Cost for CPA to do your taxes

[Raygun99]

I think if you buy an MLP in an IRA, either traditional or Roth, it generates Unrelated Business Income in the IRA, requiring a tax return and tax liability in an otherwise tax exempt entity. I would try to avoid that.

The first $1,000 of UBTI per IRA is exempt from tax and does not require a tax return filing. Example: An IRA invests in an MLP that generates $3,000 of UBTI. The IRA will owe tax on $2,000 of UBTI

 

[DawgMan]

I kinda wondered about this once I had zero earned income coming in. Could I just do it myself plugging in interest, capital gains, dividends from all my statements? On the surface, it seems easy enough, but while I still have some level of earned income, an LLC, individual returns, I pay about $3500/yr... but, as others have said, worth the $$!

 

[kenny1924]

No. Do not stop going BEFORE you look at 3 years of your returns, and say, I can do this.

IMHO, your return (after all data is collected) is about 2 weekends of work the 1st year, and 1 1/2 in the 2nd year and 1 weekend in the 3rd year.

So, no you should not go, but pay attention to the detail. Then buy the top level version (Home and Business) for $75 from Amazon and answer approximately 100-150 questions.

Sch K-1 are easy to do since they are ready to go.

W-2, 1099, and other info is an automatic pull.

Rest is all putting in the info yourself but it will take time to get used to the TurboTax questioning format. There is SO much help they give that I laugh at the people that go to the Accountant, since it is all about being challenged on 10 questions out of 200, and breezing thru the rest.

In the following years, most of the data stays in it, and it remembers what you filled out. And, therefore, less time.

My returns are complex, and when I mail it, they are over 100 pages, and yet, I have been doing it with US investments, Foreign Investing, Properties, W-2 Job and a Small Business (all in one for many years).

THEN (CAPS NECESSARY), BUY THE TAXAUDIT.COM FOR $39.99 AND LET THEM REPRESENT YOU FOR ANY AUDITS THAT COME ABOUT, AND WHALLA! YOU NOW HAVE A 'WARRANTY' PROGRAM FOR DOING SOMETHING YOURSELF.

If IRS finds a mistake, do NOT argue. Pay the penalty and tax and call it a day!!!!!

Above has been working for me, but it is not for everyone. I am very motivated to do these things, and still do not know my tax bracket or even why a deduction is allowed or not allowed, since Turbotax guarantees the accuracy. But, be honest about it also.....

Kenny

 

[DawgMan]

No. Do not stop going BEFORE you look at 3 years of your returns, and say, I can do this.

IMHO, your return (after all data is collected) is about 2 weekends of work the 1st year, and 1 1/2 in the 2nd year and 1 weekend in the 3rd year.

So, no you should not go, but pay attention to the detail. Then buy the top level version (Home and Business) for $75 from Amazon and answer approximately 100-150 questions.

Sch K-1 are easy to do since they are ready to go.

W-2, 1099, and other info is an automatic pull.

Rest is all putting in the info yourself but it will take time to get used to the TurboTax questioning format. There is SO much help they give that I laugh at the people that go to the Accountant, since it is all about being challenged on 10 questions out of 200, and breezing thru the rest.

In the following years, most of the data stays in it, and it remembers what you filled out. And, therefore, less time.

My returns are complex, and when I mail it, they are over 100 pages, and yet, I have been doing it with US investments, Foreign Investing, Properties, W-2 Job and a Small Business (all in one for many years).

THEN (CAPS NECESSARY), BUY THE TAXAUDIT.COM FOR $39.99 AND LET THEM REPRESENT YOU FOR ANY AUDITS THAT COME ABOUT, AND WHALLA! YOU NOW HAVE A 'WARRANTY' PROGRAM FOR DOING SOMETHING YOURSELF.

If IRS finds a mistake, do NOT argue. Pay the penalty and tax and call it a day!!!!!

Above has been working for me, but it is not for everyone. I am very motivated to do these things, and still do not know my tax bracket or even why a deduction is allowed or not allowed, since Turbotax guarantees the accuracy. But, be honest about it also.....

Kenny

Point taken Kenny! And I thought I could ride this horse myself!

 

[Yoheadden]

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!

I don’t have any experience with MLP’s, but from what I have read here, it doesn’t sound like an off the wall amount to pay. If it is really bothering you, you could get comparison quotes from another CPA to see what they would charge u.
I’m lucky in that my return has nothing too complicated. I would do it myself, but my CPA for my business does mine for no charge

 

[2177V]

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!

