Enrolled agents, also known as EAs, are tax practitioners who have earned their credentials by passing the IRS Special Enrollment Exam, otherwise known as the EA exam.
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EAs are licensed tax professionals that can represent taxpayers before the IRS.
In this post, we’ll explain everything you need to know about an EA, who can become one, how to prepare for and pass the test, and other important information about enrolled agents.
Let’s get started!
Contents
What is an Enrolled Agent?
Enrolled agents are federally authorized tax practitioners who have passed a rigorous competency exam, and can represent taxpayers before the IRS. In other words, an enrolled agent is someone you want on your side when dealing with the IRS.
If you’re preparing for your taxes or need help understanding what steps should be taken before submitting a return, there’s no better person to turn to than an enrolled agent.
As one of the few people qualified to represent taxpayers before the IRS, these individuals can: provide representation before IRS appeals officers; prepare U.S. individual income tax returns; represent clients in administrative proceedings; represent clients before Tax Court judges, and more.
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Now that we know what is an enrolled agent, let’s consider another question: how many enrolled agents are there?
According to the National Association of Enrolled Agents, there are over 50,000 enrolled agents in the United States and other countries.
Who should become an EA?
Becoming an EA is a great fit if you’re an accounting professional looking for a rewarding career that is both challenging and satisfying.
Also, if you want to be in charge of your own destiny, you will love the independence of being an EA. Finally, becoming an EA can take your success to the next level if you’re ambitious and motivated.
What Does an Enrolled Agent Do?
Enrolled Agents are registered with the Department of Treasury to represent taxpayers before the Internal Revenue Service (IRS) in all matters, as well as perform other duties that their local IRS director may assign.
(Source: Community Tax)
Here are 8 examples of what an enrolled agent can do:
- Prepares tax returns for clients that are in accordance with IRS guidelines, regardless of whether that includes individual income tax returns, business tax returns, employment tax returns, or excise tax returns.
- Provides advice to clients regarding how they can legally reduce their taxes based on their specific financial situation.
- Provides representation before the Internal Revenue Service during any inquiry.
- Enrolls new taxpayers into the system and update taxpayer accounts with accurate information if needed.
- Explains changes in laws that affect tax filling.
- Determines which exemptions and deductions will lead to the lowest possible taxes for you, using extensive knowledge of tax codes and federal law.
- Helps resolve disputes between taxpayers and the IRS by representing them before an administrative law judge through appeal at higher levels.
- Serve as a trustee for large estates with assets worth more than $10 million, including homes, land, farms, or businesses that have been passed down from generation to generation.
How Much Do Enrolled Agents Make?
Enrolled Agents are the only federally authorized tax practitioners who specialize in taxation. Therefore, enrolled agent salaries are based on factors like experience level, type of experience, job location, etc.
Generally, enrolled agent salaries range from $50,000 to $100,000 annually, with a median salary of $70,000.
Notwithstanding, enrolled agents earn at three different salary levels: entry, mid, and senior.
Entry-level enrolled agents with about five years experience earn $42,000 annually on average.
Enrolled agents at the mid-level with five to ten years work experience earn $50,000 on average.
With 10 to 20 years of experience, a senior-level enrolled agent earns $55,000 as average annual salary.
This pay rises to $60,000 annually for enrolled agents with over 20 years of experience.
The EA exam is not easy, but it offers one of the highest pay rates in public practice. Become a member of this elite group by studying for and passing the exam.
What is EA Exam?
The Enrolled Agent exam, also called the Special Enrollment Examination (SEE), is designed to assess an individual’s understanding of fundamental taxation concepts.
It is taken at Prometric, and the questions cover three broad sections: Individuals, Businesses, as well as Representation, Practices and Procedures.
Part 1 of the EA exam, which focuses on Individuals, comprises 100 multiple-choice questions and is of 3.5 hours duration. Sections under this part include:
- Preliminary Work, Taxpayer Data (17)
- Income and Assets (21)
- Deductions and Credits (21)
- Taxation and Advice (14)
- Specialized Individual Returns (12)
Part 2, focusing on Businesses, also contains 100 multiple-choice questions over 3.5 hours. There are just 3 sections under this part, namely:
- Business Entities (28)
- Business Financial Information (39)
- Specialized Returns and Taxpayers (18)
Part 3 of the exam is titled Representation, Practices, and Procedures. The exam duration for this part is also 3.5 hours, with 100 multiple-choice.
Sections in this part include:
- Practices and Procedures (25)
- Representation before the IRS (24)
- Specific Types of Representation (19)
- Completion of the Filing Process (17)
Now, let’s consider how to pass enrolled agent exams using study material for EA exam.
Study Material for the EA Exam
The Enrolled Agent (EA) designation is one of the most valuable certifications in the tax preparation industry. Passing the EA exam proves that you have extensive knowledge of US tax law, as well as the legal and ethical responsibilities required of an enrolled agent.
While the Enrolled Agent (EA) exam isn’t exactly easy, it’s not impossible to pass if you know where to look for study material for EA exams and how to use them. In addition, achieving an EA designation allows you to represent clients before the IRS legally and brings significant financial rewards, making this test worth taking.
Start by ensuring that the study material for EA exam is of high quality and tailored to your learning style and pacing requirements.
To that end, below are 5 of the best study materials today, perfect for anyone hoping to become an enrolled agent.
1. Textbooks (Digital and Hardcover)
You should consider textbooks if you are not sure how to study for enrolled agent exam.
The self-study exam prep materials come in both hardcover and digital formats. The digital study materials are available as an online subscription, while the hardcover study materials have a CD-ROM of practice questions and audio files.
Hardcover editions are also available for those who prefer textbooks rather than study from computer screens.
Most EA exam prep courses offer textbooks in both formats for students.
2. Workbooks & practice tests
Workbooks and practice tests are great study resources because they provide an interactive learning experience. In addition, they offer guided instruction, which is especially helpful for candidates.
Some of these materials also come with practice tests.
3. Live seminars
Live seminars offer an interactive, engaging, and educational experience. They’re also a great way to network with other professionals in the industry. Plus, you can clear your doubts through feedback from industry experts.
Live seminar content is often more comprehensive than written or audio study material. If you have any confusion about what was said at the seminar, there’s usually a replay or recording available to watch it again.
Live seminar sessions are shorter than traditional college courses, making them easier to fit into your schedule without any stress.
4. Video classes
Video classes provide in-depth information and explain concepts and definitions that are hard to understand with text alone.
Let’s look at how to study for enrolled agent exams using video classes.
Since video classes can be online or downloadable, they are a very helpful study resource. They are interactive and allow you to pause, rewind, and replay sections of the video as often as necessary.
You can watch a video class anytime, anywhere as long as you have internet access.
5. Audiobooks
Auditory learners should first consider audiobooks as study material.
The biggest benefit of audiobooks is that it doesn’t require much concentration, which means you can do other things while listening. You can go about your daily life and still listen to your book.
Additionally, audiobooks are perfect if you’re exhausted from studying all day or have trouble focusing on reading.
6. Flashcards
One of the best study materials is flashcards. You can quickly jot down information and test yourself on it, ensuring that you retain everything. They’re also a good study tool if you want to find out how well you know something by testing your knowledge with questions.
The problem with these cards is they can’t be updated easily when new information is available.
Nonetheless, the main benefits of this study material for EA exam are:
- quick access to information;
- easy to use in any environment;
- great for beginners.
Bottom Line
Being an Enrolled Agent is right for you if you are considering a career in tax. The exam is long and challenging, but you can conquer it with the right study materials and prep courses.
