EA vs. CPA: Clarifying The Difference In Tax Roles

It's clear you want to be the best you can be, professionally, and a big part of unlocking your potential in the accounting industry is earning certain certifications. Many accountants want to become certified public accountants (CPAs) while others have their sights set on becoming enrolled agents (EAs). But which one is right for you? Read on to learn more about an enrolled agent vs. CPA.

The decision depends on a lot of different factors, such as deciding what kind of colleagues and clients you want to work with and which areas of accounting interest you the most. It's helpful to compare the differences between an EA and a CPA so you can decide which one is the best choice for your career.

What is a CPA?

Certified public accountants are consultants for a range of topics related to money management, taxes, financial services and other accounting areas. Their clients may include businesses or individuals who need help in financial planning. CPAs are experts in a broad range of accounting and finance-related topics and are certified by a state.

CPAs are state-licensed accounting professionals who can:

• Perform financial audits for businesses and organizations
• Provide attestation services
• Offer tax planning and preparation services for individuals, businesses
• Investigate financial discrepancies and potential fraud
• Consult on various financial matters
• Work in management accounting
• Represent clients before tax authorities and regulatory agencies

What Is an Enrolled Agent?

Enrolled agents are more specialized than CPAs, as their professional skills center on taxes for individuals and businesses. The federal government oversees the licensing of EAs and with this title, EAs can represent clients before the IRS. Almost every aspect that relates to taxes can be handled by an EA, from estate taxes and retirement taxes to corporate taxes. EAs can represent individuals and businesses with the IRS if they are facing an audit. EA credentials are awarded by the IRS and are effective in every state.

EAs are federally authorized tax practitioners who can:

• Represent taxpayers before the IRS
• Prepare and file tax returns for individuals and businesses
• Provide tax planning advice
• Assist in resolving tax-related issues
• Advocate for clients in matters related to tax collections, penalties, and appeals

Comparing EAs Vs. CPAs

There are pros and cons attached to each type of certification. Both EA and CPA certifications can enhance any accountant's career, but it's important to look at the differences between EAs Vs. CPAs to properly compare.

Education and Certification

One of the key differences between a CPA and an EA is what it takes to earn the designation. A CPA applicant must meet all the education requirements as outlined by their state, and then pass the CPA exam. EA applicants must pass all three parts of the Special Enrollment Examination (SEE) or have five years of experience as an IRS employee in a tax-facing field.

Exams

The CPA exam is four 4-hour tests that cover Financial Accounting and Reporting (FAR), Auditing and Attestation (AUD), Business Environment and Concepts (BEC), and Regulation (REG). Applicants have 18 months to pass all four exams. Some states also require an ethics exam.

The EA exam is a three-part test that each consists of around 100 multiple-choice questions. The sections include Individuals; Business; Representation, Practice, and Procedures. Applicants have two years in which to pass all parts of the exam.

Eligibility to Practice

CPAs can only practice in the state they are certified in, while EAs can practice in all 50 states because their license is awarded at the federal level. EAs are not as common but as clients recognize their specific skills, the demand is growing. CPAs are widely known in the business and accounting world.

Clientele

CPAs offer more broad accounting services while EAs specialize in tax issues. For accountants who really want to focus on tax issues, the EA is the way to go. EAs usually do not branch out into other areas of accounting that are not tax-related. CPAs can focus on taxes as well as other topics that have little to do with taxes, such as corporate finance or auditing.

Earnings

On average, CPAS make more money than EAs annually. A CPA’s average salary is around $62,000 while the average EA salary is around $50,000. As with any salary reporting, a lot depends on various state and regional differences, which have an impact on both clients and earnings.

Which Certification is Better? 

This depends on your career goals and the specific role within the field of taxation and accounting you want to follow. EAs focus on taxation which may be a preferred choice for individuals seeking expertise in tax planning and problem resolution.

Since CPAs are licensed accountants, they have a broader skill set encompassing auditing, financial accounting, and consulting services. This wider skill set allows CPAs to work in various fields, including tax, audit, and advisory services. Ultimately, it is up to you to decide if you prefer to have a specialized focus on tax or if you want broader accounting expertise with a CPA. 

Enrolled Agent vs. CPA: Which Path Will You Take?

There's no wrong answer when it comes to deciding whether it's best for you to study to become a CPA or an EA. Both are prestigious positions that will give you a lot of additional income per year. When you look at the similarities and differences between an EA and a CPA, you can see that either one will help you achieve your professional goals.

Interested in learning more about the salary outlook for accountants? Check out this blog post.