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Choosing a Tax Accountant-USA

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Choosing a Tax Accountant-USA

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This gives information on choosing a tax accountant to prepare U.S. tax returns.

  • Generally, you should choose a Certified Public Accountant who holds a valid practising license. You can verify the validity of a license with the relevant State Board of Accountants.
  • Most experienced tax CPAs are capable of handling U.S. tax returns that contain foreign income.
  • Specific criteria to look for in a CPA:
    • experienced;
    • works exclusively in tax;
    • pragmatic. You don't necessarily want a CPA who advises you to amend your tax returns for a $10 mistake.
  • In particular, a tax CPA you choose should understand:
    • how foreign income fits into the U.S. tax system;
    • applying credits for foreign taxes
    • the information reporting applicable to foreign assets. This should include the Foreign Bank Accounts Reporting form, also known as FBAR or TDF-90, and the recently introduced form 8938 (Foreign Account Tax Compliance Act, or FATCA).
  • You normally don't need a tax adviser who is "dual-qualified" in both the U.S. and your home country.
    • There are not many practitioners qualified this way, so you greatly narrow down your choice.
    • Normally, you should be able to handle any residual tax affairs in your home country yourself.
    • If you do have a tax accountant in another country, you can (and should) authorize both your advisers to talk to each other.
  • Ideally, you want to choose a firm where you will deal with the same CPA from one year to another.
  • Ask around your friends and co-workers for a recommendation. If this doesn't give you any names to focus on, then you should select a few medium sized CPA firms in your city and get some quotes on their services and costs.
  • Use your "gut feeling" when deciding who to choose.
  • If you have a tax problem that needs resolving, you want a CPA who will help you work out a reasonable strategy to resolve things. However, you should be cautious of anything that sounds like scaremongering.
    • Remember the statute of limitations - as long as you filed a tax return on time, and in good faith, then in most cases, it is closed after 3 years.
    • The statute of limitations is 6 years if you omitted 25% of your adjusted gross income;
    • There are some specific additional exceptions, and some states don't exactly follow federal rules for their taxes, but this is the general principle.
    • If you have filed fraudulent returns, the statute of limitations never runs out. However, it is very unusual for the IRS to prove fraud.
  • Tax attorneys are normally needed for more serious cases where there is wilful evasion of tax and/or fraud.