The area of taxation accounting demands a skilled professional to deal with whether for an individual or a business. When we consider such professionals, two coveted international credentials often come to our mind- a Certified Public Accountant or an Enrolled Agent (EA). Obviously, we will want to know which of them will serve the purpose and what are areas they are specialized for rather than the differences between the two irrespective of either engaging them or choosing either or both for career development. Let us discuss the differences between a CPA and an EA here.
It is to be noted that both Enrolled Agents (EA) and Certified Public Accountants (CPA) are licensed professionals who can effectively handle the tax issues of an individual or a business. The primary difference between the two lies in the fact that the license of an EA is authorized by the federal government, i.e., the Internal Revenue Service (IRS) while the CPA license is issued by any of the 55 U.S. states.
This means a CPA has restricted authority to the state level whereas an EA can work across the country. A CPA license is a two-way process where one must clear the CPA exam conducted by AICPA first and then apply for the license separately. On the contrary, an EA license is a single-step process by which one can get an EA license by clearing the exam only.
For a job aspirant, it often creates a dilemma of which path to take in the domain of accountancy. The roles of EAs are centered around a specific niche i.e., taxation but holding greater authority since they represent their clients before the IRS. On the other hand, CPAs’ range of services are much wider rather than taxation and expanded to public accountants, tax accountants, personal finance managers, business consultants, auditors, etc.
What is a CPA?
A licensed CPA is used to carry the following roles :
Individual and Business Consultants
Chief Financial Officer
It means apart from preparing and filing tax returns, a CPA can do auditing and is able to give wealth-related financial advice. For earning a CPA credential, one must clear the four parts of the CPA exam administered by AIPCA where 18 months’ time will be given to pass the sections in an exam cycle. CPAs are governed by the individual US states each of which has different eligibility criteria regarding age, experience, educational qualifications, etc.
What is an Enrolled Agent (EA)?
An enrolled agent (EA) is an IRS-authorized tax professional. EA is considered highly coveted as it is the highest credential awarded by the IRS.
EAs are especially skilled in taxation in its most complicated form. They can represent their client before the IRS regarding tax disputes/discrepancies, appeals, etc.
Being a federal license holder, EAs can represent any taxpayers from any part of the country to any IRS office without restriction. To earn an EA license, one must pass the three parts of the Special Enrollment Examination (SEE) exam. After clearing one part, the candidate can take the other parts at convenience. The score stays valid for two years. Former IRS employees with the required skill and expertise can get the EA license directly without any exam.
Ethical commitment is a must for an EA. To maintain the standard, completion of 72 hours of continuing education courses is mandatory after each 3 years for a licensed EA.
CPA: Professional bodies of different US states give the license.
EA: Federal Government, IRS.
CPA: One must clear a 4-part CPA exam.
EA: One must clear the 3-part SEE exam.
CPA Vs.EA-Exam Sections:
Auditing and Attestation (AUD)
Business Environment and Concepts (BEC)
Financial Accounting and Reporting (FAR)
Representation, Practices, and Procedures.
CPA Vs.EA-Exam Features:
CPA: Passing of all 4 parts is required within 18 months. A minimum of 75 marks is required to pass each part of the exam.
EA: The score of each test section is valid for 2 years which has been extended to 3 years due to covid. The passing score for each section is scaled to 105.
CPA: 180-250$ per exam.
EA: 203$ per exam part.
CPA Vs.EA-Expected Salary:
CPA: Around 66000$ a year with 1 yr experience.
EA: 40000-65000$ per annum as per experiences.
Which Path to take?
If you have the inclination, determination, and the required academic and professional qualifications with the intent to become a seasoned auditor in public accounting along with the tax matter, go for the CPA but keep in mind it is costlier.
On the other hand, if you want to work as a tax professional in a specific domain EA should be your cup of choice. Mind it, to be an EA, there is no set academic qualification. The exam is quite easier than CPA and is economical and affordable too.
However, since the REG part of CPA is covered in EA, one can also go for a dual qualification simultaneously by availing some offers like what Uplift Pro is providing where a free EA course is offered with official CPA admission.
Once you have decided to pursue the prestigious Enrolled Agent (EA) course and are about to surface as an IRS-authorized Tax professional the following tips will help you to successfully crack the 3-part EA exam. The EA exam is known as Special Enrollment Examination (SEE) having the following structure.
