Tax Preparer Skills Assessment: How to Test Readiness Before Tax Season

By Vincent Howard, CPA | Managing Partner, Howard, Howard and Hodges | SkillAbility for Accounting Firms

Last updated: July 14, 2026  |  28-minute read

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Tax season is a terrible time to discover that a preparer cannot recognize an incomplete organizer, trace a number to its source, document a judgment, ask a follow-up question, or respond correctly when the software result does not make sense.

By then, the firm has already committed payroll, assigned returns, promised deadlines, and built its capacity plan around work that the employee may not be ready to perform.

The manager becomes the backup system. Review turns into reconstruction. Questions arrive one at a time instead of being organized. Returns move backward in the workflow. Senior staff spend their most expensive hours fixing basic preparation problems while complex client work waits.

A résumé cannot prevent that. A credential alone cannot prevent it. Completing continuing education does not automatically prove that someone can apply the material inside the firm’s workflow.

Before tax season begins, the firm needs evidence.

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Who I Am and Why You Should Listen

I have practiced public accounting since 1990. I earned a Master’s degree in Taxation from the University of Central Florida, founded my accounting firm in 1993, and merged it in 2001 to form Howard, Howard and Hodges. I helped grow the organization from three people to approximately 50 staff across four locations and multiple states. The firm was named PASBA Firm of the Year in 2015.

Across more than three decades of tax seasons, I have seen the difference between knowing tax information and being able to prepare tax work that another professional can rely on.

A preparer may know the vocabulary but fail to connect the facts. Another may enter information quickly but ignore an inconsistency. A third may calculate the right answer but leave no workpaper trail explaining how the conclusion was reached. Someone else may be technically capable but expose the firm to risk by mishandling taxpayer data or using an unapproved tool.

Those are different development problems, and a multiple-choice quiz usually cannot distinguish them.

Since 2020, I have built and run the SkillAbility accounting workforce development platform used by more than 1,000 accounting professionals across dozens of PASBA firms. The recurring lesson is that firms need to measure capability through performance. Knowledge becomes useful only when the person can apply it inside a repeatable workflow.

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Why Tax Preparer Readiness Must Be Tested Before Tax Season

Federal requirements establish a baseline, but a firm’s operational readiness standard must go further.

The IRS states that anyone who prepares or assists in preparing federal tax returns for compensation must hold a valid Preparer Tax Identification Number for the applicable calendar year. A valid PTIN establishes registration status; it does not tell the firm whether the employee can prepare the firm’s assigned returns to the firm’s quality standard.

For paid preparers responsible for claims involving the Earned Income Credit, Child Tax Credit and related credits, American Opportunity Tax Credit, or head-of-household filing status, the current Instructions for Form 8867 require specific due-diligence activities. These include interviewing the taxpayer, asking adequate questions, documenting questions and responses when information appears incorrect, inconsistent, or incomplete, completing and submitting the required checklist, and retaining specified records.

For practitioners subject to Treasury Department Circular 230, section 10.22 requires due diligence in preparing, approving, and filing tax returns and in determining the correctness of representations. The rule also links reliance on another person’s work to reasonable care in engaging, supervising, training, and evaluating that person.

That connection matters. A firm should not assume readiness simply because a new preparer completed a course. The firm needs a reasonable process for determining whether the person can perform the assigned work.

The AICPA PCPS CPA Firm Competency Model reinforces the need for a broader readiness standard. Its six firm competencies include productivity, technical knowledge, client service, people development and teamwork, business development, and culture and inclusion. A tax preparer assessment will not weigh every area equally, but it should recognize that strong performance requires more than technical recall.

Data security is also part of preparer readiness. IRS Publication 4557 explains that tax professionals must protect taxpayer data, that firms need security plans, and that employees should be trained in confidentiality and security practices. A preparer who knows tax law but mishandles taxpayer information is not ready for tax season.

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What Is a Tax Preparer Skills Assessment?

