IRS Enrolled Agents vs. CPA: Which is Right for Your Tax Situation



Financial advisers and experts advertise their services every day. How can you tell which professional to hire for your IRS tax needs? Much of it depends on the specific kind of assistance you're looking for. Ideally, you should choose a professional who is best qualified to handle your money matters. Often, that means hiring a Certified Public Accountant (CPA) or an IRS Enrolled Agent (EA). But, how can you tell which one to choose for your financial needs?


What's the Difference Between a CPA and an EA?

First, it helps to understand the difference between the work of a CPA and the work of an EA. A CPA is qualified to handle all kinds of accounting issues, including general ledger duties, bank reconciliations, and income statements. CPAs are also skilled in preparing income tax returns, communicating with the IRS, and representing you in auditing cases. Generally, a CPA can handle just about any kind of financial issue you have.

An Enrolled Agent, however, is primarily taught to care for matters that relate to income tax preparation and auditing. For example, if you are audited by the IRS, an EA can represent you during the process and provide you with specialized advice to help you present your case. EAs are either former IRS agents who have worked for the agency for at least five years or they are accountants who have passed an intensive, two-day examination about the regulations of the IRS tax code.

Things to Consider When Making Your Decision

Now that you know the difference between an EA and a CPA, how can you decide which one to use? Here are a few things to keep in mind as you're deciding.

  1. How often will you need assistance?
    Do you need ongoing help, possibly on a monthly basis? A CPA may be the best choice for you, because these individuals can offer regular advice and assistance on a variety of financial topics. In fact, CPAs may be an ideal choice for those who are operating a business.
  2. Are you primarily worried about tax matters?
    If your biggest worry comes at tax time, then an EA may be a better selection. Since Enrolled Agents are so well versed in the IRS tax code, they can advise you about how to avoid falling into common auditing traps and how to make sure that you are well prepared for possible tax issues in the coming year.


  3. How important is it that you develop an ongoing relationship with your adviser? 
    Would you prefer to establish a long-term relationship with your accountant? If so, make sure you work with an EA or a CPA who works for themselves, rather than those who are employed for large corporations. With a self-employed professional, you're far more likely to receive a higher level of customer service and to be able to speak to the same person each time you contact the agency.

Both a CPA and an EA can be helpful in financial matters. Knowing which one will best suit your needs can help you avoid any potential troubles with Uncle Sam or the IRS.


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