Part 1 – Individuals
Part 2 – Businesses
Part 3 – Representation, Practice, and Procedure
Each part of the exam has approximately 100 questions in one of three multiple-choice formats:
All of the following except
The results of the exam are obtained by calculating the correct answers out of the total number of questions. That number is then converted to a scale that ranges from 40 to 130 where the cut-off pass mark is 105. Applicants qualifying for a part of the exam may carry forward the score for up to two years from the date of qualifying for that part.
The tips to Crack the Exam
The Organized Study Plan
Prior to starting your study preparation, make a judicious plan to study at least 50 hours for each part of the exam, at a pace of at least 10 to 15 hours per week. Write plenty of notes in your own words.
Consider a Review Course
Although some free stuff is available on the IRS site, it is advisable to select a good review course either for self-study or some mentoring system for effective value addition.
Do a Strength-weakness analysis (SWA) on the respective part of the examination by chalking out the stronger and weaker areas which help to identify the areas to be focused more.
Continue practicing MCQs by attempting as many mock questions as you can.
Frequently make assessment of your progress by mock evaluation scores and improvise accordingly.
Get in continuous touch with the IRS website for being updated with any tax amendments reflected on the website.
It is always better to get familiar with the prometric online testing system in advance. Although prometric allows 15 minutes for this practice at the time of the exam, it is better to know it earlier in advance from the prometric site.
It is advisable to take 15 to 30 minutes recess to give your brain a break for every hour you study and help you refocus when you return.
Set a benchmark in your study and reward yourself with anything as a reward after achieving the set benchmark.
Get yourself free from exam phobia without thinking about the outcome or score. It would be better to get the full satisfactory preparation and take the exam in a tension free manner rather than casually to get the best results.
Considering the average pass rates as disclosed by Prometric’s for the last 3 years which are (1) approximately 88% for Part 3, (2) 72% for Part 1, and (3) 57% for Part 2, one can think of taking the part 3 first for boosting the confidence. But again, this decision must be matched with the mindset, competence, self-evaluation, and confidence of the aspirant.
So, nothing to be taken lightly to think out of the box. If you are going to take the exam one part at a time, better not to schedule a long interval between Parts 1 and 2. There are several topics that overlap these two parts (e.g., travel and entertainment expenses, related party losses, sales of property, and non-taxable exchanges), so you can recall it easily in a shorter time frame. Hope the above tips and discussion will help to crack the EA exam comfortably.
Imagine the scenario whether you may or may not be a commerce or law graduate, you may or may not have experience in tax return preparation but you want to explore the tax return preparation industry with a zeal to heighten your career in this arena. What should you do? The answer is ‘blowin in the wind’-go for an Enrolled Agent (EA) course and get the EA license in 6-9 months.
What is an EA? EA is an authorized expert by the federal government who can prepare and present all tax-related documents and represent before the Internal Revenue Service (IRS) on behalf of any client from individuals to corporate.
Reasons to become an EA
Unlimited Representation before the IRS
The IRS permits EAs to represent a taxpayer without limitations. By fulfilling the required formalities an EA can be present in the IRS National Database. This helps to handle any type of tax matter (even audits, collections, and appeals), represent clients before any IRS office, and represent any taxpayer in any state in a hassle-free manner
Argue tax law
On behalf of the taxpayer, an EA can disagree with the IRS on a tax return either prepared or not prepared by him/her or anyone which a non-EA tax preparer cannot do.
An EA can talk with the IRS in an audit on a tax return he/she prepared or prepared by anyone else and can talk with the IRS collections office which is not permitted for a non-EA tax return preparer.
A licensed EA can handle any kind of tax-related appeal to the IRS not permitted for a non-EA tax return preparer.
The Department of Treasury regulates the EA designation with an IRS stamp, so all 50 states recognize and respect it. The EA’s universal acceptance and esteem stand makes the credential unique and in sharp contrast with the CPA license which is granted by the individual state board of accountancy thus making the CPA taxation practice in limit.
On average, EAs earn about 10% more per return than an unenrolled tax preparer. For example, at entry-level, an EA with up to 5 years’ experience, can get an average salary of $42,000, at mid-career (5-10 years) it is approximately $50,000 and at a later stage (10-20 years, it can be more than $55,000 respectively. Mind it, you do not have to possess any academic qualification to obtain it.
EA credential gives you recession-proof job security. If taxes are there even in a recession laden country, EAs are there to serve. Therefore, demand for EA is indefinite and increasing fast in developing and developed countries at a greater pace.
In comparison to other accounting courses, EA costs are lower. For this, one must pay for a PTIN number ($30.75), pay at least $609 ($203 per part) in exam fees, and a $140 enrollment fee post exam brings your EA expenses to under $800. That total is considerably much lower than what you would spend on other accounting certifications.
