CPA vs. Enrolled Agent: Which Do $2M to $8M Retirees Actually Need?
Episode 56
CPA vs. Enrolled Agent: Which Do $2M to $8M Retirees Actually Need?
Published on Oct 21st, 2026
Episode Summary
Episode 56 of Retirement Tax Matters evaluates how retirees with $2M to $8M should consider choosing between a Certified Public Accountant (CPA) and an Enrolled Agent (EA) for their annual tax preparation needs. Garrett Crawford, CFP® and Adam Reed first establish the boundary between ongoing, proactive tax planning handled alongside a financial planner and tax preparation process experienced each year. The conversation breaks down how an Enrolled Agent holds a federal license issued directly by the IRS, focusing on tax preparation but can have the full capacity to collaborate with your financial planner. In contrast, a state-licensed CPA undergoes testing across accounting, auditing, and taxation, bringing distinct value to households navigating complicated state income taxes, local estate taxes, or the sale of a business -- and generally reliability and depth of expertise that is difficulty to beat. Garrett also clarifies the role of a Tax Attorney, explaining why their work centers on legal conclusion with the IRS and highlighting that true attorney-client privilege does not protect conversations with a CPA or EA. With October 15th passing and tax preparers recovering from corporate filing deadlines, connecting your tax preparer with your financial planner before December 31st ensures your year-end tax strategies are properly executed on next spring's return.
Key Tax Planning Questions
Question 1: What's the difference between tax planning and tax preparation?
We did an entire episode on this topic for episode 20. For those interested in a deeper dive answer to this question, please use this direct link to listen to the entire discussion.
Many retirees in the $2M to $8M range assume that because they have worked with an tax preparer for decades, proactive tax planning is happening automatically. In practice, tax preparation and tax planning are two separate services that happen at different times of the year and accomplish different objectives.
Tax preparation is an annual compliance process. Each spring, you collect your W-2s, 1099s, and brokerage statements from the previous calendar year and deliver them to a credentialed tax preparer, such as a Certified Public Accountant (CPA) or an Enrolled Agent (EA). Their primary responsibility is to calculate your tax liability and report that history accurately on Form 1040 to keep you in good standing with the IRS. In many CPA firms, tax preparation is often provided alongside other standard services like corporate bookkeeping, financial statement accounting, and business consulting. When it comes to your personal return, their job during the busy spring filing season is focused on compliance: making sure the numbers from the prior tax year are reported correctly.
Tax planning, on the other hand, is forward-looking and strategic. While CPAs and Enrolled Agents can offer tax planning, their capacity to do so for individual retail clients is can sometimes be limited because their business model requires processing a massive volume of returns between January and April. That is where a CFP® professional who specializes in tax-return-driven planning comes in with a different perspective. Tax planning takes place throughout the calendar year, especially in the fall, while there is still time to make meaningful financial adjustments.
Proactive tax planning evaluates your lifetime tax bill in aggregate rather than focusing only on what you owe will owe this upcoming tax year. In our firm, we review your recently filed tax return, run an income estimate before December 31st, and look for financial planning opportunities before the calendar closes. That includes evaluating whether to fill the remainder of a lower tax bracket with a Roth conversion, managing capital gain harvesting in a taxable brokerage account, or keeping your taxable income below a Medicare IRMAA surcharge threshold. A tax preparer is generally not tracking your investment accounts in November to initiate those moves.
These two roles are complementary rather than competing. Your tax preparer provides the necessary compliance and reporting expertise to file an accurate return with the IRS, while your financial planner models forward-looking strategies to help you pay less tax over the course of your retirement. For a household with a multi-million dollar portfolio, having both specialties working together gives you the best outcome.
Question 2: What is important to look for in a CPA or Enrolled Agent?
I have the tax preparer referral conversation a lot with retirees I interact with. Here are three practical factors that go into referrals I make for clients.
