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Freelance & Remote

How to Make Money as a
Tax Preparer

Earn $150-$500 per return preparing taxes for individuals and small businesses. Make $15K-$30K in just 4 months of tax season work - and build a loyal client base that returns every year.

$150-$500 Per return
$300-$1,200 Startup cost
Jan-April Peak earning season
Hard Difficulty

Quick Facts

Earning Range
$150 - $500/return
Startup Cost
$300 - $1,200
Time to First $
Jan (tax season)
Difficulty
Hard
Time Commitment
10 - 60 hrs/week (seasonal)
Tax Form
1099-NEC / Schedule C
Equipment Needed
Computer + tax software
Work Location
Remote or in-person

What You'll Do

Tax preparers compile clients' financial information - W-2s, 1099s, investment statements, business receipts - and use professional tax software to accurately prepare and e-file federal and state income tax returns. The work is detail-intensive but learnable, and the seasonal income can be extraordinary for the hours invested.

The business model is highly sticky - a client satisfied in year one almost always returns in year two, plus refers friends and family. Many preparers acquire 80-90% of their client base through referrals from existing clients. Building a base of 100 clients is enough for a $25,000-$40,000 annual income from just 4 months of focused work.

Common return types you will prepare:

  • Form 1040 - individual returns
  • Schedule C - self-employed income
  • Schedule E - rental property income
  • Small business (S-Corp, LLC) returns
  • Amended returns (Form 1040-X)
  • First-year gig and freelance filers
  • Investment income (Schedule D)
  • Prior year unfiled returns

Earnings Breakdown

Fees are charged per return, not per hour. Simple W-2 returns are fast but low-fee. Complex returns with business income take longer but pay significantly more per client.

$150-250 Simple W-2 return
$300-500 Schedule C / small biz
$15K-$30K Seasonal income (4 months)
Return Type Fee Range Time per Return Annual Volume Needed for $20K
Simple 1040
W-2 only, standard deduction		 $150 - $200 30-60 min 100-133 returns
Itemized / Multi-state
Itemized deductions, 2 states		 $200 - $350 60-90 min 57-100 returns
Schedule C / Rental
Self-employed or landlord		 $300 - $500 90-150 min 40-67 returns
Small Business Return
S-Corp, LLC, partnership		 $500 - $1,200+ 3-6 hours 17-40 returns

Experienced preparers with established client bases charge at the high end of these ranges. In competitive markets, new preparers may start at the low end and raise rates after the first successful season.

Startup Costs

The main investment is professional tax software. Unlike consumer software, professional packages support all tax forms, allow e-filing for clients, and include client management tools.

ItemCostRequired?Notes
IRS PTIN registration $0 Required Free at irs.gov/ptin. Must renew each year before December 31.
Professional tax software $300 - $600 Required Drake Tax, TaxSlayer Pro, or ProSeries. Includes e-filing. Annual license.
AFSP continuing education $75 - $200 Recommended 18 credit hours. Gives limited IRS representation rights. Boosts client trust.
Professional liability insurance $200 - $500/yr Recommended Protects you if a client claims your error caused them financial harm.
NATP or NAEA membership $100 - $200/yr Optional Professional association resources, CE discounts, and directory listings.
Total to start: $300 - $1,200 - The entire investment is typically recovered in your first 2-5 client returns. Year two and beyond are far more profitable as software and CE become familiar annual costs.

Pros & Cons

Pros

  • Very high seasonal income ($15K-$30K in 4 months)
  • Nearly 100% client retention year after year
  • Can work virtually - clients upload docs remotely
  • Builds toward CPA or Enrolled Agent upgrade
  • Self-employed clients pay $300-$500+ per return
  • Tax knowledge reduces your own tax bill

Cons

  • Highly seasonal - most income in 4 months
  • Licensing and software cost $300-$1,200 upfront
  • Tax law changes require annual continuing education
  • Errors can result in client penalties and liability
  • High stress during April deadline crunch
  • Building a client base takes 2-3 seasons

How to Get Started

  1. 1

    Register for a free IRS PTIN

    Visit irs.gov/ptin and complete the online PTIN application. It is free and takes about 15 minutes. A PTIN is required by law to prepare federal tax returns for compensation. You must renew it annually before January 1 each year. This is your first official credential as a tax professional.

  2. 2

    Complete the IRS Annual Filing Season Program

    The AFSP requires 18 hours of IRS-approved continuing education. It is not required by law, but it grants you limited representation rights before the IRS and signals credibility to clients. CE courses are available through the NATP, NAEA, or online CE providers for $75-$200. Most preparers complete this before their first tax season.

  3. 3

    Purchase professional tax software

    Buy a professional tax preparer license - Drake Tax, TaxSlayer Pro, or ProSeries. These include all form types, e-filing for clients, a client portal for document uploads, and customer support. Consumer versions (TurboTax, H&R Block) are not appropriate for professional use. Budget $300-$600 for your first license.

