CPA vs EA vs Tax Preparer: Key Differences Dimov CPA

While it can be more expensive than a chain tax service, the value comes from strategic advice that can save you far more than the preparation fee. An Enrolled Agent (EA) is a tax expert who is federally licensed directly by the U.S. EAs specialize exclusively in taxation and have earned the privilege of representing taxpayers before the Internal Revenue Service. This guide will break down the critical differences between a CPA, an Enrolled Agent (EA), and a basic tax preparer. We’ll help you understand who to hire for your specific situation so you can move forward with confidence. Accountants charge more than tax preparers, given their QuickBooks advanced expertise.

Regulatory Oversight and Professional Standards

Unlicensed preparers may lack the knowledge to handle complex tax situations, increasing the risk of errors or audits. An accountant is ideal if you’re managing business finances, investments, or require regular financial oversight. However, for simple annual tax filing, a tax preparer will suffice. Enrolled Agents (EAs) must pass a comprehensive three-part exam administered by the IRS, covering federal tax planning, individual and business tax return preparation, and representation. They must also complete 72 hours of continuing professional education (CPE) every three years. An  Enrolled Agent is a tax professional licensed by the IRS.

Types of Tax Preparers

• Both CPAs and tax preparers can deliver quality service in terms of local or remote.
• The fear of overpaying, missing a critical deduction, or worst of all, facing an IRS audit is real.
• Some accounting responsibilities can only be performed by a CPA.
• For straightforward tax filings or standard bookkeeping, a qualified tax preparer might be sufficient.
• Unlicensed preparers may lack the knowledge to handle complex tax situations, increasing the risk of errors or audits.

Once the exam is passed, the accountant applies to their individual state for licensure. CPAs are also usually required to complete 40 hours of continued education annually. Generally speaking, EAs tend to charge lower fees compared to CPAs, particularly for routine tax preparation and consultation. However, CPAs might offer additional services and Opening Entry depth of expertise that could be worth the higher cost. Your timing and location can impact the cost of tax preparation, too.

Can Accountants Also Be Tax Preparers?

Changes in family structure, especially marriage or divorce, can have a big impact on your taxes as well. You’ll also find that rental properties, with rental income, is a complex issue that may need the help of a CPA. If you’re unsure about what figures should go where and the troubleshooting mechanisms of the software are not helpful, then you must either read the tax code yourself or speak with a CPA.

• To obtain PTIN, they must create an account on the IRS website, visit the application page, and complete the form.
• Before beginning their profession, tax preparers must get a Preparer Tax Identification Number (PTIN) from the Federal Revenue Service (IRS).
• While the EA has full representation rights, they lack the state-granted authority to perform financial statement audits, reviews, or compilations.
• They’re typically adept at dealing with the IRS, and some EAs even worked as IRS agents before opening their own practices.
• Many businesses face financial complexities that necessitate the insights of a CPA.

Get rid of the stress of last-minute filing by starting tax preparation early. We take tax prep off your plate by having all your financials organized through clean, monthly books. Bench simplifies your small business accounting by combining intuitive software that automates the busywork with real, professional human support. CPA fees vary based on factors like the complexity of your return, your location, and the level of experience of the CPA.