The assessment should mirror the return types and responsibilities the person will actually receive. It should not attempt to test the entire Internal Revenue Code, and it should not become a contest to see who can memorize the most obscure rule.

A useful assessment answers six practical questions:

1. Can the preparer understand the assignment and organize the source documents?
2. Can the preparer apply the tax rules required for the assigned return type?
3. Can the preparer recognize missing, conflicting, or unusual facts?
4. Can the preparer leave a clear workpaper trail and reviewer handoff?
5. Can the preparer protect taxpayer data and follow the firm’s workflow?
6. Can the preparer recognize the limits of their authority and escalate correctly?

A knowledge quiz is not the same as a readiness test

The U.S. Office of Personnel Management notes that work samples have strong content validity when the tasks closely represent the job. That is the design principle CPA firms should use: test the work, not a collection of disconnected trivia.

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Start With the Role and Return Scope

A valid assessment begins with a job analysis. OPM describes job analysis as the foundation for assessment decisions because it connects actual job tasks with the competencies required to perform them.

Before building the tax test, document five things.

1. Return types the preparer will handle

Examples include:

• Basic individual returns
• Individual returns with Schedule C, rental activity, investments, or education credits
• Partnership returns
• S corporation returns
• C corporation returns
• Fiduciary returns
• Payroll or information returns

Do not use a complex entity-return assessment for a role that will prepare only basic individual returns. Do not use a basic 1040 quiz to evaluate an experienced business-return preparer.

2. Work expected on entry

Separate skills the firm expects on day one from those it intends to teach. A seasonal experienced hire may be expected to navigate the software and produce review-ready work immediately. A recent graduate may need only foundational tax knowledge, source-document discipline, learning ability, and a strong response to structured training.

3. Level of independence

Define whether the person will:

• Enter source documents under close supervision
• Prepare complete returns for review
• Resolve review notes
• Draft client questions
• Research issues
• Review another preparer’s work
• Communicate recommendations directly to clients

4. Firm workflow requirements

Include the operational behaviors that matter to the firm: naming conventions, workpaper indexing, open-item tracking, source-document annotations, status updates, reviewer notes, and escalation procedures.

5. Non-negotiable risk controls

Identify behaviors that cannot be compensated for by a high total score. These may include fabricating facts, overriding diagnostics without support, hiding an unresolved issue, uploading taxpayer data into an unapproved system, or ignoring an explicit due-diligence trigger.

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Ten Capabilities CPA Firms Should Measure

1. Source-document recognition and control

The preparer should be able to inventory the file, match documents to return areas, identify duplicates, distinguish current-year from prior-year information, and notice expected documents that are missing.

Test whether the preparer can:

• Recognize common tax documents relevant to the role
• Trace entered amounts back to source
• Compare the organizer with the documents received
• Identify information that requires clarification
• Separate facts from assumptions
• Preserve an organized source trail

2. Tax-law application

The assessment should require application, not just recall. Give the preparer facts and documents, then ask for the appropriate treatment, additional questions, or research issue.

For a basic individual preparer, the test may cover filing status, dependents, wage and interest income, common adjustments, itemized deductions, credits, and basic self-employment activity. An experienced business-return preparer should face entity-specific basis, ownership, balance-sheet, fixed-asset, compensation, distribution, or state-apportionment issues that reflect the firm’s actual work.

Because tax law changes, the firm should update the test before each filing season and label the tax year clearly.

3. Tax software workflow

Software proficiency includes more than locating input screens. The preparer should understand how source information flows through the return, what diagnostics mean, and how to verify the output.

Measure whether the preparer can:

• Navigate the assigned return efficiently
• Enter information in the correct area
• Use notes, tick marks, and attachments appropriately
• Review diagnostics without clearing them mechanically
• Compare forms and schedules with the underlying facts
• Recognize when software output requires investigation

4. Issue spotting and professional skepticism

Include information that should cause the preparer to pause. Examples include a dependent’s residence that conflicts with the organizer, a Schedule C with revenue but no apparent expenses, a large charitable contribution without support, a 1099 that does not match the client’s explanation, or a prior-year carryforward that appears absent.

