Hey there, I’m new to tax prep and just passed the CPA exam. Looking for some recommendations on tax software to use for preparing about 10 returns for family and friends. Nothing too complicated, just simple stuff. I’m 23 and tech-savvy. Appreciate your help, thanks!
Are you planning to charge for these returns? If you are, avoid using TurboTax as it’s not compliant with IRS rules for paid preparers. But, if it’s just personal use for friends and family, it should be fine. I prepare around a dozen returns for family and friends and use Proconnect Tax Online. You’ll need a PTIN and EFIN for e-filing. Keep in mind the EFIN can take a few weeks to process, so apply early if you’re planning to use it.
Peyton said:
@Bay
Yes, I will be charging. I already have a PTIN from my firm.
Great, but you’ll also need an EFIN to e-file for clients. When I worked at a firm, I had a non-compete agreement that stopped me from taking on clients personally. Your firm may not care about small 1040s like family returns, but it’s worth checking.
Peyton said:
@Bay
What’s an EFIN exactly? My firm doesn’t mind small 1040s; they don’t take on these clients.
Sorry about the confusion. EFIN stands for Electronic Filing Identification Number. You need that to e-file.
@Bay
Thanks, I’ll look into it. I’ve heard Drake and TaxSlayer are good for handling around 10 returns.
Peyton said:
@Bay
Thanks, I’ll look into it. I’ve heard Drake and TaxSlayer are good for handling around 10 returns.
Yep, I’ve heard of both. Personally, I use Proconnect Tax Online, which is also an Intuit product.
TaxAct or Drake PPR (pay per return). If you’re planning to take on more clients later, I’d suggest starting with Drake to avoid switching software. TaxAct is pretty basic, while Drake is widely used by smaller firms. I personally use Drake. I also tried TaxAct recently, and I’m happy I started with Drake years ago.
Drake PPR costs $350 and includes 10 Form 1040s, including all state returns. Additional 1040s are $40 each, and business returns (e.g. 1065, 1120-S) are $60 each.
By the way, since you mentioned already getting a PTIN, you’ll also need an EFIN. Apply ASAP since it can take a while for the IRS to process it. I recommend getting an EIN for yourself too (a sole proprietor), and use that instead of your SSN for business purposes. You’ll report it on Schedule C of your Form 1040.
Peyton said:
@Parker
Why do you prefer using an EIN instead of an SSN? Both can be used on Schedule C, right?
Yes, both can use Schedule C. But if you get more clients and a business pays you over $600, they may need to issue you a 1099-NEC. It’s safer to use an EIN instead of your SSN for privacy. Getting an EIN is quick and easy online.
I just suggest doing it now, so if your business grows, you’re ready. It’s simple and worth doing upfront. But that’s just my advice. Good luck with everything!
Proconnect is really all you need. Don’t overthink it. Good luck!
I suggest either TaxAct or TaxSlayer pay-per-return options. There are other options too that could work.
Make sure you get your PTIN and EFIN to operate as a professional preparer.
I used Ultimate Tax before retiring and found it great for any returns, but I’m not sure if they have a pay-per-return plan.
Switching software can be a hassle, so don’t stress too much about spending a little more upfront for good software.
Peyton said:
@Remy
I already have a PTIN.
You also need an EFIN. It’s different from PTIN.
To e-file any returns, you must have an EFIN. Here’s the link with more info on how to get one: FAQs about electronic filing identification numbers (EFIN) | Internal Revenue Service
Peyton said:
@Dane
Thanks! I’ll apply for it now and hopefully have it before tax time.
How long does it usually take to get approved for an EFIN?
EFINs can take a while to process, so start the application now. Lacerte has a per-return fee structure if you’re considering it.