EAs are in high demand, which means you will have a lot of flexibility when it comes to finding a job. You can work for yourself or a firm. You can also choose to work part-time or full-time which is great for prioritizing work/life balance.
Work from home
You can usually work from home as an EA if that is your preference. Remote working is great for taking care of families while managing jobs. You will be able to set your own hours, and you will not have to commute.
Among so many reasons to be an EA, few are cited here. Employees considering a career change can take an ambitious leap to become an EA. For others wanting to increase their earnings or knowledge about tax law can pursue EA from a reputed institution. Since EAs are upskilled to handle more complicated returns, they possess the calibre to do more things for their clients which increases the earning potential of EAs accordingly.
Therefore, if certain obstacles prevent you from earning the CPA, but you plan to specialize in tax, you can get the EA license and be just as capable in the domain. So, why wait? Get your dose of motivation to become a highly-paid EA.
In the field of accounting, one can get easily confused amid the sea of ellipsis. But a hard core conceptual understanding of certain accreditations is vital to look for a licensed tax professional to guide you through your financial needs intelligently. When making your decision about whom to work with, you may wonder about the differences between an enrolled agent (EA) and a Certified Public Accountant (CPA US Course).
Both CPA and EA are credentials that should uphold stringent ethics and standards. EA is regulated on the federal level and CPA US Course is regulated on the state level. As CPAs are licensed at the state level means they have limited scope of practice within those jurisdictions.
An enrolled agent and a certified public accountant are both tax experts and the work they do is often similar, but there are some differences between an EA vs CPA US Course.
To understand the difference between an EA and a CPA, you should start with the responsibilities and day-to-day work of each. Here’s an overview of both.
A. What is an EA (Enrolled Agent)?
EAs are federally authorized tax practitioners who can
1. Represent taxpayers before the IRS on matters ranging from collections to IRS audits and appeals. Additionally, they often:
2. Provide tax advice
3. File tax returns for individuals, partnerships, corporations, estates, trusts, and other entities with tax-reporting requirements
4. 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
1. Complete 72 hours of continuing education every three years.
2. Comply with ethical standards established by the Department of Treasury.
3. 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.
B. What is a CPA US course (Certified Public Accountant)?
CPA US Course 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
1. 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.
2. 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.
3. Each state’s board of accountancy, CPA society, and other regulatory agencies have ethical rules and regulations that CPAs must abide by.
Enrolled agents, or EAs, :- are tax preparers the IRS has authorized to represent taxpayers. Enrolled agent clients include individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements.
Certified Public Accountants, or CPAs :- are licensed accountants with the statutory privilege to sign an audit report. They can prepare financial accounts, provide audit services, and advise clients on tax matters. Normally, the clients of CPAs are businesses requiring both accounting and tax services.
The steps to becoming an EA or a CPA US Course are quite similar. The main difference between these two processes is the manner in which you fulfill the basic requirements.
C.1 The Exam Eligibility
In order to become an enrolled agent, you must either take the Special Enrollment Exam (SEE), also known as the enrolled agent (EA) exam, or have previous work experience at the IRS. While passing the exam is much easier once you’ve acquired several years of tax experience, there is no prerequisite for taking the EA exam. Therefore, you could sit for it during college if you wanted. You just need a Personal Tax Identification Number (PTIN) to schedule the exam.
In contrast, you must meet educational requirements to take the US CPA Exam. The various state boards of accountancy establish the US CPA Exam application and licensure requirements, and almost everyone expects you to have 120 credit hours of education to sit for the exam. Yes, this requirement is equivalent to a bachelor’s degree, and many state boards also prefer you have your degree in accounting.
C.2 The Exam Content
The EA exam has three parts, and most people find the first and third parts to be the easiest because some experienced tax professionals can pass these parts with minimal studying. Conversely, almost everyone must work hard to pass the second part–Businesses– so it’s naturally considered the hardest.
On the other hand, the US CPA Exam has four parts and much broader content. The section equivalent to the EA exam is Regulation (REG), and only about 70% of the REG content directly relates to the EA exam. The rest covers other topics such as business law.
Still, when we compare REG’s taxation section to the EA exam’s taxation section, we uncover quite a lot of overlap. In fact, the amount of shared content can help candidates earn both certifications at the same time. Candidates who have trouble passing REG can shift their focus to passing the EA exam and earning the EA designation. Once they’ve done so, they can use their expanded tax knowledge to return to the US CPA Exam, pass it, and get their CPA license as well.
