Last updated: February 2026 | Sources: IRS, Bureau of Labor Statistics, National Association of Enrolled Agents
The Tax Career Decision You Need to Get Right
If you are considering a career in tax, you are facing a decision that will shape your earning potential, professional authority, and long-term career ceiling for years to come. The two most common entry points are tax preparer and Enrolled Agent (EA) -- and the difference between them is far greater than most people realize.
A tax preparer can file returns. An Enrolled Agent can file returns, represent clients before the IRS, handle audits, appeals, and collections, and practice in all 50 states with a federally recognized credential. That gap in authority translates directly into a gap in earning power and career stability.
This guide breaks down every factor you need to consider: credential requirements, salary data, scope of practice, IRS representation rights, time to credential, and career trajectory. By the end, you will know exactly which path fits your goals -- and how to get started today.
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Quick Comparison: Enrolled Agent vs Tax Preparer at a Glance
Before we go deep, here is the side-by-side overview:
| Factor | Tax Preparer | AFSP Participant | Enrolled Agent (EA) |
|---|---|---|---|
| IRS Credential | PTIN only | PTIN + AFSP Record of Completion | Highest IRS credential |
| Representation Rights | None (preparation only) | Limited (only clients whose returns they prepared) | Unlimited (any taxpayer, any matter) |
| Exam Required | No | No (CE courses only) | Yes (3-part SEE exam) |
| Education Required | No | No | No |
| Federal or State | State-dependent | Federal (IRS program) | Federal (all 50 states) |
| Time to Credential | Days to weeks | 1 season (18 hours CE) | 3-6 months study |
| Exam Cost | $0 (PTIN is free) | ~$100-$200 for CE courses | $801 (3 parts x $267) |
| Median Salary | $42,000 - $52,000 | $45,000 - $55,000 | $60,000 - $80,000 |
| Career Ceiling | Limited | Moderate | Very high ($100K-$200K+) |
| Continuing Education | Varies by state | 18 hours/year | 72 hours per 3-year cycle |
| IRS Directory Listed | No | Yes | Yes |
The short version: a tax preparer has the lowest barrier to entry but the lowest career ceiling. An Enrolled Agent requires more upfront investment but unlocks dramatically higher earning potential and professional authority. The IRS Annual Filing Season Program (AFSP) sits in the middle as a stepping stone.
What Is a Tax Preparer?
A tax preparer is anyone who prepares federal tax returns for compensation. The IRS requires all paid tax preparers to have a Preparer Tax Identification Number (PTIN), which is free to obtain and has no education or exam requirements.
That is it. There is no federal exam, no education requirement, and no background check. You get a PTIN, and you can legally prepare tax returns for pay.
What Tax Preparers Can (and Cannot) Do
Can do:
- Prepare individual and business tax returns
- File returns electronically
- Sign returns as paid preparer
- Charge fees for tax preparation services
Cannot do:
- Represent clients before the IRS (audits, appeals, collections)
- Practice across state lines without meeting each state's requirements
- Call themselves "Enrolled Agents" or claim IRS credentials
- Handle IRS correspondence beyond basic return preparation
Tax Preparer Salary Data (2026)
| Experience Level | Annual Salary | Hourly Rate | Notes |
|---|---|---|---|
| Entry-Level (0-2 years) | $30,000 - $40,000 | $14 - $19 | Seasonal work common |
| Mid-Level (3-7 years) | $40,000 - $55,000 | $19 - $26 | Year-round at larger firms |
| Experienced (8+ years) | $50,000 - $65,000 | $24 - $31 | Senior preparer at established firm |
| Self-Employed | $35,000 - $80,000 | Varies | Highly seasonal, client-dependent |
According to the Bureau of Labor Statistics, the median annual salary for tax preparers is approximately $46,290. However, this number is skewed by the seasonal nature of the work -- many tax preparers only work during tax season (January through April) and earn their full annual income in 3-4 months.
The Seasonal Problem
The biggest career limitation for tax preparers is seasonality. Tax season runs roughly from late January through April 15 (or October 15 for extensions). Outside of tax season, many preparers face reduced hours or no work at all. This creates income instability and limits earning potential.
