EA vs. CPA Tax Professionals: What’s the Difference?
If you’re interested in professional help with your taxes, you might be wondering what types of specialists there are and which one you need. An enrolled agent and a certified public accountant are both tax experts, but when you should work with an EA vs CPA differs based on your needs. Here's an overview of both.
EAs and CPAs
When you're looking to hire a tax professional, you want someone knowledgeable — someone you can trust to get the job done and keep your personal information secure.
Two of the more common tax professionals are:
EAs and CPAs can both be tax experts, and the work they do is often similar, but there are some differences between an EA vs CPA. To understand the difference between an EA and a CPA, you should start with the responsibilities and day-to-day work of each.
What is an EA (Enrolled Agent)?
EAs are federally authorized tax practitioners who can
- Represent taxpayers before the IRS on matters ranging from collections to IRS audits and appeals. Additionally, they often:
- Provide tax advice
- File tax returns for individuals, partnerships, corporations, estates, trusts, and other entities with tax-reporting requirements
To become an EA, candidates must pass a three-part test, apply to the IRS, and pass a background check.
To maintain the EA designation, they must
- Complete 72 hours of continuing education every three years.
- Comply with ethical standards established by the Department of Treasury.
Many EAs are also members of the National Association of Enrolled Agents, which has even higher standards for continuing education, as well as its own Code of Ethics.
What is a CPA (Certified Public Accountant)?
CPAs are state-licensed accounting professionals who may be:
- Business advisors
- Corporate accountants and executives
- Tax consultants
- Forensic accountants
- Financial planners
To become a CPA, candidates must pass a four-part exam and comply with education and experience requirements. The exam is the same no matter which state it's taken in, but every state has its own education and experience requirements. Most require at least a bachelor's degree and at least two years of public accounting experience.
- Each state also has its own rules for maintaining the license, but most require at least 40 hours of continuing education per year, with four of those hours covering ethics.
- Each state's board of accountancy, CPA society, and other regulatory agencies have ethical rules and regulations that CPAs must abide by.
Many CPAs are also members of the American Institute of CPAs, which has its own Code of Professional Conduct.
When to work with an EA vs. CPA
EAs and CPAs are both knowledgeable, experienced professionals who are required to maintain high ethical standards. The primary difference between an EA vs CPA is that EAs specialize in taxation, and CPAs can specialize in taxation and more.
So, how do you know when to work with one over the other? That depends on the type of services you need.
Working with an EA
If you need help with an IRS issue, such as a collection problem or an audit, then an EA might be your best bet. They’re typically adept at dealing with the IRS, and some EAs even worked as IRS agents before opening their own practices.
They’re also a great option if you need tax preparation and planning advice for an individual or business. While EAs can't provide compiled, reviewed, or audited financial statements like most CPA’s can, they can generally perform bookkeeping work to put the business's records into tax-basis statements that they then use to prepare a tax return.
Working with a CPA
CPAs are federally approved to represent you in all matters before the IRS. Those that specialize in tax preparation can also typically help you with tax and financial planning, accounting needs, and most other financial tasks that you might have. Look to a CPA to identify the credits and deductions you qualify for to increase your tax refund and help lower your tax bill.
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.
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