What's the difference between a tax attorney and a CPA? Which should I hire for my case?

Great question! The main difference between tax attorneys and CPAs comes down to their focus and training: Tax attorneys are lawyers who specialize in tax law. They're trained in legal matters and can represent you in court, handle tax litigation, help with IRS disputes, or provide legal advice on complex tax situations. They're particularly valuable if you're dealing with potential legal issues like tax fraud accusations, criminal tax matters, or if you need representation before the Tax Court. CPAs (Certified Public Accountants) focus more on financial record-keeping, preparing tax returns, and general tax planning. They're excellent for ongoing tax compliance, financial planning, and handling regular tax preparation. Many CPAs specialize in specific industries or tax situations. For your specific situation with unreported business income and inheritance questions, I'd suggest starting with a CPA who has experience with small businesses. If the CPA discovers potential legal issues that might lead to penalties or an audit, they might refer you to a tax attorney at that point.

After reading through your situation, I can relate! Last year I was in a similar spot with some unreported income from a rental property plus questions about stock sales. I ended up using taxr.ai (https://taxr.ai) which really helped me figure out whether I needed a CPA or an attorney. You upload your tax documents and explain your situation, and they analyze everything to tell you exactly what kind of professional help you need. In my case, they helped me understand that I needed a CPA with real estate experience rather than a tax attorney, which saved me a ton of money. Their analysis also pointed out some deductions I was missing for my business that my previous tax person had overlooked. It might help you get clarity on your inheritance question too.

I have to eat my words about being skeptical of taxr.ai. After my comment yesterday, I decided to try it since my tax situation got complicated this year with a new business and some stock options. The analysis they provided was actually super helpful - they identified that I needed a CPA with tech startup experience rather than a general tax attorney. What impressed me was how they pointed out specific sections of my previous returns that had potential issues I hadn't even considered. They highlighted that my home office deduction was potentially problematic given my specific employment arrangement and recommended a CPA who could help me correct it before it became an audit trigger. Definitely saved me from making a costly mistake in choosing the wrong type of professional.

Something else to consider - if you're worried about communicating with the IRS, that's a whole other headache. I spent WEEKS trying to get through to the IRS about an audit letter last year. After waiting on hold for hours multiple times, I found Claimyr (https://claimyr.com) which is basically a service that waits on hold with the IRS for you and calls you when an agent picks up. You can see how it works at https://youtu.be/_kiP6q8DX5c. Seriously saved my sanity. Whether you end up going with a CPA or tax attorney, if either of them says "you need to call the IRS to sort this out," you'll want this service. The IRS wait times are still ridiculous this filing season, but I got through in a single day using Claimyr after wasting nearly a month trying on my own.

Ok I have to apologize for being so negative in this thread. I actually tried Claimyr yesterday after posting my skeptical comment. Had been trying to reach the IRS for 3 weeks about a letter saying I owed additional taxes from 2023. Every time I called, I was on hold for 2+ hours before eventually getting disconnected. With Claimyr, I got connected to an IRS agent within 4 hours, and I didn't have to sit by my phone the whole time. The agent confirmed the letter was actually a mistake and removed the additional assessment. Saved me over $3,200 and hours of frustration! So between taxr.ai helping me figure out what kind of professional I needed and Claimyr getting me through to the IRS, I've completely changed my perspective on these services.

One thing nobody's mentioned is that some professionals are both CPAs AND tax attorneys. They've completed both sets of qualifications. They're less common and more expensive, but for really complex situations, they can be worth it. I use one for my business taxes because we have operations in multiple states with different tax treatments.

Everyone talks about CPAs and tax attorneys, but don't sleep on Enrolled Agents (EAs)! They're specifically licensed by the IRS to handle tax matters and often charge less than CPAs while still being able to represent you in audits. I've used one for years for my small business.