My CPA charges $80 to $100 an hour in Northern California so $750 translate to about one 8 hours day of work. I do not have a MLP but I do have a general partnership in a business which I do the business taxes. The other two partners agreed to pay me $400 which is what your CPA formerly charged. Mmm. Perhaps I should up my fee.

I buy TurboTax designed for general partnership so completing the form 1065 general partnership return is fairly easy. What is not easy....is the recent business income deduction called Section 199A in which Turbo Tax simply ask the question whether the business qualify for a Section 199A tax deduction.

I had to do 2 hours of research on this issue. The intent of a Section 199A tax deduction is to give non-corporation partnerships a 20% deduction off their business income which is similar to the 20% tax deduction the recent tax law gave to Corporations under the 2017 tax law change.

I discovered our partnership does not qualify but it appears that large corporations such as Amazon do qualify for a 20% deduction off their billion dollar business income. Life can be so unfair.

 

[WWDog]

Our return is simple but includes income from 6 places plus interest income from 3 sources. It takes probably 10 minutes to enter the numbers and print out the return. I paid $95 this year. The rest of the hour is used to what if with my tax man and what I might do to improve my situation for the next year. I could do the paper work myself already have a very good idea what my return will be before we meet. I do gain significant knowledge on what I might do for the next few years and what to watch out for.

 

[Bdroc]

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!

MLPs issue a K-1 to reflect your share of revenue and expense. It's a little extra work but not a big deal. I suggest taking your 2020 return to someone else early next year to get a competitive estimate.

 

[MarieIG]

We've been with our CPA for years. He usually charges us $150 for Fed & NYS returns. Our returns are not complicated, but I feel more secure having him do them. Well worth it, IMO.

Next visit, I am printing out Gumby's trigger income list and discussing Roth conversions.

 

[LA_Newsboy]

I pay about $1,200 a year in Southern California for a CPA to do my fed and state returns, with 8-10 K-1s from my MLPs.



For those complaining about MLPs, mine pay me about $90,000 a year in tax-deferred income and will pass to my heirs with a stepped-up basis, unless Congress does something rash in the coming years.

 

[Tracer]

I always did my own taxes, even before tax software. It was tedious, but I always enjoyed the challenge. I no longer itemize, but when I did, TurboTax made that chore a lot easier. I had to deal with a K-1 for a few years when I owned an MLP, but thank god no more. They are a nightmare! Today doing my taxes is a breeze. I take the standard deduction and pretty much everything from Fidelity including 1099's and calculating long and short term gains and losses is already done when importing directly into Turbo from Fidelity. Everything else is simply entering numbers into TT from my other 1099's. Piece of cake! Cost for TT about $60 with the discount from Fidelity.

 

[Sunset]

I pay about $1,200 a year in Southern California for a CPA to do my fed and state returns, with 8-10 K-1s from my MLPs.
....
For those complaining about MLPs, mine pay me about $90,000 a year in tax-deferred income and will pass to my heirs with a stepped-up basis, unless Congress does something rash in the coming years.

Sure but what did you pay for them and how long have you held them

My MLP in my IRA pays less than $1,000 UBTI so I just ignore it for the tax return.

 

[Old Microbiologist]

We used to use a tax service that specialized in expat Americans (out of Baltimore) but they made too many simple errors that required corrections. The advantage was it serves as a protection against audit. The IRS generally won't audit your tax returns if you use a CPA. We did this when we retired overseas and still had 3 rental homes in the US and I was earning $250k a year in the US as a government free-lance contractor but could claim it as foreign income exclusion plus we have 3 brokerage accounts that were actively day traded. So, somewhat complicated. We sold the homes and I stopped working so it got a lot less complicated so we do our own taxes now. We found that we know a lot more about taxes than the CPA did and my wife (not making this up) loves doing taxes. She thinks it is fun!

 

[RetMD21]

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.

Lol, not a CPA but my decision was the same. Doing multi-state returns was the final straw

 

[socca]

I buy TurboTax designed for general partnership so completing the form 1065 general partnership return is fairly easy.

Quite a few years ago, I investigated using TT for a general partnership, but discovered that it doesn't support quite a few states, including North Dakota. TT Business is also much more expensive than H&R Block Business (which is included within the H&R Block Premium & Business bundle). H&R Block supports all states, and states are free (vs. $50/state for TT). The H&R Block Business user interface is quirky, but after many years I can now get the job done with little hassle.

