What does your CPA charge?

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Don46
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What does your CPA charge?

Post by Don46 »

I have been paying from $1500 to $2000 each year to a CPA for doing my taxes. This year he charged about $1500 but another $550 for advice that should have involved no more than one hour's work. He seemed to drag it out and make it more complicated than it was.
This is a joint return with two salaries, one taxable portfolio that includes several Limited Partnerships that require K-1 forms, a commercial real estate investment, and various business expense deductions. I fill out a form he supplies, and I do it pretty carefully. I supply all the year end forms and try to make his job easy so it will save me money. I don't want to do my own taxes, but I'm mildly frustrated by the feeling that he's charging me a lot for what ought to be about a four hour job I would guess. Adding to that, he is always months late. I've never filed on time and this year filed in September.
How do other people find a good CPA?
spaddlewit
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Re: What does your CPA charge?

Post by spaddlewit »

$500 for a married joint return. But she's also a friend of the family, so I'm not sure if that factors into her pricing for me.
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FrugalInvestor
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Re: What does your CPA charge?

Post by FrugalInvestor »

I went back to doing my own (with the help of TurboTax) when the CPA's charges exceeded $200. My returns are very straightforward.
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bottomfisher
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Re: What does your CPA charge?

Post by bottomfisher »

Approximately $1,300 - $1,400 per quarter. Performs personal taxes as well as taxes for my LLC.
travellight
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Re: What does your CPA charge?

Post by travellight »

Mine charged $800 for many years then raised it one year to $1200 so I left. There was no increase in work. I have found a new CPA who charged me $1000 flat fee. He has done so much work on it, part of the learning curve with a new client. I really appreciate it and plan to use him next year when there will be much less work since the groundwork has been done and he can reap the reward, same fee/less work.
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manwithnoname
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Re: What does your CPA charge?

Post by manwithnoname »

Don46 wrote:I have been paying from $1500 to $2000 each year to a CPA for doing my taxes. This year he charged about $1500 but another $550 for advice that should have involved no more than one hour's work. He seemed to drag it out and make it more complicated than it was.
This is a joint return with two salaries, one taxable portfolio that includes several Limited Partnerships that require K-1 forms, a commercial real estate investment, and various business expense deductions. I fill out a form he supplies, and I do it pretty carefully. I supply all the year end forms and try to make his job easy so it will save me money. I don't want to do my own taxes, but I'm mildly frustrated by the feeling that he's charging me a lot for what ought to be about a four hour job I would guess. Adding to that, he is always months late. I've never filed on time and this year filed in September.
How do other people find a good CPA?
What do you think you should be paying?

why do you think a return should be about only a 4 hour job?

What was the advice that you think should have involved no more than 1 hour's work?

K-1s, business deductions and commercial RE investments are complicated. Try doing them yourself. Business deductions have high audit potential which requires careful preparation.

I am always amused by taxpayers who think they know how much time should be spent on providing advice on a tax question that they cannot figure out the answer to. If you know how much time should be spent then you should be able to answer the question correctly yourself in that time frame.
umfundi
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Re: What does your CPA charge?

Post by umfundi »

I pay about $500 for the family returns: Joint including schedules C and D plus separate returns for two sons with kiddie taxes. State and Federal returns

I am astounded that anyone is paying thousands for this, since it is equivalent to a few hours with TurboTax.

I usually buy TaxCut (HR Block) and run my own numbers in January. Then, I turn it all over to the CPA for the details.

Keith
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brainstem
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Re: What does your CPA charge?

Post by brainstem »

Unless we know someone's scope of tax reporting, these comparative numbers are not exactly helpful .......
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InvestorNewb
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Re: What does your CPA charge?

Post by InvestorNewb »

I pay $1,800 + tax for corporate taxes.

To be fair: the amount you are paying seems reasonable.
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Grt2bOutdoors
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

Let's see. A 1040, two state returns, rental property, standard A,B,D,E schedules, various other schedules, a K-1, and a 1040A for minor children. Grand total is $75 for yearly software update. Labor charge: a cup of coffee and two biscotti. :D
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

umfundi wrote:I pay about $500 for the family returns: Joint including schedules C and D plus separate returns for two sons with kiddie taxes. State and Federal returns

I am astounded that anyone is paying thousands for this, since it is equivalent to a few hours with TurboTax.

I usually buy TaxCut (HR Block) and run my own numbers in January. Then, I turn it all over to the CPA for the details.