Enrolled Agents, by contrast, work year-round because their representation authority generates work outside of tax season: audits, appeals, collections, tax planning, amended returns, and IRS correspondence happen 12 months a year.
What Is an Enrolled Agent (EA)?
An Enrolled Agent is a tax professional who has earned the highest credential the IRS awards. EAs have unlimited practice rights, meaning they can represent any taxpayer before the IRS on any tax matter -- including audits, appeals, collections, and penalty abatement -- in all 50 states.
The EA credential is granted by the IRS after passing the Special Enrollment Examination (SEE), a three-part exam covering individuals, businesses, and representation/procedures. Unlike a CPA, which is state-specific and requires a college degree, the EA is a federal credential with no education requirement.
What Enrolled Agents Can Do
Everything a tax preparer can do, plus:
- Unlimited IRS representation -- audits, appeals, collections, penalties
- Practice in all 50 states -- federal credential, no state restrictions
- Represent any taxpayer -- not limited to returns they prepared
- Handle IRS correspondence -- respond to notices, negotiate settlements
- Appear before IRS Appeals -- contest IRS positions on behalf of clients
- Negotiate Offers in Compromise -- settle tax debts for less than owed
- Advise on tax planning -- year-round advisory services
- Sign returns as authorized IRS representative
Enrolled Agent Salary Data (2026)
| Experience Level | Annual Salary | Hourly Rate | Notes |
|---|---|---|---|
| Entry-Level EA (0-2 years) | $50,000 - $65,000 | $24 - $31 | Year-round work from day one |
| Mid-Level EA (3-7 years) | $65,000 - $85,000 | $31 - $41 | Building representation practice |
| Senior EA (8-15 years) | $80,000 - $120,000 | $38 - $58 | Established client base, referrals |
| EA with Own Practice | $90,000 - $200,000+ | Varies | Representation + preparation fees |
| Specialized EA (IRS resolution) | $100,000 - $250,000+ | $150 - $400/hr | Tax controversy specialists |
The median salary for Enrolled Agents is approximately $65,000-$75,000, significantly higher than the tax preparer median. But the real story is the career ceiling: experienced EAs with their own practices or specializing in IRS representation routinely earn $100,000 to $200,000 or more.
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The IRS Annual Filing Season Program (AFSP): The Middle Ground
Between tax preparer and Enrolled Agent, the IRS offers the Annual Filing Season Program (AFSP) -- a voluntary program that gives non-credentialed preparers limited representation rights and listing in the IRS public directory.
How AFSP Works
- Complete 18 hours of continuing education annually (including a 6-hour Annual Federal Tax Refresher course with a 100-question test)
- Receive a Record of Completion from the IRS
- Get listed in the IRS Directory of Federal Tax Return Preparers with credentials
- Earn limited representation rights -- you can represent clients before revenue agents, customer service representatives, and the Taxpayer Advocate Service, but only for clients whose returns you prepared
AFSP vs EA: Key Differences
| Feature | AFSP | Enrolled Agent |
|---|---|---|
| Representation scope | Only clients whose returns you prepared | Any taxpayer, any matter |
| Appeals representation | No | Yes |
| Collections representation | No | Yes |
| Practice before IRS Office of Appeals | No | Yes |
| Federal credential | Record of Completion (annual) | EA license (permanent with CE) |
| Renewal | Every year (18 hours CE) | Every 3 years (72 hours CE) |
The AFSP is a good stepping stone if you are currently a tax preparer and want to differentiate yourself from the millions of PTIN holders, but it is not a substitute for the EA credential. The representation rights are severely limited compared to an EA, and you must renew annually.
Our recommendation: If you are going to invest time in continuing education anyway, invest that time in studying for the EA exam instead. The ROI is dramatically higher.
