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MD Tax Preparer Exam

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#1
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10
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19-Sep-2019 3:08pm
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MD
Hi Everyone,

I'm set to take the MD Tax Preparer exam in November and I was wondering if anyone had any advice or personal experience about it to offer.
(FYI, MD is one of the 4 states that require a state license, everyone else can just get a PTIN and EFIN and call themselves a tax preparer without doing anything. Also, CPAs or Tax Attorney's don't need this license, so many CPAs in MD I've spoken to don't even know it exists. ;) )

Thanks!
 

#2
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3585
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21-Apr-2014 7:21am
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The Land
was wondering if anyone had any advice or personal experience about it to offer.

My advice would be to get as many questions right as you can.
 

#3
Nilodop  
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Pennsylvania
Also as many answers right as you can.
 

#4
makbo  
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In The Counting House
y10nbaum wrote:I'm set to take the MD Tax Preparer exam in November and I was wondering if anyone had any advice or personal experience about it to offer.

Does MD administer a stand-alone exam as the only requirement? California instead requires a 60-hr course that covers certain topics with a final exam created and administered by the CE provider.

Are there self-study courses available, such as from Gleim or a professional organization?

Are EAs also exempt from the MD requirement? If so, you might find it more advantageous to just skip ahead to the EA credential.
 

#5
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10
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19-Sep-2019 3:08pm
Location:
MD
MD just requires one stand alone test. No course required. 180 minutes. 130 questions. 70% to pass.

There are study guides available. I bought one, but I found the information to be just a bunch of copy and pasted material from IRS publications. I found it much easier to just study the actual publications. The nice thing about the test is that you are allowed to bring a printed copy of Pub 17 and the MD Tax Guide with you during the test.
The valuable thing I find from the study guides is the two practice exams. It helps you figure out what you need to work on and brings the information into focus.
I'm pretty certain most of the info is in the publications we're allowed to bring in, it's just a matter of knowing where to look. #Index #TableOfContents

This is the official bulletin from the testing company which describes all the rules.
https://candidate.psiexams.com/bulletin ... inurl=.pdf

In regard to makbo's comment about taking the EA, I figured it would be better for me to use this as a stepping stone to bigger things. I don't have a degree, and I want to be able to start actually preparing returns, albeit if they're only a few returns a month. This way I can start getting real in-the-field experience. I have a bunch of friends that I'm sure would appreciate have a tax preparer on their side. My plan is to start off nice and cheap that way I can give myself that experience.
That could help me solve the good old paradox of work experience being a job requirement. (You need work experience to get hired for a job, but in order to have work experience, you need to have had a job, but the job requires work experience, etc...)
EA seems to be a lot more extensive and for right now, I'm just looking for an opening into the field that can help get started.
I may choose to veer off to different areas of the finance field in the future. For now, this is what I want to start with. (while I simultaneously work full time in a consulting firm in the health care industry :) It's funny how that happens.)
 

#6
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10
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19-Sep-2019 3:08pm
Location:
MD
I bought the electronic version here: https://gstti.com/Maryland_Tax_Preparer ... Guide.aspx
 

#7
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10
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19-Sep-2019 3:08pm
Location:
MD
Great news! :D :D :D

I passed!!!

I am now a licensed tax preparer in the state of MD.

The next step is to create a business plan and get some clients... ;)
 

#8
sjrcpa  
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1917
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Maryland
Congratulations!
 

#9
taxcpa  
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29-Apr-2014 6:47am
Location:
USA
Bit of advice from a cranky old guy:

STAY OFF MY LAWN!!

Oops, thats for the neighbors kids.

Seriously, given your limited hands on experience, you may be better off to find employment with an experienced practitioner who can help you learn, and review your work. This may be heresy, but there actually are a few H&R Block offices that are run by people with a clue. I have not seen that in Liberty or Jackson Hewettt franchises.

Good luck.
 

#10
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19-Sep-2019 3:08pm
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MD
You know that's something I've been considering the past few days.
Currently, I have a full-time job at a consulting firm in the health care industry, not really related to tax preparation.
That being said, I was planning on doing this very much on the side. My thought was to get the license and do a few returns for friends and maybe family, more on the simple side, this way I can get a feel for it.
On the other hand, I saw a local accounting firm looking for a tax preparer part-time for tax season and I was thinking of giving that a shot. It's just something I need to balance out along with my regular full-time job. I don't think I'm experienced enough to go ahead and quit my day job just yet. ;)
 

#11
taxcpa  
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USA
You should also consider the costs of doing business on your own. First and foremost, you will need proper software and its expensive. My ATX renewal is almost $2K this year. Liability insurance is another chunk. Doing multiple returns using a home version of TurboTax is a violation of the lisence. People do it, but its a risk.