Keith
I'm astounded you'd pay $500 especially since you run your own numbers. The minors return shouldn't take more than 10-20 minutes each if it's relatively straightforward.
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Grt2bOutdoors
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

manwithnoname wrote:
Don46 wrote:I have been paying from $1500 to $2000 each year to a CPA for doing my taxes. This year he charged about $1500 but another $550 for advice that should have involved no more than one hour's work. He seemed to drag it out and make it more complicated than it was.
This is a joint return with two salaries, one taxable portfolio that includes several Limited Partnerships that require K-1 forms, a commercial real estate investment, and various business expense deductions. I fill out a form he supplies, and I do it pretty carefully. I supply all the year end forms and try to make his job easy so it will save me money. I don't want to do my own taxes, but I'm mildly frustrated by the feeling that he's charging me a lot for what ought to be about a four hour job I would guess. Adding to that, he is always months late. I've never filed on time and this year filed in September.
How do other people find a good CPA?
What do you think you should be paying?

why do you think a return should be about only a 4 hour job?

What was the advice that you think should have involved no more than 1 hour's work?

K-1s, business deductions and commercial RE investments are complicated. Try doing them yourself. Business deductions have high audit potential which requires careful preparation.

I am always amused by taxpayers who think they know how much time should be spent on providing advice on a tax question that they cannot figure out the answer to. If you know how much time should be spent then you should be able to answer the question correctly yourself in that time frame.
A K-1 is complicated if you are the CPA actually preparing it for distribution. A K-1 is not complicated if all you are doing is copying numbers from the various K-1 lines to your software package. Come on! Commercial real estate is complicated? How so? - MACRS depreciation, repairs, capital expenditures, expenses, rental income, vacancy, taxes, insurance, wage expense and associated employer taxes if you have someone on the payroll. Complicated? It is if you are a REIT, in that case you'd have your own staff or you'd outsource the accounting and it would be a contract price, not a one-time deal. I'm always amused when I hear CPA's hide behind the dread K-1 form - oh, the horror, it's so difficult to copy numbers. High income also has high audit potential - keep good records and you'll make out okay. If you don't like the outcome, you can always appeal the audit findings.
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Grt2bOutdoors
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

spaddlewit wrote:$500 for a married joint return. But she's also a friend of the family, so I'm not sure if that factors into her pricing for me.
A friend of the family? I must be too honest, if I were your friend I'd charge a nominal amount ($100-200), $500 is the going rate for a standard 1040, a couple of schedules and a state return. Hate to tell you - your discount is non-existent, you are just a client.
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Grt2bOutdoors
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

Don46 wrote:I have been paying from $1500 to $2000 each year to a CPA for doing my taxes. This year he charged about $1500 but another $550 for advice that should have involved no more than one hour's work. He seemed to drag it out and make it more complicated than it was.
This is a joint return with two salaries, one taxable portfolio that includes several Limited Partnerships that require K-1 forms, a commercial real estate investment, and various business expense deductions. I fill out a form he supplies, and I do it pretty carefully. I supply all the year end forms and try to make his job easy so it will save me money. I don't want to do my own taxes, but I'm mildly frustrated by the feeling that he's charging me a lot for what ought to be about a four hour job I would guess. Adding to that, he is always months late. I've never filed on time and this year filed in September.
How do other people find a good CPA?
A CPA - they are state licensed, they have taken extensive collegiate level courses in theory and practice of accounting, auditing and business law, passed a rigorous exam composed of 4 parts - auditing, financial, cost, business law. Where is the value in a CPA? You receive maximum value when you employ their services in providing an attestation that the financial books and records of a legal entity (company (public/private),llc,sole proprietorship) are presented fairly in accordance with Generally Accepted Accountng Principles. That is a man-hour intensive (sometimes it can go for months) examination that ensures theory has been applied to practice. Why? Well, because the CPA can be held accountable in court and by government if they have been found to act in a criminally negligent or just plain negligent manner and fail to act in a manner representative of the profession. You have monetary recourse if the court finds for you. They can lose their license to practice as a certified public accountant. They are subject to censure by their peers. They have to take continuing education courses to maintain their license, though subject matter can vary - they aren't re-learning how to make journal entries, t-accounts or running a trial balance. They are learning about new regulations, laws, etc. that may affect the financial statements of companies.

Now - CPA's also provide other services including taxation and consulting services, but they do not need the CPA to provide such services - that is why you can pass by a local HR Block, Liberty Tax Service, Joe's Tax Accounting services and not see the word CPA on the shingle. CPA's can be worth the money, but most times unless you are using them for attestation services, you can find competent counsel with an enrolled agent or someone who has been performing taxation services for a long period of time and likely pay a heck of a lot less.
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kramer
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Re: What does your CPA charge?

Post by kramer »

My dad was a tax man for many years, enrolled agent and former comptroller and extensive accounting experience and he handled many corporations accounting and taxes as personal clients. He was not a CPA and didn't charge like one despite having a stellar reputation with his clients. I think you are paying too much and don't really need the services of a CPA to begin with.

