How To Find An Accountant For Americans Abroad — Saving Money (Part 1)
This is part 1 of a 3 part blog series to help you assess if you need to pay a tax professional to help you prepare your US tax return as an American abroad.
The most common question I’m asked is, “Can you recommend an accountant?” The issue is that an accountant that works for a friend won’t necessarily work for you. Each individual’s circumstances are different, so it’s difficult to recommend an accountant without knowing more about your personal circumstances, preferences, and about your financial life. I am not personally certified or trained to give advice, and there actually isn’t a professional qualification anywhere in the world where someone can recommend a tax professional (that I’m aware of).
For Americans abroad, filing a US tax return can be a very anxiety provoking and stressful process because it is well documented that filing taxes for Americans abroad is more difficult for Americans outside the US than inside the US.
Table of Contents
- Do you actually need a tax professional?
- How To File
- Time vs Money
- Consider using tax prep software before engaging a tax professional
- The Hybrid Options
- Final words… Don’t Delay
- About the Taxpayer Advocacy Panel
- About the International Member of the Taxpayer Advocacy Panel
Do you actually need a tax professional?
Frequently, people think that they can’t do their own US tax return when in reality, it is possible to do it yourself. Often those who think they can’t do it themselves lack self-confidence or just the thought of doing taxes sets them into a fit of stress and anxiety! So their first thought is that they need to find a professional to do it for them. There’s nothing wrong with this line of thinking, but given that there’s a lack of tax professionals available in the market compounded by the complexity of an expat tax return, that drives the price up. So it’s worth exploring doing it yourself as a first step. Filing taxes as an American abroad can be difficult, but it’s not impossible.
How To File
Everyone has 3 options to file a US tax return:
- file yourself
- use online tax preparation software
- pay a tax professional
If you look at IRS filing statistics, most people use online tax preparation software to file with the IRS.
Time vs Money
First, consider your time versus money. Filing yourself will save you money, but then you’ll spend more time on it. While paying a tax professional will cost more, and in theory, save you time. Keep in mind that there’s a caveat with using a tax professional, in that you still have to trawl through your documents and financial reporting and give the numbers to the professional, they can’t do this step for you! And then the tax professional is just putting the numbers into the correct boxes on the forms for you. Frequently people spend just as much time on filing themselves versus using a tax professional. This is why the below picture says “moderately less” time!
The IRS estimated it took nonbusiness taxpayers 9 hours at a cost of $150 to file a tax return in 2023. The IRS unfortunately doesn’t provide an estimate of time or cost specific to international taxpayers, but the average time burden will be more given the number of complicated international forms required. Additionally, according to American Citizens Abroad it is estimated that return preparation fees for Americans abroad is between $2,000 and $3,000.
Consider using tax prep software before engaging a tax professional
Give serious consideration to using online tax prep software before hiring a tax professional, it could save you a lot of money in the long term.
More than 70 percent of taxpayers (107 million people) are eligible for the IRS’ Free File program yet only 3% use it. The IRS doesn’t promote the Free File program to taxpayers nearly as much as it should. Imagine how much money people would save if they knew these options existed? This is why I wrote the blog article 2024 Free Online US Tax Preparation Software Options for Americans Abroad in order to help international taxpayers save on their tax prep costs. It is worth giving the Free File software options a serious look. Even if you don’t qualify for Free File, many of these tax prep options are available for only $7.95 or $20. Why pay the national average of $150 to file a tax return when something free will do the same job?
Keep in mind that although you may find one of the IRS Free File providers can work for you, and are free, many say they support international taxpayers but in reality they don’t. For example, most of the Free File providers require a US phone number to set up an account or do not allow e-filing for Married Filing Separate. There are no price or feature comparison websites to compare the options, but this is why I wrote this blog post to try to help you save time. Do your homework and spend time comparing the options to see if one works for you.