The intent of a Section 199A tax deduction is to give non-corporation partnerships a 20% deduction off their business income ... I discovered our partnership does not qualify but it appears that large corporations such as Amazon do qualify for a 20% deduction off their billion dollar business income.

As a net income pass-thru entity a general partnership can't "take a tax deduction". The GP allocates its net income to partners on K-1s, and each partner may take any relevant deductions. The GP merely reports on each K-1 what portion of its net income is eligible for a Section 199A deduction. I agree that the Section 199A rules are complex, but U.S. bureaucrats don't seem to have any incentive to keep things simple.

 

[dixter]

a few years ago my mom commented on the fact that she was paying for her taxes to be done and it was costing her $1200.... so being curious what you get for $1200 I asked her if she wouldn't mind to see if I could come up with the same exact return by using a computer and turbo tax... so we sit down for the afternoon and I just input the data that she had turned in to her tax guy... and we got it done and she was surprised that the program knew what to do simply by asking questions during the data inputs.... I printed it out for her and when she got her returns from the tax guy to sign before sending them in she compared and said my returns were better as she didn't owe as much taxes... so the next year I bought her the tax software and she did it on her own ... I still feel a little strange when the question on the software asks how much for tax prepare fees and I just type in $100... it actually is only $75 but I charge $25 for the effort... for my personal taxes I use turbo tax and I fill out several different times using slightly different inputs and then on April I just send in the one I like .... you do have choices in some areas and what you want to pay the IRS... maybe you put more in an IRA HSA or how you handle loses for the year or push them to another year... it all works out...

 

[sunnysideup]

Only you can decide if you need a CPA or not. Ignore those who try to convince you that you should do your own tax returns.......just because it’s cheaper.....to each his own.....

Re CPA fees....we moved from NJ to FL and expected a huge drop in fees, but it wasn’t much...We are paying a bit more than you, but but DH and I have multiple investment accounts so we have lots of input for the CPA and lots of pages/forms to our tax return. And part of their fee is based on the output... But even my parents who only had a few joints account, and a shorter return, paid more than your lower fee.

For us, the benefit of a CPA is not just in computing our taxes, he is there if we get an IRS letter. He answers our questions and concerns. And seriously, I do not want to do my own return. It’s enough work to gather the documents.

So, do what works for you. The fees seem reasonable. Heck, you can call another COA and get a price quote if you think your being overcharged....

 

[Koolau]

The advantage was it serves as a protection against audit. The IRS generally won't audit your tax returns if you use a CPA.

<SNIP>

No idea if this is actually true, but I'll admit taking a bit of comfort THINKING it's true. IRS DOES however, catch my CPAs math/stupid errors! Hope those don't eventually add up to an audit, though I think I'm ready for all but the hassle and "fear factor."

 

[target2019]

Audit protection is a holy grail, I fear.

 

[Smoeller]

Tax prep

We have pretty routine joint return and have used AARP free tax assistance for years
Yes FREE

 

[Z3Dreamer]

It is very hard for a CPA to make a living doing unrelated 1040's. Unrelated meaning no associated business. Maybe you are related to a good business customer. Maybe their practice is just starting up. Maybe you have been a client for so long, they don't want to tell you goodbye.

CPAs are also really bad at telling you "You don't need me. I don't want your business." They just charge you for their time and assume you will go away if you don't like it.

 

[RE2Boys]

It is very hard for a CPA to make a living doing unrelated 1040's. Unrelated meaning no associated business. Maybe you are related to a good business customer. Maybe their practice is just starting up. Maybe you have been a client for so long, they don't want to tell you goodbye.

CPAs are also really bad at telling you "You don't need me. I don't want your business." They just charge you for their time and assume you will go away if you don't like it.

As mentioned early, I word in the bank office of a CPA firm for 12 years. The firm was taken/over merged with a much larger multi-state firm and they actively drove away at least a third of their unrelated client base. One summer, they sent out letters telling folks what their return will cost to prepare next year and suggested that another preparer may better serve their needs. Essentially the drove away clients who they only saw once a year. They raised their minimal charge to around $600 to start.

And to report, most of the MLP work costs were when the client SOLD shares, and the fact that the MLP K1s were always delivered very late in the season.