EA vs CPA: Which is better?
When you’re contemplating whether to earn the Enrolled Agent (EA) designation or the Certified Public Accountant (CPA) certification, you need to know the answer.
Both are good options. The EA and the CPA each have their pros and cons as well as distinct effects on your long-term career.
To help you make the decision, let’s take a look at the CPA vs enrolled agent.
EAs, or enrolled agents, are tax preparers authorized to represent taxpayers before the IRS. Their clients are individuals, partnerships, corporations, estates, trusts, and any entities with tax-reporting requirements.
CPAs, or Certified Public Accountants, are licensed individuals with the statutory privilege to sign an audit report. They can prepare financial accounts, provide audit services, and offer tax expertise. Typically, their clients are businesses that need both accounting and tax services.
One other important distinction separates the 2 designations: licensure. The CPA certification is also a license to practice, whereas the EA is simply a designation, not a license. Consequently, enrolled agents do not receive an EA license or an enrolled agent license to practice. But while the EA designation doesn’t sound quite as prestigious as the CPA license, don’t fret: People recognize and greatly respect enrolled agents, and sometimes more than CPAs when it comes to tax matters.
The steps to becoming a CPA or an EA are quite similar. As you’ll see, the basic requirements are the same, but the manner in which you fulfill the requirements differ. Let’s take a look at the CPA vs EA requirement differences.
To become an enrolled agent, you must either take the EA exam, also known as the Special Enrollment Exam (SEE), or have previous work experience at the IRS. Passing the exam is much easier once you have several years of tax experience. However, there is no prerequisite for taking the exam. In fact, you can schedule and sit for the exam as soon as you obtain a Personal Tax Identification Number (PTIN), even if you are still in college.
In contrast, sitting for the CPA Exam involves meeting an education requirement. Almost every state board of accountancy (the organizations that determine the CPA requirements) requires 120 credit hours of education to sit for the CPA Exam. As you can see, this requirement is the equivalent of a bachelor’s degree. Most state boards also prefer that degree to be in accounting.
The EA exam has 3 parts. Most people consider Part 1 and Part 3 to be the easiest, as some experienced tax professionals can pass these parts without much studying. But almost everyone must work hard to pass Part 2. So naturally, it has the reputation of being the hardest.
The CPA Exam has 4 parts, and the exam content is much, much broader. The CPA Exam section equivalent to the EA exam is Regulation (REG). Only around 70% of the REG material relates directly to the EA exam, while the rest covers other topics such as business law.
However, comparing the taxation section of REG to that of the EA exam reveals quite a lot of overlap. In fact, this shared content can help candidates pass both exams in time. If you start with the CPA Exam and struggle with REG, you can temporarily change course by passing EA exam and earning the EA designation. Then, with your improved understanding of tax, you can come back to REG, pass the CPA Exam, and, ultimately, get the CPA license as well.
As I said, the EA exam has 3 parts. You can’t take the exam from March-April every year because the exam is closed for updates. Otherwise, you can take the exam parts at any other time during the year and in any order you like. You can take them hours, days, or months apart. In case you fail an EA exam part, you can take each exam part a total of 4 times during the testing window (May 1-February 28). You can pass the EA exam in a timely manner by studying with an EA review course and sticking to a study schedule.
The CPA Exam has a stricter timeline than the EA. The CPA Exam is only available during 4 annual testing windows. Here’s the CPA Exam schedule:
You can only sit for the CPA Exam during these testing windows. Additionally, you must pass all 4 parts of the CPA Exam within a rolling 18-month period. This time period begins as soon as you pass your first exam section. At that point, you have 18 months to pass the remaining 3 sections. If you don’t pass the remaining sections within this time, you will lose credit for the first section you passed. You must then pass that section and any other unpassed sections within 18 months of the time you passed your second section. With such tight deadlines, relying on a CPA review course and faithfully adhering to a consistent study schedule are even more critical for achieving CPA Exam success.
If your path to the enrolled agent credential runs through the EA exam, you don’t need to meet an experience requirement. You only need to pass the exam. Thankfully, you’ll receive your exam results immediately. And once you’ve passed, you can apply for enrollment by filling out Form 23. The processing of your application can take 60 days (90-120 if you’re a former IRS employee). Additionally, as part of the evaluation of your enrollment application, the IRS will conduct a suitability test. This test will include a review of your personal tax compliance.
To finish the process of becoming a CPA after you’ve passed all 4 CPA Exam sections, you must acquire an additional 30 credit hours to fulfill the 150-hour education requirement. Additionally, you must work in an accounting position for 1-2 years to meet the experience requirement.
