When it comes to jobs in accounting and finance, many people consider becoming CPAs, while few think about the option of becoming enrolled agents. With an increasing need for EAs across the nation, choosing to follow this career path can be both satisfying and lucrative.
Enrolled Agent vs CPA
First, it is important to understand the difference between an enrolled agent and a CPA.
Enrolled agents are specialized tax practitioners who are certified to represent taxpayers in dealings with the IRS. EAs prepare taxes, can stand in for you during an audit, and handle other business you may have with the IRS.
To become an EA, you must pass the SEE exam. Unlike CPAs, enrolled agents become nationally certified, so they can practice in any state with the same certification.
CPAs, on the other hand, are public accountants who file reports with the Securities and Exchange Commission (SEC). There is no national certification for CPAs, so they must be certified in each state in which they intend to work.
Given the difference in their job descriptions, it’s not surprising that their salaries differ as well.
Enrolled Agent Salaries
There are 3 general levels of salary for EAs: entry-level, mid-level, and senior. The average salary is typically determined by experience and location. For example, EAs based in the state of California earn up to 8% more on average than those who work in other states.
According to Payscale.com, entry-level EAs generally begin with a salary of about $23,000 per year, but their pay can vary between $8-$24 per hour.
Entry-level agents are primarily tax practitioners. During tax season, these agents review and prepare tax returns for both individuals and businesses.
As their experience increases, these agents have the opportunity to move up the pay scale.
Mid-level enrolled agents typically earn between $37,000 and $50,000. These agents tend to have 1-2 years of work experience. Hourly pay could be anywhere from $12-$55, depending on how many years of experience they have under their belt.
Common tasks for mid-level EAs include the preparation and review of tax returns, following up with tax invoices, preparing bank reconciliations, providing information to external auditors, and much more. The responsibilities for a mid-level position exceed that of an entry-level agent, which explains the difference in pay.
Senior level internal revenue agents can earn a healthy income in the accounting world. These higher-paying positions can be between $66,000 and $127,000 annually.
To qualify for high-level positions, EAs must typically have a minimum of 5 years experience in tax consulting, planning and training. Other tasks include preparing tax returns, performing tax accounting reconciliations, teaming up with the different departments regarding any tax issues, etc.
There is considerably more responsibility required for EAs in senior positions, which translates into the potential to earn a greater income.
The average Enrolled Agent salary is approximately $45,000 annually, as compared to CPAs, who earn an average of approximately $60,000 a year. According to payscale.com, EAs make between $29,236 – $74,047 a year, with a median income of $46,134, while CPAs make between $41,676 – $98,448 a year, with a median income of $59,824.
Although pursuing your CPA may look more profitable at first glance, thanks to the increasing demand for enrolled agents, the EA’s earning potential increases faster than the CPA’s. In as little as 4 years, EAs can earn the same amount as the average CPA if they are successful and take on many clients.
The flexibility of being an EA may make the slightly lower pay worth it for those who like to set their own hours and work independently for individuals or businesses all over the United States. CPAs typically work in a more traditional office environment with a predictable salary that increases over time as they gather experience.
How To Become An EA
Becoming an enrolled agent takes much less time than becoming a CPA. Unlike the CPA exam, which requires you to have completed certain educational prerequisites, there are no educational requirements to sit for the Special Enrollment Exam (SEE).
You must obtain a Preparer Tax Identification Number (PTIN)
You must register for and pass the Special Enrollment Examination (SEE)*
You can then apply for enrollment and pay a fee online or by mail
You must also pass a tax compliance check that investigates whether you have filed all your tax returns and have no outstanding tax liabilities.
*Some IRS employees do not have to take the SEE exam if their work experience meets the IRS requirements (please see Treasury Department Circular No. 230 for details on this exemption).
Earning the EA license demonstrates your advanced knowledge of tax procedures and regulations. If you are looking for a flexible and well-paid career in the tax industry and do not want to become a CPA, this rewarding job is worth investigating. If you decide to pursue this career path, check out these study materials for passing the EA exam today!