Its hard to get clients with "simple" returns. If they are simple, they use Turbo Tax, an online service, or one of the storefronts. People come to me with business issues, complex investments, etc. I do very few straight 1040 schedule A returns. Most of them are for family or children of clients.
 

#12
taxnoob  
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38
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20-Feb-2019 10:13am
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California
Get a mentor, partner up with a distressed tax preparer (bring some fresh ideas) or someone who is getting ready to retire to learn, get ready to work for free to learn.

Learning & experience should be your goal at the moment. It is the only way you can have billable clients in the future. Otherwise, you have to ask yourself. What's your value add if clients can just go to a HRB/Turbo Tax or free online softwares?

Figure out your niche.

Good luck & congrats!
 

#13
makbo  
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taxcpa wrote: First and foremost, you will need proper software and its expensive.

Not up front. You can get an UltraTax federal PPR license for about $300, and as I recall the ProSeries PPR (or PRP or whatever they call it) license was priced in the same range. This is a tremendous help with cash flow for the beginning tax business, as you can match your actual filing fees per return with the client fee received. The license allows you to prepare all federal and state individual and entity returns, you only have to pay when you want to print or efile.
 

#14
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19-Sep-2019 3:08pm
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MD
Do you have a link for that software?
 

#15
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Austin, Texas
 

#16
makbo  
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y10nbaum wrote:Do you have a link for that software?

For UltraTax,

https://tax.thomsonreuters.com/site/wp- ... e_List.pdf

The language on the linked document is a little confusing, but if you contact them, I am very confident you can get the PRP license for $300, which would also include download of TY2018 software for testing purposes. Most of the prices you see are for unlimited and/or network versions, so don't let that scare you off. UT does charge per return for efiling, in addition to the basic PPR fee (so if you print and paper file, you don't have to pay the efile fee). They also have integrated online organizers (for a small fee), or offline/paper organizers included in the base fee, plus e-sign for engagement and Sec. 7216 letters, as well as KBA-based e-sign for Forms 1040 and bank account verification for electronic refunds/payments.

It doesn't take many clients to qualify for a unlimited state license. They have a break-even estimator that tells you when it pays to switch to an unlimited license, based on your prior year results.
 

#17
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3
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29-Jun-2019 5:57am
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TX
Congrats on passing! I am currently doing a similar thing as you. I chose to go the route of my getting my EA. Passed the individual section in October and working on corporate currently. For software I chose Proconnect online for now. It is a little sluggish, but so am I so it is a match for me. Maybe not in the future but now it is fine.
 

#18
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10
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19-Sep-2019 3:08pm
Location:
MD
Good luck with that!

The next thing I was wondering about was liability insurance. Do you guys think it's really necessary to get that if I'm starting off doing very few returns?
 

#19
taxcpa  
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245
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USA
What is your ability to fund a defense to a malpractice claim? Not judgement, claim. Defense is expensive, even if you win.
 

#20
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10
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19-Sep-2019 3:08pm
Location:
MD
That's a good point. I thought about that. I'm just wondering if when measuring the risk vs. the benefit if it's really worth the price.
I would like to believe that most issues could be sorted out with an amended return. Obviously, once you start dealing with mid to large businesses, the chips played are much higher.
In your experience, do you see it to be a large risk? How often does malpractice come up?

Thanks for the input! :)
 

#21
makbo  
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y10nbaum wrote: I'm just wondering if when measuring the risk vs. the benefit if it's really worth the price.

First, it seems this thread really belongs in the Business Operations sub-forum, perhaps you could flag a moderator to move it for you. (use the little triangle symbol at the upper right corner of your post).

Second, regarding E&O insurance -- you are basically paying for legal services. When I was an employee and preparing a few returns on the side (with my employer's blessing) I did not have it, but as soon as I went on my own, I got a policy.

I think you will find that your first year premium is quite reasonable, maybe just $300. This is not only because your practice is presumably starting small, but you also have no prior years to cover. Remember that a claim is more likely to arise several years after the return is prepared, and your insurance coverage won't cover that if you weren't already on the policy at the time the return was prepared. So if nothing else, you want to start your E&O coverage from day one to get that prior year coverage when you need it.
 


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