All in all, while there may be exceptions to the rule, the CPA license generally has a much higher barrier of entry than the EA credential.
To take the Enrolled Agent exam, you must pay a testing fee for each exam part. The exam has 3 parts, and the testing fee is $$181.94, which comes to a total of $545.82. To pass the exam, you’ll also need to purchase an enrolled agent course, which provides study materials covering the exam content. The most popular EA course, Gleim EA Review, costs $500-$600 depending on your course package.
Finally, once you pass the EA exam and are ready to become an enrolled agent, you’ll have to pay the IRS $30 to complete the enrollment process. Over the course of becoming an EA, you’ll also want to consider additional enrolled agent exam costs covering retakes, testing appointment reschedules, and continuing education courses.
Taking the CPA Exam is a bit more expensive, for one reason because the exam has more parts. Specifically, the CPA Exam has 4 sections, and typically, you must pay $208.40 to sit for each part. If you pass each section on your first attempt, you still must pay $833.60. Another CPA Exam cost you must take into account is the application fee. You’ll have to pay this fee the first time you apply to your state board, and it ranges from $30-$200 depending on the state board. If you have to retake an exam section, you may also have to pay a registration fee, which typically runs from $30-$150.
Using a review course is just as essential to passing the CPA Exam as it is the EA exam (if not more so), and CPA Exam prep is also pricier. The best CPA review courses will run you about $1,700 on average. After you pass the CPA Exam, you probably also have to take the ethics exam, which usually costs $130. Finally, you must pay the CPA licensing fees, the mid-range of which comes to about $150. And yes, there are also a few other CPA Exam fees you’ll need to budget for depending on your situation and testing track record.
This chart presents the totals for the Enrolled Agent exam and the CPA Exam costs.
|Testing Fee (per part)|
|Examination Fee (per part)|
|EA Review Course|
|Enrollment for Practice:|
|CPA Review Course|
Because the CPA Exam is so expensive to take, candidates usually invest quite a bit more in their review courses so that they are better able to pass the exam on the first attempt. CPA candidates usually choose a course like Becker CPA, Gleim CPA, Wiley CPAexcel, Roger CPA, Yaeger CPA, or Surgent CPA. Therefore, we highly recommend candidates review the best CPA review discounts before purchasing their course as a way to keep more money in their pockets.
According to Payscale.com, enrolled agents typically make between $30K-$75K a year. A CPA salary is usually between $40K-$104K per year. So, starting salaries for a CPA and an EA are comparable, but CPAs benefit from increased earning potential as time goes on. However, enrolled agents have the opportunity to earn extra money during tax season. I have a reader who actually makes more during those few months than he usually earns for the year in retail.
As for the employment situation, enrolled agents usually don’t work for a firm. They actually have their own clients and can, therefore, work at home with flexible hours. On the other hand, many CPAs start off in audit firms, but as they accumulate experience, they can launch their own practices and acquire their own clients.
In the perspective of the IRS, CPAs and EA are on the same level.
Both CPAs and EAs can provide superior services to clients. First, I’ll show you how EAs add value, and then I’ll reveal the ways in which CPAs assist their clients.
EAs work on tax only. Therefore, they may have a tax specialization, such as tax preparation or tax resolution. For this reason, a CPA who specializes in tax should consider earning the EA so they can demonstrate their tax expertise.
Since the IRS empowers enrolled agents with an unlimited right to practice on a federal level, enrolled agents can work with a client who may have filings across all states in the U.S.
Enrolled agents can often 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.
As you may recall, the EA exam has 1 fewer part (3) than the CPA Exam (4).
Furthermore, the REG CPA Exam section questions don’t go into as much detail about tax as the EA exam questions, but they are harder, in part because the CPA Exam sections contain both multiple-choice questions and task-based simulations. The EA questions are more in-depth but less varied and complicated, so they are easier. Therefore, most candidates only need a few months to pass the EA exam. In comparison, many people need 12-18 months to pass the CPA Exam. The less time you take to get the designation, the sooner you and your clients can enjoy your improved status with the IRS.
A CPA’s expertise is based in accounting and auditing, but most CPAs provide tax filing services as well. This combination of skills is attractive to small businesses needing both audit and tax services, preferably coming from the same team.
Hiring a CPA makes more sense for businesses because someone who “knows the numbers” can conduct better and more accurate tax planning.
Enrolled agents are not as well-known as CPAs. However, they are as good (if not better) at handling income tax matters. If you would like to specialize in income tax and desire the flexibility of working at home with your own clients, I encourage that you explore the EA path further. Take the next step toward the EA designation by seeing if the Enrolled Agent exam is harder than the CPA Exam.