Tax Return Fees by CPA

[sunnysideup]

I almost embarrassed to say what we pay. $1300 this year. 1100 plus 200 for an additional state return. We probably overpay, but ever since we started with our current CPA several years ago, we get no letters from the IRS. Prior to that, we used a cheaper CPA and every year we had questions from IRS on our numbers related to stock transactions. So we are paying for his competence, if not his hours.

How complicated is our return? We currently live in NJ, and have 2 state returns since DH works out of state, plus the federal. We also have separate monies so we have a lot of financial forms from brokers and banks, with at least 20 stock transactions per year, but I organize all the information every year, so it's not like I hand him a box that looks like a box with raffle entries, he gets a binder with everything categorized.

So, we are moving soon and next year we will have a new CPA in our new home state, and only one state return again. And in a lower cost of living state we should not have to pay so much for the tax return service. Finally, I may try to use Turbotax in the future but I'm not ready to just yet with houses being bought and sold.

 

[gerntz]

If you have foreign tax credit, HSA withdrawals, multiple K-1's, plenty of donations, multiple brokerage accounts, cap gains, itemized deductions, rental property, IRA withdrawal/Roth conversion, redeemed savings bonds, state tax differences from Fed, it can add up pretty easily.

 

[iac1003]

If you have foreign tax credit, HSA withdrawals, multiple K-1's, plenty of donations, multiple brokerage accounts, cap gains, itemized deductions, rental property, IRA withdrawal/Roth conversion, redeemed savings bonds, state tax differences from Fed, it can add up pretty easily.

This is what I have found although we have no more rental property. But Schedule C, foreign tax credits, RMD withdrawals for DH, brokerage accounts, etc.

I am not a math nerd and all the numbers get me buggy. I used to do our tax return until 20 years ago and it took me days (before online software) but I heavily relied on my BIL who is a tax specialist to answer my questions. I think he got a lot of questions from various family members so he decided to not answer questions unless paid to do a return. I don't really want my DSis & BIL knowing the extent of all our holdings so we have been using a CPA since then.

$465, several schedules. I think it's going to get more complicated, not less, as I start to withdraw from our after-tax brokerage account next year, plan to sell our house and move and so on. We shall see.


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[frank]

I use a local tax and bookeeping service to just do my taxes, nothing else. I organize the no's and have everything ready for him. I have one rental and hold one land contract, plus a couple 1099's. he charges me 65. a year. I know this is cheap and this year I wasn't busy so I did my own taxe on taxhawk.com plus had hime do them to find out how they compare and if there are any differences. I know he is a certified tax person and he uses software to complete as many returns as he does in a year, but it will be interesting to see if he is using the same or comparable software to what is availabe online. another reason to use the tax preparer is to make sure all the new regulations have been installed where on the internet software you never know.

 

[target2019]

I use a local tax and bookeeping service to just do my taxes, nothing else. I organize the no's and have everything ready for him. I have one rental and hold one land contract, plus a couple 1099's. he charges me 65. a year. I know this is cheap and this year I wasn't busy so I did my own taxe on taxhawk.com plus had hime do them to find out how they compare and if there are any differences. I know he is a certified tax person and he uses software to complete as many returns as he does in a year, but it will be interesting to see if he is using the same or comparable software to what is availabe online. another reason to use the tax preparer is to make sure all the new regulations have been installed where on the internet software you never know.

He is using a professional tax package. This has a database of his clients and helps him manage the process. It's unlikely he's using one of the consumer versions. His package allows him to file on behalf of many clients.

 

[45th Birthday]

I have a fairly complicated return, and have for quite some time. I have always used TurboTax and never paid an accountant to do my returns. I like to know what is going on with my taxes at a detail level because I manage my portfolio to minimize taxes. For 2014, I paid .05% of my income in Federal tax. No, that's not a typo. How? Loads of option income sheltered by previous tax loss harvesting (will end soon), muni bond income, MLP's, high deductions for charity and interest, and use of foreign tax credits to offset all but the AMT portion of my tax bill.


Not only does TurboTax help with the filing, but it allows me to run what-ifs that are very valuable. Not sure I could find a tax accountant who would be knowledgeable enough to do that.