The preparer does not need to resolve every issue independently. Readiness includes recognizing that an issue exists and identifying the next appropriate action.

5. Due-diligence questioning and documentation

Use at least one scenario in which the facts are incomplete or inconsistent. Require the preparer to draft the questions they would ask and the note they would retain.

The current Form 8867 instructions emphasize interviewing the taxpayer, asking adequate questions, obtaining sufficient information, and contemporaneously documenting inquiries and responses when the information appears incorrect, inconsistent, or incomplete. Your assessment should show whether the preparer knows how to move from a vague concern to a useful question.

6. Workpaper and documentation quality

A reviewer should be able to understand:

• What source was used
• What procedure was performed
• What issue was identified
• What conclusion was reached
• What remains open
• What requires reviewer attention

Clean data entry with weak support is not review-ready work. For the broader standard, see How to Reduce Review Notes in Accounting.

7. Self-review and reasonableness checks

Require the preparer to review the return before submission. The assessment can include a checklist asking them to compare the return with prior year, investigate large changes, clear or explain diagnostics, verify names and identification numbers in a fictional file, review direct-deposit information, and reconcile the return to the source documents.

The objective is not merely to find whether the software produces a result. It is to determine whether the preparer can evaluate whether the result makes sense.

8. Written communication

Ask for two short communications:

• A client-information request that groups questions clearly and avoids unnecessary jargon
• A reviewer handoff that summarizes completed work, material issues, open items, and recommended attention

Tax-season capacity depends on organized communication. One complete question list is more efficient than a stream of disconnected emails.

9. Taxpayer-data security

Include a small security scenario. For example, the preparer receives a fictional tax document through an unapproved personal email address or is offered an unapproved public AI tool to summarize an organizer. Ask what the preparer should do.

Readiness should include:

• Using only approved systems
• Recognizing sensitive taxpayer information
• Following access and clean-desk rules
• Using secure transmission methods
• Reporting suspicious messages or potential exposure
• Not sharing credentials

10. Time management and escalation judgment

Tax preparers need to keep work moving without hiding uncertainty. Observe whether the preparer spends the entire assessment forcing one unresolved item or documents the issue, identifies the missing information, and proceeds with the work that can be completed.

Ask the preparer to classify each open item as:

• Resolve independently
• Research
• Ask the client
• Ask the reviewer
• Stop and escalate immediately

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What to Test by Tax Preparer Level

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A Practical 90-Minute Tax Preparer Assessment

Ninety minutes is not a universal rule. The right duration depends on the role, the complexity of the return, whether software is involved, and whether the assessment is used for hiring or internal readiness. The following design is a useful starting point for a preparer expected to handle individual returns.

Sample fictional client file

The assessment package may include:

• A current-year organizer
• A prior-year return
• Two Forms W-2
• Forms 1099-INT and 1099-DIV
• A Form 1099-NEC and a simple Schedule C summary
• A Form 1098-T
• Dependent information with one inconsistent residence fact
• A charitable-contribution summary without full support
• A brokerage statement that requires identification but not advanced transaction entry
• A fictional email containing a questionable request to send information through an unapproved channel

Candidate deliverables

1. Prepare the assigned portions of the return.
2. Create or complete the required workpapers.
3. Identify missing documents and inconsistent facts.
4. Draft a consolidated client-question list.
5. Document the due-diligence inquiry required for the fictional facts.
6. Complete a self-review checklist.
7. Prepare a reviewer handoff.
8. Explain how the security scenario should be handled.

Use only fictional or thoroughly sanitized information. A hiring or readiness assessment should never expose real taxpayer data.

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Copy-and-Use 100-Point Tax Preparer Scorecard

The weighting below is an illustrative starting point for an individual-return preparer. Adjust the weights after analyzing the role and return mix.