  4. 4

    Practice on sample returns before tax season

    Use your software's practice mode or find sample return datasets online. Work through a simple W-2 return, a Schedule C sole proprietor return, and a rental property return. Learn where your software flags errors and how to navigate different form types. Preparation before clients arrive makes the first season far less stressful.

  5. 5

    Offer discounted returns to friends and family first

    In your first season, prepare returns for 10-20 trusted people at a discount or free. This builds real-world experience, generates your first reviews, and - critically - creates your first referral sources. Every satisfied client knows at least a few people who also need a tax preparer. Your first 10 free clients could turn into 50 paying clients by year two.

  6. 6

    Market specifically to self-employed individuals

    Gig workers, freelancers, Uber drivers, and small business owners pay significantly more per return ($300-$500+) and have more complex situations that benefit from professional help. Post in local Facebook groups and LinkedIn targeting self-employed individuals. Many first-year 1099 earners are confused and looking for guidance - you can be that resource.

  7. 7

    Study toward Enrolled Agent status

    The IRS Enrolled Agent designation is the highest credential available to tax professionals who are not CPAs. EAs can represent clients in audits, appeals, and collections. The exam is three parts, can be taken without a degree, and opens the door to year-round IRS representation work at $150-$300+ per hour. Many tax preparers pursue EA as a long-term upgrade.

Tools & Resources for Tax Preparers

Most popular software Drake Tax Professional Tax Software The gold standard for independent preparers. Handles all form types, state returns, e-filing, and client portals. Excellent customer support. Annual license runs $300-$600 depending on return volume. Budget-friendly TaxSlayer Pro Professional Tax Software Lower entry price than Drake. Good for new preparers with limited startup budget. Handles all major forms and e-filing. Cloud-based option available for remote work with clients. CE and credentials NATP Professional Association National Association of Tax Professionals. Offers AFSP-qualifying CE courses, a preparer directory, research tools, and professional development resources. Membership helps build credibility with clients. Client acquisition LinkedIn + Google Business Marketing Channels A Google Business Profile and LinkedIn presence targeting self-employed clients generates year-round inbound inquiries. Clients searching "tax preparer near me" or "1099 tax help" find you organically.

Get the Free Side Hustle Starter Kit

Client intake templates, pricing guides, a tax season schedule, and a cheat sheet for common self-employed deductions - everything you need to launch your tax prep business.

You're in! Check your inbox for the Starter Kit.

Taxes on Your Own Tax Prep Income

⚠

You owe self-employment tax on all preparation fees

As a self-employed tax preparer, your preparation fees are Schedule C income subject to 15.3% self-employment tax plus income tax. The good news: your software, CE, professional memberships, home office, and computer are all deductible expenses that reduce your taxable income significantly.

Calculate My Tax Bill - Free

Key deductions for independent tax preparers

  • ✓ Tax software license - fully deductible as a business tool. Same for any reference books, IRS publications, or study materials.
  • ✓ CE courses and PTIN fee - deductible as professional education and licensing costs.
  • ✓ Home office deduction - if you have a dedicated work space used exclusively for preparation work, you can deduct a portion of rent or mortgage.
  • ✓ Set aside 25-30% of each payment for your own estimated quarterly taxes. Due: April 15, June 15, September 15, January 15.
  • ✓ Professional liability insurance premiums are fully deductible as a business expense on Schedule C.

Frequently Asked Questions

How much can you make preparing taxes on the side?
A part-time preparer handling 50-80 returns per season at $200-$350 average fee earns $10,000-$28,000 in January-April. Preparers who specialize in complex returns and build a referral base of 100+ clients can make $30,000-$50,000 in four months. The income compounds year over year as your client base grows through referrals.
Do you need a license to prepare taxes?
Federal law requires only a PTIN to prepare taxes for compensation. Some states have additional licensing requirements - California requires a CTEC registration, Oregon requires licensing through OBTP, and a few other states have their own rules. The IRS Annual Filing Season Program is voluntary but grants representation rights and builds client confidence.
What is the best tax software for a new preparer?
Drake Tax is the most popular choice among independent preparers - it handles all form types, is reliable, and has excellent support. TaxSlayer Pro is a more affordable alternative for beginners with a limited budget. All professional software allows e-filing, which clients expect and the IRS processes faster than paper returns.
How do tax preparers find clients?
Most established preparers grow through referrals from satisfied clients. In the first season, tell everyone you know, offer a small discount for referrals, and set up a Google Business Profile. Targeting self-employed individuals and gig workers on LinkedIn and local Facebook groups generates consistent inbound inquiries from people who need more help than consumer software provides.
Can I prepare taxes remotely?
Yes. The majority of preparers now work virtually - clients upload documents through a secure portal, the preparer reviews and prepares the return, shares the draft for client review, then e-files with a digital signature. Remote work removes geographic limits on your client base. Use our 1099 tax calculator to show prospective clients what they owe before they hire you.