 

[Badger]

My income is from pension, SS, dividends, and a very small amount of interest. I owe nothing to anyone. The house is paid off and medical is taken care of between Medicare and Tricare for Life. I don't come anywhere close to being able to itemize so I go to the library where AARP volunteers do my tax returns for free. Just to see if there is a difference I also use the free TurboTax from Vanguard and they always come out the same or within a few dollars.

I can't see paying anyone to do my taxes. In a few more years I will have to start taking withdrawls from our IRAs but that shouldn't change the complexity to the point where I would need to pay someone unless anyone can show me where I am making a mistake.

Cheers!

 

[Hermit]

I hate doing taxes. I worry over the details so much I spend hours checking and rechecking the numbers. I didn't think my taxes were very complicated this year, but my accountant managed to create a 56 page packet for my taxes. Last year it cost me $450. I haven't gotten a bill this year.

I quit a perfectly good j*b paying me over $50 an hour. Why would I want to do something very unpleasant that would likely take me more than 10 hours which I could have done for less than $500? And I don't want to think about the sleep I would loose thinking about it.

All that said, I am pretty tight, so when my tax return gets down to a few 1098s and the standard deduction, I probably will do it myself.

 

[braumeister]

$1300 this year. 1100 plus 200 for an additional state return. We probably overpay,
I definitely think you overpay.

but ever since we started with our current CPA several years ago, we get no letters from the IRS.
Almost everyone gets no letters from the IRS.

Prior to that, we used a cheaper CPA and every year we had questions from IRS on our numbers related to stock transactions. So we are paying for his competence, if not his hours.

How complicated is our return? We currently live in NJ, and have 2 state returns since DH works out of state, plus the federal. We also have separate monies so we have a lot of financial forms from brokers and banks, with at least 20 stock transactions per year,
Honestly, that doesn't sound complicated to me.

I really hope you give it a try next year. Just do it yourself with the software, and compare it to the results you get from a pro. I think you might be surprised.

 

[bclover]

350 for my city, state and feds. Tax returns and shoveling snow are two things that I will gladly pay out the wazoo to never have to do again in life

 

[38Chevy454]

I think the main discussion point here is that *you* need to have a good understanding of your tax situation. If you understand the rules and forms, a self-prepared 1040 using TT or similar software is a very viable option. However, if you do not understnad it, then a paid professional is your best option. I have done my taxes with rental property (in past), have a small home-based side business, financial and pension 1099's, W-2 income, carryover losses, and more without any IRS audits or feeling I was not knowledgeable of the return amounts and minimizing the taxes i have to pay - which are always more than I like!

Whether you can afford the pro vs your tolerance for paying is another factor. I may spend approx 20 hours doing mine, but I do several checks before filing. Add in 1 or 2 states, and the 2 trust returns I do; and it easily gets near 20 hours. I would rather spend that money for a pro on something else. My time is worth the trade-off.

 

[sunnysideup]

I really hope you give it a try next year. Just do it yourself with the software, and compare it to the results you get from a pro. I think you might be surprised.

Thanks for the advice--you probably are right. Since this is the last year I am working, it is worth paying someone else to do it but next year and beyond, I will have the time and energy to do it. And I like the idea of doing it and comparing it to the return done by the professional as a comparison to get started.

Now if I could only get my DH who has a finance degree interested in helping!!! How is it that the science nerd does the taxes!!!

 

[GreenER]

I had always done my own taxes prior to marrying and I continued to do the taxes up to a couple of years ago when DH took over doing them. I had thought we might pay to have them done one time after we retire. My one concern is getting things right with capital gains. We've not previously had to deal with them much as we've been buy and hold folks.

 

[2B]

I had always done my own taxes prior to marrying and I continued to do the taxes up to a couple of years ago when DH took over doing them. I had thought we might pay to have them done one time after we retire. My one concern is getting things right with capital gains. We've not previously had to deal with them much as we've been buy and hold folks.

If you have the documentation on the purchase date/price, capital gains are trivial. Anything bought in the last couple of years has purchase information maintained by the brokerage or mutual fund company. Tax software will suck any transaction data from the 1099 and automatically put it in the right place in Schedule D.

I had a very old ETF in my ETrade account. ETrade didn't show any of the purchase information. I transferred it to Vanguard and it is shown on their website. I verified that it is correct with my documentation. I'll have to see if this is put onto the 1099 properly when I eventually sell.

 

[rbmrtn]

If you have the documentation on the purchase date/price, capital gains are trivial.

True, and consider if you don't have this info the CPA is no help. They can only work with the information you provide them.

