Cost for CPA to do your taxes

[Ologist]

Hi folks,

I have been going to the same accountant for the last ten years. The annual fee has gone from $400 to $750. This is for a joint return with standard deduction.
We are now retired no W-2’s, ages 68 and 62. Have accounts with Fido and Vanguard do about 15 to 20 trades per year. Also the last five years have done a ROTH conversion.

Have about five MLP’s that need to be accounted for. When I asked the accountant why such a high charge he said because of the MLP’s.

I think he is charging me based on the value of my accounts. Should we stick around or find a new CPA. Have not been audited no complaints except for fee. Drop off documents and a week or two later pick up return. No face to face meetings or tax planing involved.

Thanks for your input!

 

[RunningBum]

I had an MLP for a couple years, and I don't remember the specifics, but it was a pain to do my taxes. I have no idea what CPAs charge in general but I'm not surprised yours would be higher than normal, and that MLPs are the reason. I sold mine and decided if I ever bought another it would be in my Roth.

 

[euro]

Not cheap but doesn't sound crazy high to me either.

 

[davebarnes]

$375 for 2019 tax returns.
Not a CPA.
Have been using same family-owned firm since 1980. Very happy with services.
Had/Have:
W2
SS
pension
tiny business with Schedule C (and forms 8895, 8949, Schedules SE, D)
HSA - in/out
taxable retirement account (int, div, capital gains/losses)
tIRA withdrawals
Roth conversions

For grins, last year I compared CreditKarma's free service with the tax guy and the difference was <$100 in taxes owed. Did not analyze why. I suspect something in the Schedule C.

 

[Sunset]

Based on limited input.

I'd sell the MLP's (if not already in IRA/ROTH) and do my taxes myself spending $25 per year , and gaining taxation knowledge by doing it.

 

[Golden sunsets]

We have no MLP's, standard deduction, 2 brokerage accounts, 5-6 1099-'s, 2 Social Security Statements and pay $220 for a CPA to do our return. Our Assets are in the mid 7 figure range. We know we've found a great deal with this guy, so have decided not to take over doing the return ourselves.

 

[Montecfo]

Do your own taxes. Nothing about your situation is hard, but it does take time.

If satisfied with the services ask your CPA what can be done to reduce the fee. That might at least keep increases down.

 

[BeachOrCity]

I think the best thing is to have a discussion with the cpa. Have this discussion before or after tax season not during. My own cpa doesn’t charge a flat hourly rate. He bills me big time for the complex stuff and also understands that the data entry side of things is low value.
Net I pay 2500. Multi state returns usually and about 20 k-1’s some of which are pretty complex.

I asked around for people that have this complexity and it is about right. I could get cheaper but not as good.

 

[RetireeRobert]

I am a retired CPA. The one you have sounds reasonable on his fees, considering the five MLP's one needs to work into the tax returns.

To give you some perspective, I used to have an investment which was a publicly traded MLP. It was such a pain in the neck on my own tax return at tax time, I eventually sold the MLP investment just to avoid the tax return headache! So, if you sell your MLP's, your tax preparation fee should drop substantially.

 

[Dtail]

We have no MLP's, standard deduction, 2 brokerage accounts, 5-6 1099-'s, 2 Social Security Statements and pay $220 for a CPA to do our return. Our Assets are in the mid 7 figure range. We know we've found a great deal with this guy, so have decided not to take over doing the return ourselves.

That is a good price.

 

[Golden sunsets]

That is a good price.

Yep. He's a keeper. And on top of that I can call him any time during the year with questions, like changes in the tax code, unique financial changes to our finances, tax harvesting questions, RMD questions, Estate questions, etc. and he never charges us for these sessions.

 

[RetiredAtThirty-eight]

Our CPA usually charges around $2300/year and it's worth every penny! I barely have to think.

 

[LOL!]

The CPA has probably found easier ways to make money and is increasing their price to make you go away.

 

[target2019]

Hi folks,

I have been going to the same accountant for the last ten years. The annual fee has gone from $400 to $750. This is for a joint return with standard deduction.
We are now retired no W-2’s, ages 68 and 62. Have accounts with Fido and Vanguard do about 15 to 20 trades per year. Also the last five years have done a ROTH conversion.

Have about five MLP’s that need to be accounted for. When I asked the accountant why such a high charge he said because of the MLP’s.

I think he is charging me based on the value of my accounts. Should we stick around or find a new CPA. Have not been audited no complaints except for fee. Drop off documents and a week or two later pick up return. No face to face meetings or tax planing involved.

Thanks for your input!

Five MLP's will take more time than "average", but really, how much time is required given last year's form is carried over to this year?

An experienced tax CPA will bang that return out in 2 hours or less. That leaves plenty of time to answer a call, get coffee, etc. I'm half-joking.

The backstory is that your tax CPA has a successful business, and probably has an employee or two. He/she has overhead that grows each year. So they need to increase prices to stay profitable.

Another factor which comes into play is that this CPA business grows, and they decide that they can no longer carry or support everyone. So it is better to raise prices to decrease the workload, and hopefully see the same profit margin. It sounds harsh, but there is always another preparer who will take new business.

I agree with selling the MLP's and doing your own taxes. But I realize this doesn't work for everyone.

 

[Montecfo]

Five MLP's will take more time than "average", but really, how much time is required given last year's form is carried over to this year?

An experienced tax CPA will bang that return out in 2 hours or less. That leaves plenty of time to answer a call, get coffee, etc. I'm half-joking.
.

So 2 hours huh? And that is more than "average"?

 

[Markola]

We just have a regular, two income household with no business. $430 last year for our CPA.

 

[VanWinkle]

That is a good price.