C3. The Experience Requirement
If you pursue the enrolled agent designation via the EA exam, you don’t have to meet an experience requirement. You simply must pass the exam. You’ll receive your exam results immediately, and once you’ve passed; you can apply for enrollment. The IRS explains that processing your application may take as long as 60 days (90-120 days if you’re a former IRS employee). Also, as part of their evaluation of your enrollment application, the IRS will conduct a suitability test that includes a review of your personal tax compliance.
To complete your journey to the CPA license, once you’ve passed all four US CPA Exam sections, you must meet the experience and education requirements. The 150-hour education requirement expects you to earn an additional 30 credit hours on top of your base 120 hours (120 + 30 = 150). Satisfying the experience requirement usually involves working in an accounting position for 1-2 years. While there could be exceptions to the rule, CPA licensure generally has a much higher barrier of entry than the enrolled agent credential.
C4. The Career and Compensation
EAs usually don’t work for a firm. They have their own clients and therefore can work at home with flexible hours. Many CPAs start out in audit firms, but as they accumulate experience, they can launch their own CPA firms and have their own clients.
According to Payscale.com, enrolled agents typically make between $33K to $80K a year, while CPAs make between $49K to $115K per year. Enrolled agents also have the opportunity to earn extra money during tax season. Finally, it is to be noted that the IRS puts both EAs and CPAs on the same level.
US CPA salary in India ? In India a fresh CPA starts with a minimum salary of INR 6 Lakh annually in a Big4 or MNC. The salary increases at higher rate compared to non-certified peers. Meanwhile, a CFO can earn more than INR 1 Cr annually.
D. Value Addition
D.1 The Advantage of EAs
1. EAs are tax specialists and work on tax matters only, so they can specialize in certain areas such as tax preparation or tax resolution. The EA designation is a federal credential. Since the enrolled agent credential comes from the IRS and includes the unlimited right to practice on a federal level, EAs can work with clients who have filings all across the United States.
2. Enrolled agents are a more affordable option than tax attorneys. Usually, enrolled agents can perform the same services as a tax attorney for a much lower price. For example, enrolled agents can represent their clients in civil resolution cases.
3. Taking the EA exam is faster than taking the US CPA Exam. EA exam only has three parts, while the US CPA Exam has four.
4. The EA questions are easier, so most candidates only need a few months to pass the EA exam. the benefit of the EA exam is that the sooner you can get licensed, the sooner you and your clients can enjoy your improved status with the IRS.
D.2 The Advantage of CPAs
1. CPAs can handle both accounting and tax matters.
2. CPA’s or CPA US Course expertise mainly lies in accounting and auditing, but most can provide tax filing services as well. This combination is attractive to small businesses that need both audit and tax services, preferably from the same team.
3. CPAs can take a holistic approach for better tax planning.
4. For businesses, hiring a CPA is the more sensible option because someone who “knows the numbers” can make better tax plans.
E. 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 US Course is that EAs specialize in taxation, and CPAs can specialize in taxation and more.
E.1 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.
E.2 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.
F. Focus, Skill and Rate Comparison:Differences Between CPA US Course & Enrolled Agent
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 US Course exam
Five years IRS experience; pass the EA exam
Average of $30 to $500, depending on experience, rank within firm, whether CPA is a firm owner
Average of $12 to $55
G. Which one to Choose? EA vs. CPA US Course
Enrolled agents are not as well-known as CPAs, but they are as good if not better with income tax matters. The path to the CPA US Course is long and arduous but more popular. If you think this is the path for you, carry on. But if you’d like to specialize in tax matters and get on the fast track to working at home with your own clients, then set your course for the EA credential.
When deciding between an EA or a CPA US Course, you will see that both types of professionals are well-qualified. They can both deliver the financial guidance you may need for your taxes. However, which one you should consult depends largely on which issue you’re looking to resolve. As could help you work through an IRS audit or a collection problem, and they can also perform bookkeeping services that could be useful for businesses when preparing tax returns.
CPAs, however, are more adept in meeting your financial planning and accounting needs; and when it comes to tax planning, they can also help you identify tax credits and deductions to lower your tax liability.
Both types of professionals are equally qualified to perform similar tasks, but there are differences in the range of services offered. CPAs can provide a much wider scope of tax services than an EA can. What’s more, general population demand is greater for CPAs than EAs.
If you have accounting needs with a micro focus, working with an EA could be the perfect fit for you. On the other hand, if you are interested in accounting practices that have nothing to do with taxes, such as auditing, then the CPA US Course option may be best.
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