 

[H2ODude]

Just wrote check for $250 and thought what a bargain. This guy has found things I'd never have, and at least once a year I'll call him with some financial questions. I started using him when we had a more complicated situation, but for $250 I'm very happy. This year I was rather stunned that our NC taxes were about 75% of what fed was. Jeeesh. Better move back to FL before the MRD kick in.

 

[Z3Dreamer]

Most of you can use TT or some similar cut rate tax preparer. As the return becomes more complex, many posters noted they needed a CPA to get it right. You should ask for an estimate before getting surprised at their fees.

The real value is in talking to your CPA outside of busy season is to get Competent Professional Advice. Having done your tax return, they are in a good position to give you a financial check up. If you go to a specialist in insurance, investments, wills or any type of financial services, they are going to sell you their product as their view of your overall finances is limited. And the CPA has no product to sell as they only sell their time.

I have seen many cases where a good meaning financial services professional put someone in a reasonable product but it was wrong for the client or some other failure. Example: A broker puts a client in tax shelters because she says she hates paying taxes. Well, she was in a low tax bracket and had no passive income so the losses were doing her no good. Or an attorney sets up a beautiful will and trust but the client doesn't understand so they don't follow through on re titling of assets. Involving the CPA before the fact would fix many issues. Or the client has 3 children and wants to name all 3 as co-executors to their will. This is permissible and many attorneys will not argue at putting this in the will. I believe that a good CPA would point out the madness of having co-executors. If you are only using a CPA to do your taxes, you are probably overpaying.

I have also had clients who sucked up vast amounts of time during busy season for complex situations, then complain about the bill. Worst was a super wealthy man who had over 30 partnerships (some oil and gas, other working businesses, others passive investments), in maybe 5 to 10 states, $3 million of cap gains from the sale of maybe 10 partnership interests, over 100 donations of appreciated donated items, stock sales, multiple properties, rental properties. Pretty much every line on the return had a large number. And he complained about our bill. The amazing thing is that this man's main business was billing his own time in his field. And his bills were said to be outrageous.

Or there is the old doctor who was about to retire. His finances in retirement looked marvelous. Apparently, he had come to us as a young man. We had set him up with a brokerage firm that had a small business retirement plan product that allowed him to sock away tons of money, pre-tax. The broker put the funds in blue chip stocks with little turnover. We guided him to an insurance pro who sold him the right amount of term and liability. The attorney set up wills and trusts for him, the spouse and kids. We and the attorney worked with him to make sure things were titled properly. With our help he avoided the aggressive tax shelters that were the rage in the 70's but the fiasco of the 80's. This is what you should be paying your CPA to do.

Thank you for letting me rant.

 

[gerntz]

Great post, Z3D. I agree 100% on discussing finances/taxes with a CPA. We did & it saved us way more than he ever cost us - and he wasn't cheap. Not outrageous iuo, but worth every penny.

 

[Hyper]

$220 this yr and a little complicated right now but should get simpler in next cpl yrs. We started with this CPA 20 some yrs ago. Did them ourselves after using him for about 10 of those yrs and was "reviewed" (think that's what the IRS called it) three yrs in a row and paid about a grand each time. What a flipping mess that was. Went back to him and have been there ever since. In the off season I have called and gotten advice from him also so that is a plus. Additionally he sends the completed tax form to us and some of it makes no sense to me at all. So feeling like it's worth the $ right now.

 

[rodi]

I have consulted a CPA exactly once - and she screwed up - failed to notice I'd overpaid SS taxes (change in job that year, signing bonus put me well over the cap in taxable compensation.)
My husband has consulted a CPA exactly once - and that person screwed up the city of Philadelphia taxes (which are notoriously horrible to do).
I do the taxes now. Hubby turned his pre-marriage house into a rental, then later sold it - I was able to handle the depreciation/cap gains issues. We have a rental now... It's on the same parcel as our property so there were some nuances with shared expenses (utilities, property taxes) I researched the issue on the IRS website. I've dealt with K-1's. I'm able to recognize if I'm missing a 1099 (MIL's taxes this year) or some other form. I guess I don't trust a CPA to notice the details I'm noticing.

I agree with the statement that your record keeping is probably better if you have done your taxes yourself each year. (That's how I caught the missing 1099). CPAs can only work from the documents you provide - so the old garbage in/garbage out caveat can apply.