Also keep in mind that these Free File options will feel like trying to fit a square peg into a round hole. The Free File software were built for stateside Americans, not international returns, so just be aware you might need to do an in depth search to find one that works for you. Also, you will need to be clear on which forms you need to file for your circumstances before you get started using one of the Free File providers. If you rely on the program to determine your forms, it may lead you down the wrong path, so make sure you know what you need from the start. That said, many of these options can work and I hear from many of you that you do use one of the Free File providers. There is no better feeling than doing it yourself and at no cost!
The Hybrid Options
Keep in mind that there can be grey area between filing yourself, using online tax prep software, and hiring a tax professional.
Some hybrid options to help you cut down on costs:
- Prepare your return yourself and then pay a tax professional to “check your homework.” Many will be happy to do it this way and offer you a discounted price since they’re doing less work. After all, most of the time you’re giving the numbers to the professional and they’re just putting the numbers that you give them into the right boxes on the forms. So you save them half the work by doing it yourself!
- Hire two different tax professionals - one for the US and another for your country of residence. Many people save lots of money by acting as the “go between” for their two tax professionals. Other people are able to prepare their taxes for their country of residence themselves, but then only pay a tax professional for the US side since it’s more complicated.
- Hire a tax professional one year, and then do it yourself the following years. If your situation doesn’t change much, then you can just fill in the forms the same way and update the numbers according to your new income that year. Just because you use a tax professional one year, doesn’t mean you have to stick with them. If you have a change in circumstances (come into inheritance, move countries, retire, etc.) then you can always go back to using a tax professional again for those “change” years to make sure you’re doing it correctly. Caveat: The risk in using this method is not catching year-on-year changes to tax forms that could impact your return. So if there are big changes to the tax code (which we are expecting for 2025, that would impact your filing in 2026) then you may want to consider having a tax professional prepare your return if the new form instructions go over your head.
- Many of the online tax prep companies offer an upgrade option for a professional to check it over before it’s submitted to the IRS for processing. This frequently comes at a reduced price compared to going to a tax professional directly.
- Prepare your return yourself (or use online tax prep software to help you) and then bring any questions you have about your return to an upcoming Problem Solving Day where you can ask a Taxpayer Advocate Service case advocates any questions you like for free!
These hybrid options aren’t exhaustive, but hopefully this helps you think about other options that may help you cut down on your tax prep costs.
Final words… Don’t Delay
Whether you decide to hire a tax professional, file yourself, or use online tax prep software, the best thing you can do is to just get filing your taxes over and done with as soon as you can. I know taxes aren’t everyone’s cup of tea, but they are unfortunately a fact of life. One can only stick your head in the sand for so long before you have to face the music, and most people I hear from that suffer the most are those who have postponed for too long where it starts to negatively impact their finances. And as scientific evidence suggests, stress causes you to age faster. So it’s better to bite the bullet and get it done sooner rather than later so you can spend your life living life rather than prolonging stress and anxiety! Filing your taxes is often not as bad as many people think it is, and once you get over the hump, you’ll feel better once it’s done and out of the way for the year too!
In part 2 of how to find an accountant for Americans abroad, I go into more detail on the various types of tax professionals that exist in the market and to help you figure out which one will work best for you.
About the Taxpayer Advocacy Panel
The Taxpayer Advocacy Panel is a United States Federal Advisory Committee whose mission is to listen to taxpayers, identify taxpayers’ issues and make suggestions for improving IRS service and customer satisfaction. TAP is comprised of approximately 75 members who volunteer to serve a three-year term, and represent all 50 states, District of Columbia, Puerto Rico and a member to represent U.S. Citizens living or working abroad.
About the International Member of the Taxpayer Advocacy Panel
I am originally from Ohio, went to college in Wisconsin, and moved to London, United Kingdom to do my masters and upon completion was offered a job, and so I stayed. 17 years later, I am married to a Brit, run a UK company, and volunteer to help Americans abroad in tax advocacy work. My three-year term on TAP started in 2022 and ends 2024. I serve on the Special Projects Committee for TAP, which is the committee that handles international issues within the IRS. I am not an accountant, which makes me a minority on TAP, in addition to being the only member on TAP not in the United States, my unique perspective helps bring clarity to the issues, prioritize problems, and provide solutions. You can contact Rebecca on tapinternational1 at gmail dot com