses, and mortgage interest.
  7. Identify any tax credits that may apply to the taxpayer, such as the earned income tax credit, child tax credit, education credits, retirement savings credits, and dependent and child care credits.
  8. Inquire about any tax payments the taxpayer has made, including withholding and estimated payments.
  9. Recognize any items that might have an impact on future tax returns, such as carryovers and depreciation.
  10. Determine if there are any specific filing requirements, including those related to areas designated as presidentially declared disaster zones.
  11. Understand the complete set of filing requirements, which encompasses considerations for extensions and amended returns.
  12. Be aware of the deadlines for filing, including any extensions that may be required.
  13. Determine if the taxpayer meets the qualifying child or relative tests for the Earned Income Credit.
  14. Lastly, examine any relevant information regarding digital assets (cryptocurrency) and foreign accounts.

 

Step Two: Get Credentials

Begin this year by participating in the AFSP-AFTR, allowing you to become eligible to represent your clients in audits.

The Annual Filing Season Program aims to acknowledge and motivate tax return preparers who are not enrolled but voluntarily enhance their expertise and elevate their competence during the filing season through ongoing education.

Looking ahead to the next year, your objective should be to attain the Enrolled Agent designation.

CONTINUING EDUCATION REQUIREMENT.

IRS encourages tax preparers to take 18 hours of continuing education to stay on its database.

The 18 hours credits must be in the following categories:

  • 10 hours – Federal Tax Law
  • 6 hours – Annual Federal Tax Refresher
  • 2 hours – Ethics

Who Can Practice before the IRS:

To practice before the IRS you must be an Enrolled Agent, Enrolled Actuary,  Attorney,  or a CPA.  You may have presentation rights to practice if you meet certain criteria.

When you complete your AFSP, you can now represent the clients whose tax you prepared as their representative.

In order to get the due credit:

  1. Have an active preparer tax identification number (PTIN).
  2. Take 18 hours CE credits to include the topics mentioned above
  3. Pass the 100 question test with passing score of 70% (its open book test)
  4. Consent to adhere to specific practice obligations outlined in Subpart B and section 10.51 of Treasury Department Circular No. 230.

To stay updated on new tax laws and revisions, you must complete a course either online via Zoom or in-person. Additionally, you’ll be required to pass a 100-question test, typically lasting three hours. When renewing your PTIN, you’ll need to provide your consent to adhere to the IRS Circular 230.

In return for your efforts, the IRS will include your name and address in their directory, which is published by the end of January 2024. This means that anyone seeking a tax preparer in your zip code area can easily find your information in the IRS Directory. It’s worth noting that this free advertising in the IRS publication can be more valuable than spending thousands of dollars on marketing efforts.

AFSP Conference in Ft. Lauderdale, Florida: November 17-18-19/ 2023  (Enrolled Agents and CPAs  can register for 13 CE offered on 18th and 19th  )

If you like to register for our Live Zoom, the last chance to attend the AFSP conference is December 16,17, 18 of 2021.  You can register online. Go to Annual Federal Tax Refresher or AFSP. This is a step to get out of tax preparer to tax professional. Go for it.

*If you are in Florida and you would like to attend a workshop in person, come to Kian Finance Authority 3 days conference one 17-18-19 in Bahia Mar Hotel. 801 Seabreeze Blvd, Fort Lauderdale, FL 33316

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