Tax Tip Tuesday | CPAs versus EAs

*this transcript was taken from our Tax Tip Tuesday post on Youtube.  You can watch the video here.

Hey, everyone. It’s Tax Tip Tuesday. Today I’m going to be talking about CPAs versus EAs. Most of you know what a CPA is, certified public accountant, but some of you might not know what enrolled agents are. I’m an enrolled agent. I thought I’d talk about both and the similarities and differences just so you’re more educated.

As I said, most of you know what a CPA is. A CPA has to complete about 150 undergraduate hours and pass a four-part CPA exam in order to become licensed. They also have experience requirements. They have a certain number of hours they have to do. With the EA, which is an enrolled agent, there is no education requirements, but they do have a three-part exam that focuses solely on tax. With the CPA, they focus on auditing attestation, business law, financial accounting and tax in a nutshell. CPAs tend to be more generalists, I like to call it, but there are some CPAs who specialize in just tax or just auditing or financial statements. I know some CPAs that don’t even prepare their own tax returns because they don’t work in the tax realm. They just work and do auditing.

With an EA, with an enrolled agent, their exam is entirely tax, so it includes individuals, businesses and practices and procedures, etc. Basically with the EA, you’re having someone that that’s all they do, is just tax. The majority of the EAs that I know and I work with on a regular basis or collaborate with on a regular basis, they all have the same CPA undergraduate education basically and hours that basically allows them to be a CPA if they wanted to be. I’m in that boat. I’m an undergrad in accounting and finance, double majored. I have my MBA. I have my master’s of taxation as well. I have all my hours. If I decided to sit for the CPA exam, I’m eligible for it and I can do it. However, since I specialize in tax and I know that’s the area I want to be in, the CPA doesn’t hold as much value for me except for obviously marketing purposes.

With enrolled agents, they are federally licensed, and CPAs are state licensed. EAs have all the same rights and privileges as a CPA when it comes to representing you in front of the IRS. We can work with anybody, any returns and with anybody in the country.

The only thing that EAs can’t do that CPAs can do is sign off on financial statements. You have some companies like obviously the big public accounting firms, they have to do audits of their financial statements every year. I can’t sign off on financial statements. I would have to be a CPA in order to do that.

Hopefully that gives you an idea of the differences, the pluses and minuses of each. Both the CPA and the EA also have to have … They have to uphold stringent ethics standards. We have to take CPE every year, continuing education every year for ethics. To keep our licenses, we have to have a certain amount of continuing education credits as well, like most licenses. It’s the same with medical licenses. You have a certain amount of CMEs you have to do.

If you have any questions, let me know. I hope you found this informative. Thanks.