Salary Comparison: Tax Preparer vs Enrolled Agent
Let us look at the numbers side by side to understand the true financial difference between these career paths over time:
Annual Salary Comparison by Experience
| Years of Experience | Tax Preparer | Enrolled Agent | EA Premium |
|---|---|---|---|
| Year 1 | $32,000 | $52,000 | +$20,000 |
| Year 3 | $42,000 | $68,000 | +$26,000 |
| Year 5 | $48,000 | $78,000 | +$30,000 |
| Year 10 | $55,000 | $100,000 | +$45,000 |
| Year 15 | $60,000 | $130,000 | +$70,000 |
| Year 20 | $65,000 | $160,000+ | +$95,000+ |
Lifetime Earnings Comparison (20-Year Career)
| Metric | Tax Preparer | Enrolled Agent | Difference |
|---|---|---|---|
| Total Earnings (20 years) | ~$960,000 | ~$1,880,000 | +$920,000 |
| Peak Annual Salary | $65,000 | $160,000+ | +$95,000+ |
| Hourly Rate (peak) | $31/hr | $75+/hr | +$44+/hr |
| Revenue Sources | Preparation fees only | Preparation + representation + planning + advisory | Multiple streams |
The investment to become an EA is approximately $801 in exam fees plus 3-6 months of study time (which you can do for free using resources like OpenExamPrep). The lifetime earnings premium of nearly $1 million makes this one of the highest-ROI professional credentials in existence.
Billing Rate Comparison
When you look at what tax professionals can charge clients, the gap becomes even more clear:
| Service | Tax Preparer Rate | Enrolled Agent Rate |
|---|---|---|
| Individual 1040 (simple) | $150 - $250 | $200 - $400 |
| Individual 1040 (complex) | $250 - $500 | $400 - $800 |
| Business return (1120S/1065) | $400 - $800 | $600 - $1,500 |
| IRS audit representation | Cannot offer | $150 - $400/hr |
| IRS collections/OIC | Cannot offer | $200 - $500/hr |
| Tax planning session | Limited authority | $200 - $400/hr |
| Penalty abatement | Cannot offer | $500 - $2,000 per case |
EAs can charge more for the same preparation work because clients value the backup of having a representative who can handle any IRS issues. And EAs can offer services -- audit representation, collections work, offers in compromise -- that tax preparers simply cannot.
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Scope of Practice: What Each Credential Lets You Do
IRS Representation Rights Hierarchy
The IRS has a clear hierarchy of who can represent taxpayers and in what capacity. Understanding this hierarchy is essential to choosing the right credential:
Tier 1 -- Unlimited Representation Rights:
- Enrolled Agents (EAs)
- Certified Public Accountants (CPAs)
- Attorneys
These professionals can represent any taxpayer before any IRS office on any tax matter. They are governed by Circular 230 and have the broadest practice authority.
Tier 2 -- Limited Representation Rights:
- AFSP Record of Completion holders
Can represent taxpayers only before revenue agents, customer service representatives, and the Taxpayer Advocate Service -- and only for returns they prepared and signed.
Tier 3 -- No Representation Rights:
- PTIN-only tax preparers
Can prepare and file returns but cannot represent clients before the IRS in any capacity beyond basic return preparation.
Why Representation Rights Matter for Your Career
Representation rights are not just a line on your resume -- they are the foundation of year-round revenue. Here is why:
-
Audit defense is a high-value, year-round service. The IRS audits approximately 0.4% of individual returns, but for higher-income taxpayers and certain business types, audit rates are much higher. Every audit needs representation.
-
Collections work is perpetual. Millions of taxpayers owe back taxes, and they need someone to negotiate with the IRS on their behalf. Only EAs, CPAs, and attorneys can do this.
-
Appeals are a specialized practice area. When taxpayers disagree with IRS decisions, they can appeal -- but they need a representative. This is often the highest-billing work in tax practice.
-
Referral networks expand. CPAs, attorneys, and financial advisors routinely refer IRS controversy work to Enrolled Agents. Tax preparers do not receive these referrals because they lack the authority to handle the work.
Credential Requirements: How to Become Each
Becoming a Tax Preparer
| Step | What to Do | Time | Cost |
|---|---|---|---|
| 1 | Apply for IRS PTIN | 15 minutes | Free |
| 2 | Check state requirements | Varies | Varies by state |
| 3 | Get hired or start your own practice | Immediate | $0 - minimal |
Some states (California, Oregon, New York, Maryland, and others) have additional requirements for tax preparers, including state registration, testing, or continuing education. Most states have no requirements beyond the federal PTIN.
