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Are there some minimum formal certifications / qualifications that one should be looking for when hiring a tax preparer (to handle federal and state tax return for an individual)?

As a salaried individual with no mortgages, loans, family, etc. my tax situation is rather simple apart from some offshore financial accounts which necessitate filling Forms 8621, 8938 and FinCEN 114 - but nothing too exotic.

I know about the CPA (Certified Public Accountant) and the EA (Enrolled Preparer) qualifications but I feel my circumstances probably don't warrant those.

I have come across a "Registered Investment Advisor and Accounting Services Firm" with very good reviews (for their tax preparation services) but their founder lists the following qualifications: CFA, CFP(R) and AEP(R) which, IIUC, are geared towards investment advice rather than tax preparation. Should I view this as a deal breaker or is it usual in the US for individuals to engage the services of "tax preparers" that may lack some formal certification specifically pertaining to tax preparation?

  • For the level of complexity you are having to deal with, you can use things like TurboTax yourself. Using a professional doesn't really save you much time as you still need to give them all the required info. They won't sit with you for hours to help you provide it (without a huge fee at least) – Eric Jan 27 at 17:28
  • @Eric the thing is that TurboTax doesn't support Form 8621, otherwise I'd be inclined to go the way you suggested. – Marcus Junius Brutus Jan 28 at 14:51
  • Form 8621 is pretty exotic so you might want to reassess the complexity of your return. – Eric Jan 28 at 21:14
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As a middle ground between EA/CPA/attorney and 'some bozo off the street', you can ask them if they participate in the Annual Filing Season Program and/or look them up yourself in the IRS directory linked here. This requires them to take a modest amount of relevant continuing education (including changes to tax law) each year and pass a test on it, and consent to 'Circular 230' (which means they can be penalized by IRS for misconduct); in return they are officially listed, and allowed to 'practice before' IRS (i.e. can represent you in an audit etc).

IRS originally tried to require education and testing for all paid preparers, but everything other than registration was struck down by the courts (google Loving v IRS), which is why starting in 2014 we see PTIN mandatory and the rest optional.

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The qualifications of the founder don’t necessarily have anything to do with those of the people preparing the returns. There could be a lot of CPAs and EAs among the preparers or none.

Yes it is common for people to be hired tax preparers in the US that don’t have any certifications. All it takes is a PTIN from the IRS. I couldn’t find the percentage of preparers that have CPAs or EAs, but my guess is that at any of the larger outfits it’s well below half.

That said it’s not terribly hard to pass the EA exams so if someone is not willing to invest the time to do so says something about whether you want them to prepare your return. Usually what happens at the larger outfits is the preparers without certifications are supported to some degree by coworkers that do. Their marketing would imply that degree is high, the reality is somewhat less.

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