US Expat Tax Preparer: Cost Drivers and How to Choose One

Can an accountant abroad prepare my US expat tax return?

Yes, if they hold an IRS preparer tax identification number (PTIN). Anyone paid to prepare all or substantially all of a US federal return needs one (IRS Topic 254). That includes preparers abroad: a foreign preparer who is not a US citizen or resident, cannot get a Social Security number and has a permanent address outside the US can get a PTIN by uploading notarized copies of identity documents (IRS PTIN FAQ).

A PTIN alone only allows preparing. A local chartered or certified accountant counts as a US CPA under Circular 230 (section 10.2) only when licensed by a US state, territory or the District of Columbia. Ask which US credential the preparer holds, not just which local one.

No official source sets a fee: the price follows the forms your facts trigger and the years filed. An expat return stops being simple when any of these apply:

• missed years of returns or FBARs, or a past filing that left out foreign income;
• a foreign company you own or run, a foreign trust, or a large gift or inheritance from abroad;
• foreign mutual funds or ETFs, each of which can need its own form;
• self-employment abroad, or a US state that may still treat you as a resident;
• an IRS letter already open, or a tax return in a second country that must line up with the US one.

Gather before you ask for a quote: last year's US return and FBARs, a list of every foreign account and investment with its highest balance, pay and tax statements from your country, and any IRS letters. Filing both US and Canadian returns is covered in choosing a US-Canada tax accountant.

How do I check a preparer's PTIN, CPA or enrolled agent credential?

Check two things: the PTIN, which must appear on your filed return, and the credential, which decides who can speak for you if the IRS has questions (IRS).

One narrow exception: any individual may represent you before IRS staff when you are outside the United States and the representation takes place there (Form 2848 instructions; Circular 230 section 10.7(c)(1)(vii)).

The IRS Directory of Federal Tax Return Preparers lists PTIN holders with a credential the IRS recognizes, such as CPAs, enrolled agents and attorneys, or with an Annual Filing Season Program record. A preparer missing from it is not unqualified for that reason alone, the IRS says, so ask about education and training. A CPA licence is issued by a state board of accountancy, and an enrolled agent is licensed by the IRS itself.

Is a PTIN holder enough for a streamlined filing, or do I need an enrolled agent?

Any PTIN holder may prepare the returns. If the IRS later examines them or sends a collection notice, only a CPA, enrolled agent or attorney can represent you on every issue. For general choices between software, a CPA and an enrolled agent, see CPA, enrolled agent or tax software.

What should I ask a US expat tax preparer before hiring them?

Ask questions whose answers you can check against your own facts:

1. What is your PTIN, and which US credential do you hold?
2. Which forms do you expect my return to need, and how many of each?
3. Will you sign the return as paid preparer and give me a complete copy? (Both are expected, per IRS Topic 254.)
4. Who files my FBARs, and what will you ask me to sign?
5. If the IRS writes about this return, who answers it, and is that in the fee?
6. Will you be reachable in the months and years after filing? (IRS Topic 254 suggests checking this.)
7. How will you treat my foreign tax and income: the exclusion or the credit, and why?

The exclusion-or-credit choice is explained in foreign earned income exclusion or foreign tax credit.

How much does an expat tax return cost, and what makes it go up?

No IRS or Treasury source sets or suggests a fee for an expat return. The work, and so the price, grows with each form your facts trigger and each year being filed (Publication 54).

Self-employment abroad is covered in self-employment tax abroad and totalization. What a catch-up involves is in the Streamlined Foreign Offshore Procedures.

What should a written quote include, and what may be billed separately?

A clear quote names each return and year, and each form by number and count. Then you can compare two quotes line by line and see whether a fact you gave was left out.

A written quote should list:

• the Form 1040 for each year, and the state return if any;
• each information form (Form 2555 or 1116, Form 8938, each Form 8621, Form 5471, Form 3520) and how many;
• the FBARs, by year, and who will e-file them;
• for a catch-up, the Form 14653 certification and the paper mailing;
• what you must send, and by when.

Ask whether these are included or billed separately: extensions, IRS letters after filing, amended returns for errors found in earlier years, extra years discovered during the work, and estimated tax planning. Get the answer in writing.

Which fees and practices are red flags for an expat tax preparer?

A fee based on a percentage of your refund is the clearest red flag. The IRS tells taxpayers to avoid it, and Circular 230 section 10.27, as written, does not permit CPAs, enrolled agents and attorneys to charge that kind of contingent fee for preparing an original return. How far the IRS can enforce it is unsettled. In Ridgely v. Lew (2014), a federal district court, relying on an appeals court ruling that preparing returns is not practice before the IRS, barred the IRS from enforcing section 10.27 for refund claims filed before an audit. It did not rule on fees for an original return.