First, do they have the actual capacity to take you on as a client? Over the past few years, the accounting industry seems to have experienced a shift. From my perspective it seems many firms are increasing their fees, and intentionally cutting the number of clients they work with each year. Some of the best tax preparers I know in town are running at maximum capacity and simply cannot accept new individual tax returns. A tax professional might have thirty years of experience and an exceptional reputation, but if their desk is so overloaded that they cannot return an email in November or file your return without an automatic extension, they are not going to be a good fit for your retirement.
Second, they need an understanding of proactive tax planning and a willingness to collaborate with your financial planner. For retirees in our asset tier, the goal is not just filing a Form 1040 each spring; it is executing forward-looking strategies before the December 31st deadline. The best tax preparers I work with genuinely appreciate having a CFP® professional in the loop. They like having an advisor they can email directly for year-to-date dividend and interest estimates, capital gain realizations, or tax reporting forms pulled straight from the custodian. When both professionals share the same expectations and communicate cleanly, it takes the administrative burden off the client and ensures that strategies like Roth conversions are reported accurately on next spring's return.
Third, look for integrity and a service mindset. Tax preparation can easily feel like a commodity where numbers are simply plugged into software, but the actual client relationship is built entirely on service. Our clients in that $2M to $8M range are generally not shopping for the absolute cheapest price in town. They are looking for stability, clear communication, and someone who stands behind their work. I would much rather see a client work with an Enrolled Agent who communicates promptly and runs their practice with deep personal integrity than pay a premium for a CPA firm that treats their return like an assembly line. The opposite is also true, a CPA who has their tax prep fees priced high, but you know they’ll be available when you need them is much better than a cheap EA who is unavailable most of the time.
Full Episode Transcript
Adam: Good morning, and welcome to Retirement Tax Matters. I'm Adam Reed. This is Garrett Crawford, our resident CFP® professional, and this morning we are revisiting a topic, but maybe taking a different approach to it. We are going to help you as retirees in that $2 million to $8 million space answer the question: what is best for me, a CPA versus an enrolled agent, an EA? How do I do tax preparation? I think before we jump into that today, there is one distinction we want to make. You can reference back to episode 20. We used to title them all, and I think it was Tax Preparation versus Tax Projections. I have never talked about this.
Garrett: It is something I do every week, and we have never utilized it, but the work has been put in. If you go to retirementtaxmatters.com/20, it should go directly to the episode. There is a little plug for the website. I didn't have to do it this week. Garrett is taking my job. Every time I fix that up, I am like, "Why am I doing this? We never talk about it," but here is our first one. Go to retirementtaxmatters.com/20 to check it out. That delves into what the difference is between a wealth manager proactively helping you plan versus the person helping you do tax preparation.
Adam: That is not the conversation for today. Some of you will appreciate this because I have seen some comments saying, "These guys are just running commercials for themselves. These guys are just shilling for money." Today, we are not talking about us at all. Obviously, we just plugged the website, but today we are trying to inform you and add some value. What does it look like for somebody in that $2 million to $8 million space? Who is one of the best people to have in their corner for tax preparation? Tax planning, which is what we do, is a forward-looking strategy. We are running fall income projections, evaluating Roth conversions, managing IRMAA tiers, and working through lifetime tax brackets. Tax preparation, on the other hand, is more of historical reporting. It involves taking your 1099s and W-2s in the spring, filing your 1040 with the IRS, and making sure you are in good standing with the IRS. We have done a full episode on that before, so check that out. I will probably link it below as well if you don't want to go to the website. Today, our focus is tax preparation. So Garrett, maybe you can kick us off with some broad definitions of what a CPA and an EA are: a certified public accountant and an enrolled agent. I know for myself, I grew up in a household where my dad was a CPA. Looking back, I was convinced that was the only option you had. My dad is the most laid back, Hawaiian shirt-wearing, relaxed guy I know. The highest I ever saw his blood pressure was when I asked, "What do you think about H&R Block?" He just started fuming with steam coming out of his ears. No hate on H&R Block, but my dad takes a lot of pride in his work, so I thought CPAs were your only option. This is a cool conversation because I think people just know what they know.
