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When it comes to pursuing a career in accounting or tax-related fields, two certifications often come up: Enrolled Agent (EA) and Certified Public Accountant (CPA). While both credentials signify a high level of expertise and can open doors to various opportunities, they differ in their scope, requirements and areas of specialization. In this article, we’ll explore the key distinctions between the EA and CPA certifications, whether you are looking to work with one, or become one.
A financial advisor can help you maximize the tax efficiency of your investments.
What Is an Enrolled Agent (EA)?
An enrolled agent (EA), is a tax professional who specializes in taxation. EAs have broad knowledge of tax-related subjects, including income, estate, gift, payroll, nonprofit and retirement taxes, as well as tax returns, levies and inheritance-related tax matters.
Once EAs have passed their qualifying exam, the federal government recognizes them as tax specialists. An EA is the highest credential the IRS awards.Typical EA responsibilities include representing business or individual clients in tax audits, tax appeals and tax collections. EAs can also provide tax advice, tax return filing and more.
What Is a Certified Public Accountant (CPA)?
Certified public accountants, or CPAs, have a more flexible and expansive repertoire than EAs. They deal in all sorts of realms within the tax world, making them a great choice if you’re looking for a broad scope of expertise. Whereas the federal government approves EAs, states approve CPAs.
CPAs typically do most of their work for public accounting firms of all sizes. They could be specifically licensed as auditors, financial planners, corporate and executive accountants and tax consultants. So, CPAs could assist in all accounting, tax and financial services for the businesses, individuals and other organizations they may represent.
CPAs may help clients set and achieve financial goals through money management and financial planning. These goals could include anything from making a down payment on a home to opening a new branch of a business.
Costs and Processes of Becoming an EA and CPA
To become an EA, it’s necessary to pass an IRS-administered exam. There are three sections to the exam: individuals, businesses and representation, practices and procedures. The cost of each section of the exam is $317. There is also a continuing education component, with a minimum of 72 hours every three years required.
To become a CPA, a person must take 150 hours of public accounting courses, typically at a college or university. Though requirements vary by state, it is common for those aiming to become CPAs to take a review course before sitting for the four-part exam. These courses can cost anywhere from $1,200 to $3,500.
Application fees for the CPA exam vary by state but are typically around $100. Each of the exam’s four sections costs about $200, with the exact cost depending on the state. There is also a continuing education component, but the exact number of credit hours varies by state.
What’s the Difference Between EAs and CPAs?
Now that you know what CPAs and EAs do in practice, here’s a side-by-side comparison of their main focuses, broader skill sets and hourly rates:
| Differences Between CPA & Enrolled Agent | CPA | EA |
|---|---|---|
| Professional Focus | Broad accounting, tax and financial services for businesses | Taxes for businesses and individuals |
| Qualifications for Practice | State education requirements (usually 150 hours of undergrad); pass CPA exam | Pass the Special Enrollment Exam; enroll with the IRS and pass a suitability check |
EA vs. CPA: Which Is Best for You?
When deciding between an EA and a CPA, both can provide tax guidance and represent taxpayers before the IRS. The main difference is the scope of their credentials. EAs specialize in federal taxation, while CPAs are licensed by state boards of accountancy and may provide a broader range of accounting and financial services.
EAs can assist with tax preparation, IRS audits, collections and other federal tax matters. CPAs can handle these issues as well, so an EA may be a good fit when you specifically need a professional focused on taxation and IRS matters. A CPA may make more sense when you also need services such as financial reporting, accounting or audits.
CPAs, however, are more adept at meeting financial planning and accounting needs. When it comes to tax planning, they can also help in identifying tax credits and deductions to lower your tax liability. They tend to occupy a wider range of roles, including in auditing, management consulting and financial analysis.
Ultimately, if you have accounting needs with a micro focus, working with an EA could make more sense. On the other hand, if you are interested in receiving broader financial services alongside tax assistance, then a CPA may be the way to go.
Representation Rights and Scope of Authority
Both enrolled agents and certified public accountants can represent clients before the IRS, but their authority is defined differently. Enrolled agents receive their credential directly from the federal government, which gives them unlimited rights to represent taxpayers in audits, collections and appeals, regardless of the taxpayer’s location.
CPAs also have representation rights before the IRS, but their licensure is granted at the state level. While CPAs commonly represent clients in federal tax matters, their authority depends on maintaining an active state license and meeting state-specific requirements. CPAs may also represent clients in state tax matters, which can matter when dealing with multi-state filings or audits.
This distinction can affect whether a CPA or an EA is appropriate. IRS-focused disputes, back taxes and federal compliance issues often fall squarely within an EA’s core practice. Situations involving both tax issues and broader accounting, financial reporting or business operations may align more closely with a CPA’s scope of practice.
When You Might Choose an EA Instead of a CPA
Although enrolled agents and certified public accountants can both provide tax services, the right choice often depends on the complexity and scope of your financial needs. Understanding where each professional tends to specialize can help you decide who is better suited to your situation.
An enrolled agent may be a better fit if your primary concern is resolving a federal tax issue. EAs specialize in tax law and commonly assist clients with IRS audits, unpaid tax balances, installment agreements, amended returns and other matters involving the IRS. If your needs are centered on tax compliance rather than broader financial planning, an EA may provide the specialized expertise you’re looking for.
A CPA may make more sense if your tax questions are connected to accounting, business operations or long-term financial planning. In addition to preparing tax returns, CPAs often provide services such as financial statement preparation, business consulting, budgeting and strategic tax planning. Individuals with more complex financial situations or business owners who need ongoing accounting support may benefit from working with a CPA.
For some taxpayers, the decision is not necessarily one or the other. Businesses and higher-net-worth individuals sometimes work with both professionals, relying on a CPA for accounting and financial reporting while turning to an EA for specialized tax representation before the IRS. Choosing the right professional depends on the services you need rather than the credential alone.
Whether you hire a professional or do your taxes yourself, get a quick estimate of your tax bill before filing by entering your details into our income tax calculator.
Bottom Line
When deciding whether to work with an EA or a CPA, both professionals can offer extensive tax expertise. The main difference is the scope of their training and services. EAs specialize in taxation and are licensed by the federal government, while CPAs are licensed by state boards of accountancy and have a broader accounting background. Both EAs and CPAs generally have unlimited representation rights before the IRS.
“EAs and CPAs are both tax experts, but a CPA has a broader accounting background as well,” said Brandon Renfro, CFP®.
Brandon Renfro, CFP®, RICP, EA provided the quote used in this article. Please note that Brandon is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.
Tips for Managing Your Taxes
- You may want to consider working with a professional financial advisor before speaking with a CPA or EA. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- SmartAsset’s tax return calculator can tell you how your income, withholdings, credits and deductions impact the amount due on your returns and any credit you may be entitled to.
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