What is the AFSP-AFTR, and how it can improve your tax career
By Ferey Kian EA, NPTI Fellow
Kian Finance Authority
The first step in becoming a tax professional is to get credentials from the IRS.
- Attend a three days workshop at an Approved IRS Education Provider that offers 18 hours of CE credits plus TWO hours of Ethics*
- Take a 3 hour test (100 questions with 70% passing grade)
- Review your courses when you are renewing your PTIN in October
- Accept compliance with Circular 230
Here are the major topics in AFSP/AFTR for 2024 Tax Season
- Topics on inflation adjustments show increases in a few areas, such as standard deductions and the exemptions for the Alternative Minimum Tax and inflation adjustment in the EITC.
- Income needs to be classified whether they are taxable or not, whether they are earned or unearned.. What is the taxability of each income and at what rate. In any AFSP coursework, tax brackets for income and capital gain are discussed with examples to reinforce your learning.
- A very important topic for tax professionals deals with ethics, mainly as it concerns taxpreparers responsibilities and all the penalties for mistakes, and aversions/diversions from circular 230 are briefly discussed.
Help your clients to stay audit free:
To prepare an income tax return for a client, these are general steps for your due diligence.
- Review the prior year’s return for accuracy, comparison, and carryovers for the current year’s return.
- Collect taxpayer’s biographical information (e.g., date of birth, age, marital status, citizenship, dependents).
- At minimum, get form 13614-c completed and signed by the client.
- Review all taxable and non-taxable income (e.g., wages, interest, business, property sale, (sometimes called Sale of Assets) dividends, rental income, and income from flow-through entities, alimony, government payments, and pension distributions).
- Determine applicable adjustments to gross income (e.g., self-employed health insurance, self-employment tax, student loan interest deduction, alimony paid, tuition, and fees deduction).
- Review last year’s and this year’s deduction if Schedule A itemized deduction is needed (e.g., state and local tax, real estate tax, cash contributions, non-cash contributions, unreimbursed employee expense, medical expense, and mortgage interest).
- Determine applicable credits (e.g., earned income tax credit, child tax credit, education, retirement savings, and dependent and child care credit).
- Inquire about any tax payments (e.g., withholding, estimated payments).
- Recognize items that will affect future returns (e.g., carryovers and depreciation).
- Determine special filing requirements (e.g., presidentially declared disaster areas).
- Determine filing requirements (including extensions and amended returns).
- Understand due dates, including extensions.
- Determine qualifying child/relative tests for Earned Income Credit.
- Review any information about Digital Assets ( cryptocurrency) and foreign accounts
Step Two: Get Credentials
Start this year with AFSP-AFTR so that you can represent your clients in audit.
The Annual Filing Season Program is intended to recognize and encourage unenrolled tax return preparers who voluntarily increase their knowledge and improve their filing season competency through continuing education (CE).
Next year, your goal should be Enrolle 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:
- Have an active preparer tax identification number (PTIN).
- Take 18 hours CE credits to include the topics mentioned above
- Pass the 100 question test with passing score of 70% (its open book test)
- Consent to adhere to specific practice obligations outlined in Subpart B and section 10.51 of Treasury Department Circular No. 230.
To stay abreast of all new tax laws and updates, you need to take the course online, through Zoom, or attend in person. You also need to take a test of 100 Questions (usually a three hours test), and when renewing your PTIN, you will have to click to consent to comply with the IRS Circular 230.
In return, IRS will publish your name and address in their Directory published by the end of January 2024 so that anyone looking for a tax preparer in your zip code area can see your name in the IRS Directory. Do we need to say that thousands of dollars of the marketing budget will not beat this free advertising in the IRS publication?
AFSP Confernce 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 taxpreparer 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