The same section treats a share of tax saved, or a promise to give back the fee if the IRS challenges the return, as the same kind of fee, and allows these only in narrow cases, such as an IRS examination of a return already filed.

IRS Topic 254 also warns against a preparer who:

• promises a larger refund than others can get;
• wants all or part of your refund deposited into the preparer's account;
• has no PTIN, or will not sign the return and enter it;
• will not give you a copy of the return;
• asks you to sign a blank form, or does not ask for your records.

If a preparer already filed something wrong, see my tax preparer filed a wrong return.

Can a preparer file my FBARs for me, and what do I sign?

Yes, if you sign FinCEN Form 114a, which authorizes the preparer to e-file your FBAR and answer FinCEN's questions about it. You and the preparer both sign; a spouse on a joint FBAR signs too.

Form 114a is not sent to FinCEN unless FinCEN asks for it. You and the preparer each keep a copy, with the FBAR, for 5 years. Each Form 114a names the number of accounts and one filing year. The preparer must be registered with FinCEN's e-filing system.

Form 114a states that filing the FBAR on time stays your legal duty, not the preparer's. Check the accounts listed on each FBAR before you sign. Which accounts belong on it is covered in FBAR: which accounts count.

Who handles IRS letters after the return is filed?

Only someone you have authorized, and the form you sign sets how far that person can go. A quote should say whether answering IRS letters is included.

On a Form 2848, a preparer without a CPA, enrolled agent or attorney credential can represent you only during an examination of a return they prepared and signed, and only with an Annual Filing Season Program record for the calendar year in which they prepared and signed the return and for each year in which they represent you (Form 2848 instructions). Otherwise you can name that preparer on Form 8821, which lets them see your information but not represent you. If you live in Canada, see answering an IRS letter while living in Canada.

I'm switching preparers in the middle of a catch-up: what do I get back?

On request, a CPA, enrolled agent or attorney must promptly return the records you need to meet your federal tax obligations, even during most fee disputes (Circular 230, section 10.28). An Annual Filing Season Program participant has agreed to the same duty (IRS). Your records include what you supplied and documents from third parties, such as bank statements.

Two limits apply. Returns and schedules the preparer drafted can be held back until you pay for that work. Where state law lets a preparer keep records in a fee dispute, the preparer must return only those that have to be attached to your return, and give you reasonable access to copy the rest.

Then tidy up the authorizations:

1. Sign a new Form 2848 for the new representative. A new 2848 recorded for the same matters generally revokes the old one, but it does not revoke a Form 8821 (Form 2848 instructions). Revoke an old 8821 separately.
2. Sign a new Form 114a for each FBAR the new preparer will file.
3. Get copies of anything already filed, so no year is filed twice.

A preparer who will not release records or filed something you did not approve is covered in my tax preparer filed a wrong return.

Example

These scenarios are illustrative. Each states its currency.

An American in Spain with two local funds (euros)

An American lives in Spain and earns a salary there. She has a local savings account and two local investment funds of €20,000 each. A clear quote names her Form 1040, Form 2555 or Form 1116, one FBAR (her accounts pass $10,000), Form 8938 only if her foreign assets pass its threshold, and, if the funds are passive foreign investment companies, two Forms 8621. The $25,000 small-holding exception counts all such funds together, in dollars at year end, and applies only if no fund paid an excess distribution or was sold at a gain. Converted to dollars, her €40,000 is above it, so she may need one form per fund. A quote that says only "expat return" leaves her unable to compare.

A streamlined catch-up from the UK

A US citizen in the UK is catching up under the Streamlined Foreign Offshore Procedures: three returns, six FBARs, a Form 14653 certification and a paper mailing. Before signing she asks two things. Are IRS letters after filing included, and will the preparer hold a Form 2848 to answer them? Who files the six FBARs? She signs a Form 114a for each FBAR year the preparer e-files, keeps a copy of each, and checks every account listed.

A fee based on the refund (US dollars)

A preparer offers to charge 10% of an expected $3,000 refund, so $300. IRS Topic 254 tells taxpayers to avoid refund-percentage fees, and Circular 230, as written, bars CPAs, enrolled agents and attorneys from such a fee for preparing an original return. Ask instead for a fee tied to the forms and years in the work.

Different for you?

• You file both US and Canadian returns: see choosing a US-Canada tax accountant, or check whether you need a cross-border accountant.
• You only need Canadian returns: see choosing an accountant in Canada.
• You are behind on returns or FBARs: read the Streamlined Foreign Offshore Procedures, then get cross-border tax help.
• You own a foreign company or many foreign funds: each needs its own forms, and fund elections are hard to undo; get cross-border tax help.
• You already have an IRS notice: you need someone who can sign a Form 2848 for that matter; get cross-border tax help.
• Your preparer filed a wrong return or kept your refund: see my tax preparer filed a wrong return.
• You are deciding whether you even need to file: start with filing while living abroad.