Garrett: Give us some broad definitions and let us know about CPAs, EAs, and anything else in that world. In fact, that is right where I want to lead off. You grew up in a household with a CPA. My parents did their own taxes when I grew up, and I didn't know what a CPA really was, other than my friends who went to accounting school and wanted to be a CPA. This is my 13th year in the financial planning industry, and for most of those years, when talking to clients, I would ask, "Do you have a CPA?" It is almost like asking if you need a Kleenex. We use the word CPA to stand for anybody that does taxes, but in real life, the conversation is more nuanced. People have their taxes prepared by many who are not necessarily CPAs. Some people do it themselves. Others have unlicensed friends who just like to do it and help prepare taxes. Then there are the credentialed tax preparers we will discuss today: the enrolled agent (EA), the certified public accountant (CPA), and later, the tax attorney. Let's start with the CPA. The reason a CPA is the most well-known is that it is probably the most intense designation to get. If you know a CPA, it means they have passed the CPA exam, which is a rigorous three or four-part exam. CPAs have a background in taxation and tax preparation, but they also have a background in accounting and auditing. Many people might not have an auditing or accounting need. Therefore, when you interact with your CPA, it is most often under the umbrella of their taxation preparation skill set to ensure compliance.
Adam: My brother, also a CPA, passed his CPA exam four or five years ago. When I started in the industry, I passed my life and health exam. I called him and said, "Ethan, I passed my life and health." He said, "Oh, cool. Was it hard?" I said, "A lot of people say it is a little bit harder than the CPA exam." He said, "Dude, you are an idiot. Don't say that." I said, "Okay, you are right."
Garrett: One thing that is a little different, which a lot of people probably don't know, is that a CPA is a state-licensed designation. That is different from an enrolled agent, which is a license given out by the IRS. Most often, you will see CPAs with a specialization in an area or multiple states, but an enrolled agent can do tax planning and tax preparation across all 50 states. Both can address tax preparation issues and are quite similar when it comes to individual taxation, but a CPA has a lot more breadth and depth than an enrolled agent.
Adam: That makes sense. I think it would be helpful to share the story you mentioned earlier. Before we help people decide which is best for their case scenario, what prompted this episode?
Garrett: I don't even know if you know this story yet, Adam. Last week, I was meeting with an older client who was asking questions for their child. They said, "My child needs a referral to a tax attorney." Sometimes, different generations use different words. When she used the term tax attorney, I racked my brain wondering if she meant someone to help prepare taxes. I asked specifically what type of service she was looking for. She said her daughter just needed some forward tax planning help with her financial situation. I wasn't generally familiar with how a tax attorney fits in with a CPA and an enrolled agent. I don't want that to be the whole conversation, but since that meeting, I have done a deep dive into where a tax attorney comes in. A tax attorney helps you reach a legal conclusion. A tax attorney, an enrolled agent, and a CPA can all represent you in court, but the reasons you would use them differ. For our $2 million to $8 million pre-retiree and retiree niche, almost all of our listeners do not find themselves in a sticky tax situation battling the IRS courts. A tax attorney comes in if you have gone through an audit with massive financial ramifications, received a result you disagree with, and feel you need to defend yourself deeply. You engage a tax attorney who is very familiar with tax law and fighting tax decisions. While they may know how to prepare a tax return, most good tax attorneys do not specialize in preparing your 1040 for the April 15th deadline. There is a lot of crossover among a CPA, an enrolled agent, and a tax attorney, but true client confidentiality agreements happen under the umbrella of a tax attorney. Surprisingly, your enrolled agent and CPA do not have near the level of client confidentiality. If you share information with your CPA or enrolled agent, it is their duty to ensure the right thing gets reported. With a tax attorney, you have more confidentiality. To be a good CFP® professional, I do not necessarily have to know everything a tax attorney knows. In my almost 14 years of doing this, I have never had a client engage with a tax attorney. My job as a CFP® professional requires an amazingly wide breadth of knowledge so I can find the right person for the job when a client situation occurs. This conversation is warranted because of the different designations out there, and I think there is a lot of confusion. The person in my office was asking for a tax attorney, but they were actually looking for a financial planner referral to help with proactive financial planning. They probably thought of a CPA giving financial advice. It is a convoluted world.