Suggested interpretation bands

Readiness gates that override the total score

A high score should not hide a serious risk. Consider requiring separate approval when the preparer:

• Invents or changes facts to make the return work
• Ignores a material inconsistency or due-diligence trigger
• Clears a diagnostic without support
• Claims completion when required work was not performed
• Uses an unapproved system for taxpayer data
• Fails to identify an issue that the role requires them to escalate
• Cannot explain the source or reasoning behind a material entry

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Tax Preparer Skills Assessment Template

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Completed Example: Seasonal 1040 Preparer

The candidate’s score does not justify either an automatic rejection or unrestricted assignment. The result identifies a narrow, important development need that can be trained and retested before tax-season volume increases.

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How to Interpret the Results

Do not begin with the total score. Begin with the pattern.

Separate readiness into four categories

Map every gap to a development response

Assessment without follow-through becomes another document. Connect each identified gap to a specific practice assignment.

For a broader role-development structure, see Accountant Development Plan: From New Hire to Advisor.

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A Four-Week Tax-Season Readiness Plan

Use the initial assessment to create a focused preseason sprint rather than assigning the same refresher course to everyone.

Week 1: Baseline and risk classification

• Verify the employee’s intended return scope and required registrations.
• Administer the baseline work sample.
• Score each competency and readiness gate.
• Classify the employee as ready, conditionally ready, or development required.
• Assign a reviewer and initial workload restriction.

Week 2: Targeted technical and workflow practice

• Assign role-specific tax-law updates.
• Practice the firm’s software and workpaper workflow.
• Complete one return with planted errors and missing documents.
• Review current due-diligence and security procedures.
• Correct the baseline assessment with coaching.

Week 3: Independent simulation

• Complete a second fictional return without step-by-step assistance.
• Prepare the full client-question list and reviewer handoff.
• Resolve or document all diagnostics.
• Complete a security and phishing scenario.
• Compare performance with the baseline.

Week 4: Readiness decision and controlled assignment

• Administer a focused reassessment on unresolved gaps.
• Confirm return-type limits and reviewer checkpoints.
• Assign the first controlled live return only after readiness is demonstrated.
• Track review notes and manager rescue during the first assignments.
• Expand scope only when the evidence supports it.

This process turns preseason training into a capacity decision. It tells the firm who is ready, who needs targeted practice, and where managers must plan additional review.

For a structured first-90-day framework, read Staff Accountant Onboarding Checklist for CPA Firms.

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How to Test Reviewers and Tax Seniors

A preparer assessment asks, “Can this person produce the work?” A reviewer assessment asks, “Can this person improve the work without becoming the preparer?”

Give the reviewer a fictional return containing:

• One correct treatment that looks unusual
• One unsupported position
• One missing due-diligence inquiry
• One workpaper that does not support the return
• One immaterial formatting issue
• One client question that should be consolidated
• One coaching opportunity for the preparer

Evaluate whether the reviewer can distinguish risk from preference. Strong reviewers protect quality without flooding the file with unnecessary notes or re-performing work that the preparer could correct.

Measure:

• Technical issue identification
• Materiality and prioritization
• Clarity of review notes
• Ability to explain the reason behind the note
• Decision to correct, return, research, or escalate
• Coaching value
• Client-impact awareness

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Fairness, Accessibility, and Legal Safeguards

Employment assessments should be designed and administered carefully. The Equal Employment Opportunity Commission explains that selection procedures should evaluate skills related to the particular job and may create legal risk when they disproportionately exclude protected groups without being job-related and consistent with business necessity. The EEOC also emphasizes reasonable accommodation and administering tests so they measure the intended skill rather than an unrelated disability.

Work with qualified HR and employment-law professionals when the assessment affects hiring, promotion, discipline, or termination.

Connect every section to the role

Document the task, competency, required proficiency, scoring method, and business reason for testing it.

Use equivalent administration

Candidates or employees being compared for the same role should generally receive equivalent instructions, time rules, permitted resources, software access, clarifications, and scoring standards.

Provide an accommodation process

Tell participants how the assessment will be delivered and how to request a reasonable accommodation. An accommodation should help the assessment measure tax-preparation capability rather than an unrelated limitation.

