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What is an Enrolled Agent for Taxes?

what is an enrolled agent vs cpa

In answering questions, candidates should not take into account any legislation or court decisions in effect after Dec. 31, 2023. With the information you now have, you can choose a tax professional for your business. Before you do, here’s a checklist of the question you should ask yourself. Hiring an EA might be the more affordable option because their services are more limited. For instance, an EA may be more cost-effective if a small business owner only needs tax preparation and planning assistance. EAs must complete 72 hours of continuing education every three years, with at least 16 hours each year.

EA vs. CPA: The Difference Is in the Details

Enrolled agents are required to take part in continuing education to stay up to date on changes in tax law. Another factor to consider as you choose your career path is the earning potential for both the EA credential and CPA license. While both the CPA and EA credential require tax knowledge, the EA is much more niche within the industry and geared more toward tax practitioners. The Enrolled Agent credential requires more in-depth tax knowledge than the CPA credential, meaning EAs are valuable to clients looking specifically for advice on advanced tax issues. Starting in 2013, the IRS will require tax preparers to pass a tax exam and obtain 15 hours of continuing education every year.

Enrolled agents: Frequently asked questions

If you need help with financial planning and management, a CPA might be a better choice. If you’re worried you might make a mistake on your taxes, you’ll probably want to hire a tax professional. Getting your taxes wrong, especially as a small business owner, can lead to fines and penalties you might not recover from. In contrast, you must meet educational requirements to take the CPA Exam. Yes, this requirement is equivalent to a bachelor’s degree, and many state boards also prefer you have your degree in accounting.

what is an enrolled agent vs cpa

Enrolled Agent vs. CPA: What Are the Exam and Licensure Requirements?

Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.

what is an enrolled agent vs cpa

Enrolled Agent vs. CPA: What Does a Career and Compensation Look Like?

  • The most important point is to find a tax professional experienced with your specific concern.
  • The EA exam has three parts, and most people find the first and third parts to be the easiest because some experienced tax professionals can pass these parts with minimal studying.
  • But make sure any professional you hire will guarantee their work on your returns, she adds.
  • These are both factors to weigh alongside salary numbers for each profession.
  • In answering questions, candidates should not take into account any legislation or court decisions in effect after Dec. 31, 2023.

Circular 230, current and prior year versions of IRS publications, forms and instructions are accessible online at You may also wish to search the internet for commercially available materials and preparation courses in preparing to take the SEE. The IRS has a list of approved CE providers, some of whom provide SEE test preparation courses.

What are the Key Differences

Both can provide individuals or businesses with the guidance needed to solve most tax issues. Beyond that, however, knowing which one to choose depends primarily on your unique circumstances. This means that the CPA is a more broad professional title compared to an EA. A CPA, for example, could work as an auditor, or provide financial management services to businesses and individuals.

  • A minimum of 16 hours must be earned per year, two of which must be on ethics.
  • The CPA Exam has testing all year long, but it has a shorter period to pass all four exams.
  • You’ll be assigned the same client success manager and never reach a voicemail within business hours.
  • Questions that contain the term “current year” refer to calendar year 2023.
  • EAs advise, represent and prepare tax returns for individuals, partnerships, corporations, estates, trusts and any entities with tax-reporting requirements.
  • Similarly, if you’re looking for business or individual financial planning, a CPA tends to be a better choice than an EA.

Understanding these differences is crucial for your small business because choosing the wrong tax professional can have serious consequences. This article will explain the differences between an enrolled agent (EA) and a CPA, helping you make the right choice for your business. Stephanie also is a published author of the book How to Pass the CPA Exam. Additionally, she created I Pass the CMA Exam, the first CMA help site. Her guidance and mentorship have helped hundreds of thousands of candidates pass their exams. She is also the Executive Committee member responsible for Finance at New Sight Eye Care, a charity registered in the United Kingdom and Hong Kong.

Why are EA and CPA salaries different?

For more information on the exams, check out our free EA Exam Guide and our CPA Exam Guide. On the other hand, the CPA Exam has four parts and much broader content. The section equivalent to the EA exam is Regulation (REG), and only about 70% of tax preparer vs cpa the REG content directly relates to the EA exam. Additionally, if you have broader accounting needs — for instance, your bank requires a reviewed financial statement to comply with loan covenants — then working with a CPA can be beneficial.

EAs and CPAs

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