Differences Between an Enrolled Agent and a CPA Explained

If asked they most wanted out of tax preparation assistance, most people would say they want someone knowledgeable of current tax laws, perfectly honest and licensed, and ready to help them understand and benefit from all possible tax guidelines. These traits can describe both enrolled agents (EA) and certified public accountants (CPA). When tax time comes around or if you need help throughout the year, deciding between the two requires additional information.

What is an Enrolled Agent?

An EA does not need to have any advanced degree in accounting or finance to get this designation. Instead, they are thus titled by the U.S. Department of the Treasury after passing IRS-specific testing and 72 or more hours of education every third year. They are legally able to prepare taxes, give advice, and represent individuals, businesses, estates, and any other entities with income tax in any way.

What is a CPA?

CPA’s have the minimum of a bachelor’s degree, two or more years of experience in accounting, and have successfully completed the CPA exam. Different states have various other requirements before a certified public accountant earns their license. At least 15 hours of extra education is required annually by the IRS.

These professionals do not only prepare and handle tax issues; they frequently specialize in a particular type of financial services for individuals or corporations so you may have to search to find the perfect fit for your needs. It is possible to need more than one CPA, especially in larger corporations or for other complex issues.

Which One is Better for You?

Most federal tax needs and issues can be handled admirably by either an EA or a CPA, but there are a few instances where one may outshine the other.

Since EA’s are licensed directly by the IRS, federal tax problems may get a more experienced touch with one of these on your side. This holds true for tax preparation if an individual or company has tax returns to file in multiple states. They can even help if you need to go to civil court for federal tax issues.

CPA’s help with the day-to-day financial management and record keeping of your life or business. For tax preparation alone, you may receive a more personal approach with a wider-reaching explanation for the best steps to take for your particular circumstance.

Ultimately, deciding whether to hire an enrolled agent or a CPA for your tax needs depends on many factors, most of which will be outside the bounds or your needs. Standard criteria like availability, affordability, and personal comfort levels sometimes win out overall.