Adam: It is always hard to define different roles and names, so this is helpful. Before we jump into our thoughts on what might be a better fit, go check out the website, retirementtaxmatters.com. We have a year-end tax planning checklist. It has never been a better time to download it. Join the subscriber list to get weekly emails from Garrett with great information and case studies. Without further ado, help us evaluate the fit. We have talked about EAs and CPAs. For people in that $2 million to $8 million space looking to optimize their taxes, who is a good fit?
Garrett: I would guess most people clicking into this video are looking for this section. I realize there is so much context that goes into the answer I am about to give. Let's start with the enrolled agent. When would somebody be better off using an enrolled agent versus a CPA? I love the idea of an enrolled agent. They signed up for a job knowing they wanted to help people prepare their taxes and become good at it without caring about accounting or auditing. They want to assimilate your tax documents and get you in a compliant standing with the IRS. If you show me an enrolled agent who loves what they do, prioritizes client servicing, and has time to talk to you, I have very little reservation working with them. For our $2 million to $8 million crowd, there may be a good fit there. Often, the integrity of the person is more important than whether they are a CPA or an enrolled agent. A bonus is that an enrolled agent probably will not have as high of preparation rates because they do not hold the CPA designation. Fun fact: I am considering sitting for the enrolled agent exam in 2027. Do I want to prepare taxes? No, but I think it would be an interesting process. There is a lot of information in tax compliance that would be helpful as I assist my clients. Moving on from the enrolled agent, I think about our $2 million to $8 million demographic. Sometimes it is not about price; it is about stability and deep expertise. Our clients are willing to pay a little more to avoid a fly-by-night operation that turns over staff. A CPA brings more depth and expertise to handle wide variability. Because CPAs are state-licensed and possess deep expertise, they are invaluable if you live in a punitive state with significant state tax issues, Roth conversions, or estate taxes. As financial planners talking to people nationwide, it is challenging to be familiar with all 50 state income tax situations. It is a great complement to have a CPA who is deeply familiar with the intricacies of specific states like Oregon or California. Additionally, because CPAs have accounting and auditing backgrounds, they are ideal for business owners looking to sell their business one day. A CPA who understands company financial records brings a level of expertise an enrolled agent will not have during a business sale.
Adam: To clarify, nobody should leave this video thinking they need to fire their EA immediately. Just like with CFP® professionals, there are incredible professionals and not-so-great ones across all designations. If you work with an EA who does excellent work and communicates well, keep them. This is simply to educate you on the differences in case you need more specialization or plan to sell a business. To wrap up, how do we work in tandem with CPAs or EAs, and why is that important this time of year? Just past October 15th, it is time to start thinking about the end of the year.
Garrett: It is time to think about what your taxable income will be on December 31st so you can consider things like Roth conversions or deferring IRA withdrawals to maximize your tax bracket. October 15th is a notoriously busy time for tax preparers. In April, CPAs and enrolled agents are basically dead, and in the fall, they are tired again from people bringing in tax documents at the last minute. Our energy is at an all-time high right now. We are gearing up to spend time with clients and get through end-of-year tax planning. Working with a financial planner who assists with proactive, tax return-driven financial planning is highly valuable and makes a big difference over time.
Adam: We appreciate you tagging along and listening to the podcast on YouTube, Spotify, and Apple. Like, subscribe, and follow. Sorry we missed last week; I was out of town for a work trip. We are glad to be back and plan to return next week. Have a great day. I'm Adam Reed, and this is Garrett Crawford. We are Retirement Tax Matters.
Garrett: See you next time.