Becoming an AFSP Participant
| Step | What to Do | Time | Cost |
|---|---|---|---|
| 1 | Obtain PTIN | 15 minutes | Free |
| 2 | Complete 18 hours CE (including 6-hour AFTR course) | 1-2 months | $100 - $200 |
| 3 | Pass AFTR 100-question exam | Same day | Included in CE cost |
| 4 | Consent to Circular 230 requirements | Same day | Free |
| 5 | Renew annually | Ongoing | $100 - $200/year |
Becoming an Enrolled Agent
| Step | What to Do | Time | Cost |
|---|---|---|---|
| 1 | Obtain PTIN | 15 minutes | Free |
| 2 | Study for the SEE exam | 3-6 months | Free (with OpenExamPrep) |
| 3 | Pass Part 1: Individuals (100 questions, 3.5 hours) | 1 exam sitting | $267 |
| 4 | Pass Part 2: Businesses (100 questions, 3.5 hours) | 1 exam sitting | $267 |
| 5 | Pass Part 3: Representation (100 questions, 3.5 hours) | 1 exam sitting | $267 |
| 6 | Apply for EA enrollment | 2-4 weeks processing | Free |
| 7 | Pass IRS suitability check (tax compliance) | Same period | Free |
| 8 | Complete 72 hours CE per 3-year cycle | Ongoing | $200 - $500 per cycle |
Key point: The EA exam has no education requirement and no experience prerequisite. Anyone can sit for the exam. You do not need a college degree, accounting coursework, or prior tax experience. This makes the EA the most accessible high-value credential in the tax industry.
Career Trajectory: Where Each Path Leads
Tax Preparer Career Path
| Stage | Timeline | Role | Income Range |
|---|---|---|---|
| Entry | Year 1-2 | Seasonal preparer at retail tax office | $30K - $40K |
| Growth | Year 3-5 | Year-round preparer, growing client base | $40K - $55K |
| Plateau | Year 6-10 | Senior preparer, some supervisory duties | $50K - $65K |
| Ceiling | Year 10+ | Office manager or franchise owner (if investing) | $55K - $80K |
The tax preparer career path hits a hard ceiling around $65,000-$80,000 for most practitioners. Without representation rights, you cannot offer higher-value services, and you are competing on price with every other PTIN holder in your market -- including retail tax chains that aggressively undercut independent preparers.
Enrolled Agent Career Path
| Stage | Timeline | Role | Income Range |
|---|---|---|---|
| Entry | Year 1-2 | EA at tax firm or starting own practice | $50K - $65K |
| Growth | Year 3-5 | Building representation practice, referral network | $65K - $85K |
| Acceleration | Year 6-10 | Established EA with representation specialty | $85K - $120K |
| Peak | Year 10-15 | IRS controversy specialist or multi-preparer firm owner | $120K - $200K+ |
| Elite | Year 15+ | National reputation, speaking, consulting | $150K - $300K+ |
The EA career path has no hard ceiling. Because you can offer high-value representation services, build referral relationships with CPAs and attorneys, and practice in all 50 states, your earning potential continues to grow as you build your reputation and client base.
The EA Advantage in a Changing Industry
The tax preparation industry is undergoing major changes in 2026:
- IRS Direct File is expanding, allowing simple filers to file for free. This threatens bottom-end preparation revenue.
- AI-powered tax software is making basic preparation easier for consumers. Simple returns are becoming commoditized.
- IRS enforcement is increasing, with more audits and collections activity. This drives demand for representation services.
These trends all point in the same direction: basic tax preparation is becoming less valuable, while representation and advisory services are becoming more valuable. Tax preparers are on the wrong side of this trend. Enrolled Agents are on the right side.
Decision Framework: Which Path Is Right for You?
Choose Tax Preparer If:
- You want seasonal work and are okay with 3-4 months of intense work followed by a slow period
- You need to start earning immediately with zero upfront investment
- You view tax preparation as a side income, not a primary career
- You do not want to study for or take an exam
- You are in a market where basic preparation generates sufficient demand
Choose AFSP If:
- You are currently a tax preparer and want to differentiate yourself from PTIN-only holders
- You want limited representation rights without the commitment of the EA exam
- You want to be listed in the IRS public directory of credentialed preparers
- You are considering the EA credential but want a stepping stone first
Choose Enrolled Agent If:
- You want a long-term career in tax with high earning potential
- You want to offer year-round services beyond seasonal preparation
- You want unlimited IRS representation rights -- audits, appeals, collections
- You want a federal credential that works in all 50 states
- You want to own your own practice with premium billing rates
- You want to be recession-resistant -- people always need tax help, especially in tough economic times
- You are willing to invest 3-6 months of study for a credential that pays dividends for decades
The Decision Matrix
Answer these five questions to determine your path:
