All you need to know about PTIN.

by | Nov 1, 2020 | ITIN

All you need to know about PTIN.

If an individual is preparing or is assisting others in the preparation of their federal tax returns, then he should have a valid PTIN. PTIN stands for Preparer Tax Identification Number and is issued by the IRS to the professional tax preparers. These professional tax preparers are Certified Public Accountants (CPAs) and the Enrolled Agents (EAs). These tax preparers are paid and must include their PTIN in all those federal tax returns which they are filing for their clients.

The PTIN is an eight-digit number that is preceded by the alphabet ‘P’. The PTIN is placed in the place of the tax preparer’s SSN in case of all tax returns filed by them.

Does an individual taxpayer need PTIN?

Individual taxpayers don’t need to have a PTIN. If you are not being paid for the services you are providing for preparing tax returns and filing tax returns, then you would not need a PTIN. PTIN would not be required for an individual in case

  1. If an individual is preparing and filing his tax returns
  2. If an individual is preparing and filing a joint tax return for his spouse
  3. If an individual is preparing and filing tax returns for his friends and relatives
  4. If any tax returns are being filed by an individual while volunteering in an organization.

Does an employee need a PTIN?

There might be instances in which employees in an organization might be asked to collect and collate tax-related information. This information must be further used by the employee to file the tax returns for the organization. This can be considered as a part of the general duties of an employee within an organization. The organization or rather the employer would compensate the employees for the efforts put in towards the tax preparation and filing. However, the employees do not need to have a PTIN.

  1. The employees do not need to have a PTIN as they would not be paid specifically for the services they are providing for tax preparation and filing tax returns.
  2. The employees who would be preparing the tax returns would not sign the tax returns. Rather, the tax returns would be signed by the treasurer or any other authorized officer of the organization.

How to obtain a PTIN?

PTIN can be obtained by following the below-mentioned steps:-

  1. PTIN can be obtained by visiting the online PTIN System. There a click on ‘Create an Online PTIN Account’ will help in getting started.  There are no fees charged for creating the PTIN at this step.
  2. The online application for PTIN must be completed. For this, the necessary information required are Social Security Number, Business information, personal information, tax returns for the previous year, information on personal certification, etc.
  3. At this step, you will have to pay the fees for registration. It is $50 and can be paid either by debit card or credit card.
  4. After the payment procedure is successful and the information has been provided, the PTIN would be provided online.
  5. Moreover, if you do not want to apply for the PTIN online it can be done through the mail. The Form W-12 must be filled for this purpose and sent to the IRS. By the online method, the PTIN can be obtained in 15 minutes whereas by the paper mode it would take around 4-6 weeks.
  6. The PTIN would expire on 31st December of every year and should be renewed. The online PTIN Account must be visited and login can be done by using the username and password.

How to find out tax preparers who have a PTIN?

 The IRS would have a directory which would include those PTIN holders who are available for public search. This directory can be used for finding out the PTIN holding tax preparers.

  1. The directory can be visited on the IRS website i.e. Directory of Federal Tax Return Preparers with Credentials and Select Qualification.
  2. Now the country, ZIP code, and area must be found out where the PTIN tax preparers are being searched.
  3. The CPAs or EAs must be searched.

Conclusion

 So, obtaining and renewal of the PTIN is quite easy and is a must if tax preparation and filing are done for others and money is made out of it.