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Basic Principles of Federal and California Taxation of Individuals (2025)

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About Course

This comprehensive introductory course is designed for individuals seeking to become California Registered Tax Preparers (CRTPs) and meets the qualifying education requirements established by the California Tax Education Council (CTEC).

Successful completion of this course satisfies the 60-hour qualifying education requirement to register with CTEC and prepare taxes for a fee in the state of California.

  • Complete at your own pace
  • Unlimited exam attempts

Course Content

Past 1. Ethics and Compliance for Registered Tax Preparers
The rules governing individuals who practice before the IRS are established in Treasury Department Circular No. 230 (Regulations Governing the Practice of Attorneys, Certified Public Accountants, Enrolled Agents, Enrolled Retirement Plan Agents, Enrolled Actuaries, and Appraisers before the Internal Revenue Service). The term "practice before the IRS" is broadly defined and includes all matters connected with presenting a client to the IRS or its officers or employees, relating to a client's rights, privileges, or liabilities under laws or regulations administered by the IRS. This encompasses activities such as preparing and filing documents, corresponding and communicating with the IRS, and representing a client at conferences, hearings, and meetings.

  • Section 1.1. Tax Preparers’ Ethics and Compliance
  • Section Review Questions
  • Section 1.2. Tax Preparer Penalties
  • Section Review Questions
  • Examination for Part 1

Part 2. Federal Taxation of Individuals
It is essential to understand the role of the federal income tax system in generating tax revenues to fund the government's annual operating expenses. The authority to enact and modify federal tax laws lies with Congress, as granted by the U.S. Constitution. This legislative body determines the taxed amount and sets the applicable tax rates to meet revenue needs. However, beyond revenue generation, Congress also employs tax laws to achieve diverse economic, political, and social objectives. These goals encompass wealth redistribution, stimulation of economic growth and full employment, as well as the promotion or discouragement of specific behaviors. For instance, to boost employment, Congress may opt to reduce taxes, providing taxpayers with more disposable income. The resulting increase in consumer spending can drive demand for goods and services, prompting the need for additional workers. Conversely, Congress may use tax laws to discourage certain behaviors, exemplified by the imposition of excise taxes on cigarettes. By increasing the cost of tobacco products, the aim is to decrease demand and curb associated negative behaviors. In the context of taxation, governments assess taxes by applying a tax rate to a defined tax base. In the income tax system, taxable income serves as the tax base. In simple terms, "taxable income" represents the disparity between the income subject to taxation, as determined by the government, and the allowable deductions subtracted from this income.

Part 3. California Taxation of Individuals

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