1. Do you want tax work to be your primary career (not a side job)?
- Yes --> EA
- No --> Tax Preparer
2. Do you want to earn more than $70,000/year in tax?
- Yes --> EA
- No --> Tax Preparer or AFSP
3. Do you want to help clients with IRS audits, collections, and disputes?
- Yes --> EA (required for this work)
- No --> Any path works
4. Are you willing to invest 3-6 months studying for an exam?
- Yes --> EA
- No --> Tax Preparer or AFSP
5. Do you want to work year-round or only during tax season?
- Year-round --> EA
- Tax season only --> Tax Preparer
If you answered "EA" to 3 or more questions, the Enrolled Agent path is clearly right for you. The exam is challenging but passable with the right preparation, and the career return on your study investment is extraordinary.
EA vs CPA: Why Not Just Get a CPA?
If the EA credential is so valuable, why not go for the CPA instead? Here is the honest comparison:
| Factor | Enrolled Agent | CPA |
|---|---|---|
| Education required | None | 150 credit hours (5-year degree) |
| Experience required | None | 1-2 years supervised experience |
| Exam parts | 3 | 4 |
| Exam cost | $801 | $1,000+ (plus review courses $2,000-$3,500) |
| Time to credential | 3-6 months | 5+ years (with education) |
| Scope | Tax only | Tax, audit, financial reporting |
| IRS representation | Unlimited | Unlimited |
| State portability | All 50 states automatically | State-specific licensing |
For someone focused on a tax career, the EA offers 90% of the CPA's tax authority at a fraction of the time, cost, and educational commitment. If you want to do auditing, financial reporting, or corporate accounting, you need the CPA. If you want to focus on tax preparation and IRS representation, the EA is the smarter path.
Many successful tax professionals hold both credentials, but the EA is the faster route to start earning in tax.
How to Pass the EA Exam in 2026
The Special Enrollment Examination (SEE) consists of three parts:
| Part | Topic | Questions | Time | Key Areas |
|---|---|---|---|---|
| Part 1 | Individuals | 100 | 3.5 hours | Filing status, income, deductions, credits, basis |
| Part 2 | Businesses | 100 | 3.5 hours | Entity types, business income, retirement plans |
| Part 3 | Representation | 100 | 3.5 hours | Circular 230, IRS procedures, ethics, penalties |
Recommended Study Timeline
| Phase | Duration | Focus |
|---|---|---|
| Weeks 1-6 | 6 weeks | Part 1: Individuals |
| Weeks 7-12 | 6 weeks | Part 2: Businesses |
| Weeks 13-16 | 4 weeks | Part 3: Representation |
| Weeks 17-18 | 2 weeks | Final review and practice exams |
Total study time: 4-5 months at 10-15 hours per week. Candidates with tax preparation experience can often compress this to 3 months.
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The Bottom Line: Make the Investment in Your Future
If you are reading this article, you are already thinking about a career in tax. The question is not whether you should work in tax -- it is whether you should enter the field as a tax preparer or as an Enrolled Agent.
Here is the reality:
- A tax preparer can start tomorrow but will hit a career ceiling around $65,000 with limited growth opportunities and seasonal income volatility.
- An Enrolled Agent requires a 3-6 month study commitment and $801 in exam fees but unlocks a career ceiling of $150,000-$200,000+ with year-round work, unlimited IRS representation rights, and a federal credential recognized in all 50 states.
The math is clear. The EA exam is one of the best career investments you can make in 2026 -- no degree required, no experience prerequisite, and you can study for it entirely for free.
Every month you delay starting your EA exam prep is a month of higher earning potential you are leaving on the table. Tax professionals with EA credentials earn an average of $20,000-$45,000 more per year than those without. Over a 20-year career, that premium compounds to nearly $1 million in additional lifetime earnings.
Start today. Study for free. Pass the EA exam. Transform your tax career.
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