What Are The Differences Between a CPA and an EA?
Whether it’s tax season and you need a hand with filing your tax return, or you need help maintaining compliance throughout the year, a tax professional can help you. But as you scroll through search engine results, you see a couple of titles appear regularly.
If you find yourself wondering what’s the difference between a certified public accountant, CPA, or an IRS Enrolled Agent, EA, look no further. This blog post can help you understand what you need to know between those two titles and how they can help you.
What does it mean to be a CPA or EA?
A CPA is a professional designation given to individuals who have completed specific education and experience requirements and passed a rigorous exam. Certified public accountants are licensed by the state in which they practice and are qualified to perform a wide range of accounting, tax, and financial tasks.
An EA is a tax professional who has passed a comprehensive exam and background check administered by the IRS. The IRS licenses enrolled agents to represent taxpayers before the agency, including in matters related to audits, collections, and appeals.
What are the differences in education between a CPA and EA?
To become a CPA, an individual must typically complete a bachelor's degree in accounting or a related field, pass the CPA exam, and meet experience requirements. The CPA exam is administered by the American Institute of Certified Public Accountants (AICPA). It consists of four parts: Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation. Each state has its own requirements for obtaining a license, and some states may have additional education or experience requirements. Once an individual has passed the CPA exam and met the state's licensing requirements, they can use the CPA title. Maintaining the license requires education credits that need to be fulfilled annually.
To become an EA, an individual must pass a three-part exam administered by the IRS. The exam covers topics such as Individual and Business Tax Returns, Representation, Ethics, and Federal Tax Law. Enrolled agents must also meet continuing education requirements to maintain their status. EAs are not licensed by the state and do not have to meet state-specific education or experience requirements. However, they must meet the IRS's requirements for enrolling as an EA and pass a background check.
What responsibilities do CPAs and EAs have?
Certified public accountants are licensed by the state and are qualified to perform a wide range of accounting, tax, and financial tasks. This may include preparing and reviewing financial statements, performing audits, providing tax advice, and managing financial operations. Certified public accountants may work in various settings, including public accounting firms, private businesses, government agencies, and nonprofit organizations. They may also be self-employed and run their own accounting practice fulfilling their desired niche within the industry on their own terms.
Enrolled agents are licensed by the IRS and are authorized to represent taxpayers before the agency, including in matters related to audits, collections, and appeals. They can also prepare tax returns for individuals, businesses, and other entities. However, EAs have a different scope of practice than CPAs and are not licensed to perform tasks unrelated to tax. Enrolled agents may work in various settings, including tax preparation firms, accounting firms, and self-employed tax professionals. However, they are more likely to specialize in tax-related work and may be more focused on representing taxpayers before the IRS.
When should I use a CPA or EA?
The roles and responsibilities between a CPA and an EA are not mutually exclusive. They have overlapping roles, such as preparing and reviewing tax returns. However, some key differences between the two could help you understand their strengths. Here are some helpful tips.
- If you need help preparing and filing your personal or business tax returns, you may want to consider working with an EA or a CPA. Both professionals are qualified to prepare tax returns and can provide valuable guidance on tax planning and compliance.
- If you are facing an audit or other tax-related issue with the IRS, you may want to consider working with an EA. The IRS licenses enrolled agents to represent taxpayers before the agency, including in matters related to audits, collections, and appeals. They have a thorough understanding of tax laws and can help you navigate the audit process and negotiate with the IRS on your behalf.
- You may want to consider working with a CPA if you need help with financial planning, budgeting, or managing your business's financial operations. Certified public accountants are qualified to provide a wide range of financial services and can help you develop strategies for achieving your financial goals.
- If you are starting a new business or need help with business planning, you may want to consider working with a CPA. Certified public accountants can provide valuable advice on financial management, tax compliance, and other important business matters.
- If you need to ascertain what you can do to alleviate tax burdens or navigate the complex tax codes to ensure your business is compliant, either a CPA or EA is a good option for you.
It's important to carefully consider your needs and choose a qualified professional to meet them. Both CPAs and EAs are qualified professionals who can provide valuable services, but they have different areas of expertise and may not be suitable for all situations.
How can Taxfyle help?
Now that you know the differences between a CPA and an EA, now it’s time to find the right person to help you file your taxes. Luckily, there’s an easy way to do that.
At Taxfyle, we connect individuals like you with a licensed, experienced CPA or EA located within the United States. We take the hard part of finding the right tax professional out of your hands by matching you with the tax professional who has the right experience to meet your unique tax needs. The best part is that they do the work of filing your taxes for you.
Whether it’s a CPA or an EA, there’s no better way to file your taxes than by giving the work to an expert. This tax season, make the hardest part of filing your tax return be logging in to an app. Our Tax Pros can help you with the rest of the work.