Typically, you'll want to use a service account that has the least privileges necessary to query the data from CRM. The connection string follows the format:
Data Source=sql server;Initial Catalog=tenant_MSCRM
If you use a service account, you may get an error when you Test Connection in SSRS Report Manager:
Log on failed. Ensure the user name and password are correct.
In that case, the error may be caused because the account does not have "Log on locally".