EA vs CPA: Understanding the Key Differences for Your Tax Needs

Apr 24, 2024

Navigating the complex landscape of tax regulations, particularly for U.S. expats, requires the expertise of skilled tax professionals.

Understanding the differences between various tax experts such as Certified Public Accountants (CPAs), who often work for public accounting firms, and Enrolled Agents (EAs) is crucial for individuals and businesses to make informed decisions when selecting the right professional for their specific tax situations.

DesignationEnrolled Agent (EA)US CPAForeign accounting designations
Percent of required curriculum in US tax100%20%Zero
Work experienceNot required1-2 yearsVaries
University educationNot requiredRequired (the equivalent of a bachelor in accounting)Varies

While I am both a US CPA (New Hampshire) and an Enrolled Agent, I have a sweet spot for Enrolled Agents. As you can see above, EAs and CPAs have to complete US tax exams in order to obtain their designation. To be fair, the CPA exam is much more extensive, it comprises of 4 parts, about 80% of the regulation part is comprised of US tax, but that is about the same as the totality of the EA exam (called Special Enrollment Exam (SEE)). Conversely, while all EAs specialize in US tax, various US CPAs can have various areas of expertise.

Who is a Certified Public Accountant (CPA)?

A Certified Public Accountant (CPA) is a US designation for licensed accounting professionals who is qualified to offer a broad range of financial services, including bookkeeping, financial planning, and tax preparation, and can specialize as corporate and executive accountants.

A CPA is a US designation, On April 17, 1896, Chapter 312 of the Laws of the State of New York established that the Regents of the University of the State of New York would provide a Certificate of Public Accountancy to individuals over age 21, of good moral character, and who possessed or intended to declare citizenship in the United States with appropriate accounting education or experience either through examination or previous experience. This was the first time the title “Certified Public Accountant” was regulated. Examinations were held in both Buffalo and New York City. Frank Broaker was licensee #1 and he received his certificate solely through previous experience as a public accountant and did not take an examination, commonly referred to as grandfathering. Broaker died on November 12, 1941. The first person to receive the CPA through examination and previous experience was Joseph Hardcastle, who would go on to become an accounting theorist and New York University professor.

With that said, jurisdictions outside the US have in recent years started using the CPA name in a way that only adds confusion. For instance when the 3 Canadian designations (CA, CMA, CGA) merged in 2017, they decided to use that name.
Quite astonishing. If I was to create an organization that would grant the copyrighted CFA designation, there is no doubt that the CFA Institute would prosecute me to the greatest extent allowed by the law.

Can a Canadian CPA prepare U.S. Tax Returns?

Anyone can prepare U.S. tax returns. Someone who doesn’t have certain designations would be referred to as an unenrolled return preparer. They have limited rights when it comes to contacting the IRS in the case of audit.

The IRS recognizes Enrolled Agents, US CPAs & US attorneys and grants them certain representation rights. Together, these are referred to as ‘Circular 230 professionals’ – having a designation issued by an authority outside the non-US does not provide the representation rights with the IRS afforded by Circular 230.

In Canada, CPAs are certified by provincial boards, which focus on Canadian accounting standards and tax regulations. Ontario CPAs are trained primarily to handle accounting and tax issues pertinent to the Canadian business environment.

While they can take electives, either within the CPA framework, or outside of it, these are not required to have their designation.

A Canadian CPA designation in and of itself does not provide evidence that its holder has knowledge in US tax.

The Need for U.S. Tax Specialization

For U.S. tax issues, particularly those involving international tax law and expatriate tax situations, the expertise of a U.S. CPA or an Enrolled Agent becomes essential. U.S. CPAs, including our CEO Olivier Wagner who is licensed in New Hampshire, and Enrolled Agents are specifically trained and licensed to handle U.S. tax laws, making them the more appropriate choice for U.S. expatriates seeking tax advice and preparation services.

EA vs CPA: What’s the Difference?

Enrolled agents (EAs) and Certified Public Accountants (CPAs) are both qualified tax professionals, but they have different focuses and qualifications.

EAs are federally authorized tax practitioners who specialize in taxation and can represent taxpayers before the IRS on matters ranging from collections to audits and appeals. They often provide tax advice, prepare tax returns, and file tax returns for individuals, partnerships, corporations, estates, trusts, and other entities with tax-reporting requirements. EAs are particularly adept at handling a wide array of tax related issues, offering comprehensive services that cover the spectrum of taxation. To become an EA, candidates must pass a three-part test, apply to the IRS, and pass a background check. They must also complete 72 hours of continuing education every three years and comply with ethical standards established by the Department of Treasury. Many EAs are also members of the National Association of Enrolled Agents, which has even higher standards for continuing education and its own Code of Ethics.

CPAs, on the other hand, are state-licensed accounting professionals who may specialize in taxation but can also provide a range of accounting and financial services, including working as tax consultants. To become a CPA, candidates must 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, which typically include at least a bachelor’s degree and at least two years of public accounting experience. CPAs must also adhere to ethical rules and regulations established by their state’s board of accountancy, CPA society, and other regulatory agencies, as well as the American Institute of CPAs’ Code of Professional Conduct.

When deciding between an EA and a CPA, it’s important to consider the type of services you need. If you need help with an IRS issue, such as a collection problem or an audit, an EA might be your best bet. They’re typically adept at dealing with the IRS and can provide tax preparation and planning advice for individuals or businesses. However, if you have broader accounting needs, such as auditing financial statements for shareholders or reporting information to the SEC, a CPA may be more appropriate. services.

For US citizens living abroad or individuals dealing with international tax issues, the choice of a tax preparer should not be taken lightly. The expertise required to effectively manage international taxation goes beyond the standard curriculum of CPAs and EAs. As such, selecting a US tax preparer who specializes in international taxation and who has undertaken the necessary additional training is crucial. This specialization ensures that your tax situation is handled expertly, avoiding common pitfalls and maximizing your benefits under the law.

Personal Experience in International Taxation

In my own interactions with the IRS and other tax professionals, I have encountered surprising gaps in knowledge regarding international taxation. For instance, during a conversation with an IRS representative, it became apparent they were unfamiliar with the Foreign Earned Income Exclusion (FEIE), a crucial element for many US expats. Of course, we successfully claimed the FEIE on our client’s behalf. However, this example underscores the fact that not all US-based tax preparers have a comprehensive understanding of how foreign income and tax issues are handled. Their clients don’t have these foreign items many U.S. expats have.

Choose Expertise in International Taxation with 1040 Abroad

Selecting the right tax professional is crucial, especially for U.S. expatriates navigating the complexities of international taxation. At 1040 Abroad, we understand the unique challenges you face. Our team, led by Olivier Wagner, a U.S. CPA licensed in New Hampshire, specializes in the intricacies of U.S. tax law for expatriates. Unlike many U.S. based tax preparers, our professionals, including Enrolled Agents trained specifically in international taxation, possess the expert knowledge necessary to handle your international tax needs effectively.

At 1040 Abroad, we also offer free tax advice via email by our Enrolled Agents who are specifically trained in international taxation. This service is designed to provide you with accessible, expert advice at your convenience, ensuring that you always have the support you need, no matter where in the world you are.

We invite you to experience the difference that specialization makes. With 1040 Abroad, your international tax obligations are in knowledgeable and capable hands. Contact us today to ensure that your tax planning and preparation are as seamless and efficient as your global lifestyle.

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