That simple return could be completed for free through VITA tax preparers at AARP. (I am an AARP tax preparer.) Sometimes it feels better to pay for a tax return, and I understand that as well.

VW

 

[RE2Boys]

Five MLP's will take more time than "average", but really, how much time is required given last year's form is carried over to this year?

An experienced tax CPA will bang that return out in 2 hours or less. That leaves plenty of time to answer a call, get coffee, etc. I'm half-joking.

The backstory is that your tax CPA has a successful business, and probably has an employee or two. He/she has overhead that grows each year. So they need to increase prices to stay profitable.

Another factor which comes into play is that this CPA business grows, and they decide that they can no longer carry or support everyone. So it is better to raise prices to decrease the workload, and hopefully see the same profit margin. It sounds harsh, but there is always another preparer who will take new business.

I agree with selling the MLP's and doing your own taxes. But I realize this doesn't work for everyone.

MLPs and PTPs were an extreme pain to deal with. I spent 12 years as a seasonal, back office tax preparer at a CPA firm. The CPAs would meet with the client and go over their situation for the past year and on the way back to his office he'd drop off an envelope with all the forms on my desk. Guaranteed that any K1s for MLP would not be included as they normally are not sent to the client until late March. I'd get most of the return completed as time allowed but sometimes it got thrown in the pending pile to be done late in the season.

Once the K-1s arrived, entering the K-1s was usually pretty straight forward, UNLESS there were any sales of the shares of MLP/PTP. Each separate sale involved an manual re-calculation of the capital gains and losses and a determination of how much of the gain should is reportable as ordinary income. At times, you need to manually do this again for AMT purposes. If you purchased a round lot of shares but sold the shares piecemeal, then further calculations are necessary.

If the brokerage house included the sale of the MLP/PTP on the 1099B, then one would has to go back and re-adjust the summary of the 1099B to account for the changed capital gain as adjusted (often some of the dividends may be return of capital, but that is not reported until you sell the shares). All these adjustments need to be documented so the CPA can justify where the entries came from, they also aid the quality review of the completed return. Typically, as the K-1 are received quite late, I would be working 70 hours per week getting paid overtime by the CPA firm.

In a typical year, I'd do maybe half dozen returns with MLP/PTPs out of the 100-150 returns that crossed my desk. Most of the individual returns my firm prepared were the owners of the business clients of the firm such as partnerships and S corps in our area. Eight or so brokerage statements was also not uncommon.
Here's is a good article concerning tax complications of MLP/PTPs: https://www.thetaxadviser.com/issue...ded-partnerships-tax-treatment-investors.html

Since tax prep was a retirement career (my degree is in engineering and added an MBA), I've down sized to being a VITA preparer in my 70s, started yesterday).

 

[ncbill]

I pay twice that but was foolish enough years ago to invest in alternative investments.

Most of them are gone now but I have to wait several more years for my direct oil & gas investments to end (wells literally capped & abandoned)

IIRC, if I sell before then I recapture the significant tax savings I received upfront...as ordinary income.

Once the above are done I'll have no trouble doing my own taxes with TurboTax/TaxCut.

 

[Lawrencewendall]

I use TaxAct Premium ($90 this year) and it handles my K-1s fine. Did a CPA ONCE!

 

[Another Reader]

I need a new CPA... Even with two dozen rental schedules and him being on the Peninsula, he is way out of line...

 

[Ologist]

Thanks everyone for your valuable insights. I get a nice income stream from those MLP’s so I do not want to sell. Placing them in a tax deferred account is not a headache free option. Income of >$1000 leads to tax consequences (that is what Google says).

I have let my CPA know I am concerned about his rate, this may prevent further large increases. If the 2020 return is greater than $750 it will be time to move on.

I tried doing it myself with TurboTax but the MLP’s had me dumbfounded!

This site is a great resource, should look at it more often.

 

[Amethyst]

We used a CPA for 34 years; the same one since the mid-90's. He had a fee schedule: flat fee (I think last year's was $675) for a basic 1040 and one basic State return, plus additional charges for each schedule, 1099, and calculation (e.g. AMT).

For the first few years, an hour's private consultation was included; then he started a partnership, which instated an hourly fee (I think it was $250).

Our returns cost between $1300 and $2200; the higher amounts were for years when we had rental property or sold real estate. The amount of work on our end (organizing, answering questions) was considerable. But we were leery of doing it ourselves.

2020 is the first year I will attempt to do our taxes myself. No real estate sales, no rentals, no state return. Wish me luck!

Hi folks,

I have been going to the same accountant for the last ten years. The annual fee has gone from $400 to $750. This is for a joint return with standard deduction.
We are now retired no W-2’s, ages 68 and 62. Have accounts with Fido and Vanguard do about 15 to 20 trades per year. Also the last five years have done a ROTH conversion.

Have about five MLP’s that need to be accounted for. When I asked the accountant why such a high charge he said because of the MLP’s.

I think he is charging me based on the value of my accounts. Should we stick around or find a new CPA. Have not been audited no complaints except for fee. Drop off documents and a week or two later pick up return. No face to face meetings or tax planing involved.

Thanks for your input!

 

[target2019]

Tax prep cost sounds like auto collision repair.
"When we get the car on the lift we might find more damage..."

 

[foxfirev5]

I'm glad DM who worked for a brokerage house for 50 years taught me how to do this for myself at 12 years old. Reading is fundamental. Follow the steps and see how changing the variables affects the outcome.
This was after I spent a couple of years filling out forms on the old typewriter for cheap relatives that gave her a whole dollar for doing their taxes. They had no idea a 10 year old was doing their taxes.

Free Turbo Tax from Fido is an insult to my intelligence.