Pilot the assessment

Have several current employees at different performance levels complete the test. Look for unclear instructions, unrealistic timing, technology problems, scoring disagreement, and content that does not reflect the job.

Train evaluators

Require evaluators to score sample responses and discuss differences. A detailed rubric is only useful when reviewers interpret it consistently.

Review outcomes

Monitor whether the assessment predicts the defined work outcomes, whether pass rates or scores reveal potential adverse impact, and whether a less exclusionary method could measure the same capability effectively.

This article provides educational information and is not legal, HR, or test-validation advice.

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How to Handle AI During a Tax Preparer Assessment

Do not leave the AI rule unstated. Decide what the assessment is intended to measure and design the policy accordingly.

Never place real taxpayer data into an assessment or an unapproved AI system. Require the preparer to identify:

• Which facts came from the source documents
• Which conclusion came from authoritative guidance
• Which output was generated by AI
• How the output was verified
• What the preparer changed or rejected

AI can improve speed, but the preparer remains responsible for the work submitted to the firm.

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Common Tax Preparer Assessment Mistakes

Testing only memorization

A preparer can answer rule questions and still fail to organize a return, identify missing facts, or document a conclusion.

Using one test for every role

The test should reflect the return type, experience level, expected independence, and workflow responsibilities.

Scoring only the final tax result

Review the source trail, assumptions, diagnostics, questions, workpapers, security behavior, and escalation decisions.

Using current employees’ live client files

Create fictional or properly sanitized data. Do not expose taxpayer information for convenience.

Making speed the dominant factor

Efficiency matters, but unrealistic timing can reward familiarity with the test format while hiding poor support and judgment.

Ignoring the current tax year

Label and update each assessment. Retire old versions when legal or software changes make them unreliable.

Using the score without a readiness gate

A preparer should not offset a data-security failure with fast software navigation or offset fabricated facts with strong technical scores.

Failing to connect results to assignments

The assessment should determine return scope, reviewer checkpoints, training priorities, and reassessment dates.

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What CPA Firms Should Measure After Implementation

Do not claim that the assessment is effective merely because everyone completed it. Compare assessment patterns with actual tax-season work. If employees who score well consistently create poor files, revisit the simulation and scoring rubric. If good preparers fail because the instructions are confusing or the timing is unrealistic, fix the assessment.

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How SkillAbility Supports Tax Preparer Readiness

A readiness assessment identifies the starting point. The firm still needs a system that builds capability before live client work creates risk.

SkillAbility is an accounting workforce development and knowledge-transfer platform designed to move professionals from new hire to future partner. It is not a generic course library that stops at completion.

The assessment should answer, “Where is this person starting?” The development pathway should answer, “What must they become capable of next?”

For the broader system, read Accounting Workforce Development: How CPA Firms Build Capacity From Within.

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Frequently Asked Questions

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External Research and Authority Sources

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The Bottom Line

A tax preparer skills assessment should not test whether someone can remember the most tax facts under pressure. It should show whether the person can perform the work the firm plans to assign.

Build the assessment from the role. Use a realistic fictional return. Test source-document control, tax application, software workflow, due diligence, issue spotting, workpapers, self-review, communication, security, and escalation.

Score the work consistently, but do not let the total score hide a serious risk-control failure. Turn every trainable gap into a specific practice assignment. Reassess before expanding the preparer’s return scope.

The goal is not to produce a perfect candidate or seasonal employee before tax season. The goal is to know who can perform which work, where review is required, and what development must happen before volume arrives.

Assess capability. Target the gaps. Validate readiness. Protect the client. Reduce manager rescue.

Protect Knowledge. Develop People. Scale the Firm.

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To a more prepared tax season,

Vincent Howard, CPA
Managing Partner, Howard, Howard and Hodges
SkillAbility for Accounting Firms

© 2026 SkillAbility for Accounting Firms. This article provides general educational information and is not tax, legal, employment, human-resources, information-security, accessibility, or assessment-validation advice.