You can find a list of enrolled agents in your area by looking online. Perhaps find one that is doing a lot of business and show him your return and ask him for a ballpark estimate. Now might be a good time to do your research. My dad worked long hours all tax season because there was high demand for his services and that may not be the best time to first approach a tax accountant.
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

kramer wrote:My dad was a tax man for many years, enrolled agent and former comptroller and extensive accounting experience and he handled many corporations accounting and taxes as personal clients. He was not a CPA and didn't charge like one despite having a stellar reputation with his clients. I think you are paying too much and don't really need the services of a CPA to begin with.

You can find a list of enrolled agents in your area by looking online. Perhaps find one that is doing a lot of business and show him your return and ask him for a ballpark estimate. Now might be a good time to do your research. My dad worked long hours all tax season because there was high demand for his services and that may not be the best time to first approach a tax accountant.
+1
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jobst
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Re: What does your CPA charge?

Post by jobst »

I pay $500 for a joint return (two salaries, some overseas income, federal and state). As a resident alien not familiar with the byzantine US tax code, I consider it money well spent to make sure everything is in line.
jared
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Re: What does your CPA charge?

Post by jared »

Grt2bOutdoors wrote:
A CPA - they are state licensed, they have taken extensive collegiate level courses in theory and practice of accounting, auditing and business law, passed a rigorous exam composed of 4 parts - auditing, financial, cost, business law. Where is the value in a CPA?
The CPA Exam has 4 parts:

1) Financial Accounting and Reporting
2) Auditing and Attestation
3) Business Environment and Concepts (Cost accounting is part of this exam, but there are many other topics covered)
4) Regulation (60-70% of this exam covers federal taxation. The rest of the exam covers a combination of Business Law, Ethics, Professional and Legal Responsibilities)
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

jared wrote:
Grt2bOutdoors wrote:
A CPA - they are state licensed, they have taken extensive collegiate level courses in theory and practice of accounting, auditing and business law, passed a rigorous exam composed of 4 parts - auditing, financial, cost, business law. Where is the value in a CPA?
The CPA Exam has 4 parts:

1) Financial Accounting and Reporting
2) Auditing and Attestation
3) Business Environment and Concepts (Cost accounting is part of this exam, but there are many other topics covered)
4) Regulation (60-70% of this exam covers federal taxation. The rest of the exam covers a combination of Business Law, Ethics, Professional and Legal Responsibilities)
Section names may have changed, by and large the theory behind the content has not with the exception of new auditing techniques with the advent of the technology age. Still the majority of a CPA's value is in attestation. The majority of a CPA partnership's revenue and partnership income growth lies in consulting. For a test of that, view any major publicly traded corporation's proxy statement where they disclose accounting and consulting fees paid - the largest chunk goes towards consulting versus attestation. The largest benefit for the shareholder is in attestation, not consulting. Accounting firms love to provide consulting services because the fees and profit margins are much higher, the value?- the jury is still out on that.
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Don46
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Re: What does your CPA charge?

Post by Don46 »

Thanks for all these responses. I'm not sure what I should be paying, and that is why I asked my question. I don't find myself asking friends what they pay for things. Most of my friends do not have incomes and tax returns that are comparable. They probably pay $300 a year or do it themselves and would think I should too.

How have some of you identified a good CPA? Do you ask friends? Brokers? Bankers? I'm open to suggestions.
Once I get a couple of leads, do you think it would be wise, useful to take last year's return to a prospective CPA and ask: what would you charge for this? What would you do differently? Get an estimate, in other words, and ask what kind of advice on tax planning I could expect and at what cost.
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Blue
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Re: What does your CPA charge?

Post by Blue »

We paid $1500 this past year for a return very similar to OP's description.
Grt2bOutdoors
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Re: What does your CPA charge?

Post by Grt2bOutdoors »

Don46 wrote:Thanks for all these responses. I'm not sure what I should be paying, and that is why I asked my question. I don't find myself asking friends what they pay for things. Most of my friends do not have incomes and tax returns that are comparable. They probably pay $300 a year or do it themselves and would think I should too.

How have some of you identified a good CPA? Do you ask friends? Brokers? Bankers? I'm open to suggestions.
Once I get a couple of leads, do you think it would be wise, useful to take last year's return to a prospective CPA and ask: what would you charge for this? What would you do differently? Get an estimate, in other words, and ask what kind of advice on tax planning I could expect and at what cost.
Do not ask a broker or banker - while you would expect your tax preparer to act in strict confidence, that may not be the case if the referral source was a broker or banker with whom they have a business relationship with - in most cases, they cross-refer and likely are compensated for it in some shape, form or manner. If you do get a couple of leads, don't show them the goods just yet - instead ask them what do you charge to prepare a standard 1040, Schedules (whichever you have used in the past), Forms (whichever you have used before), etc. Ask how many years they have practiced tax. Ask if they've had practical experience in an IRS tax audit and what was the outcome. Finally, use your gut if you don't like how they respond or you hair stands up on back of neck - you know not to go with them.
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Don46
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Re: What does your CPA charge?

Post by Don46 »

manwithnoname wrote:
What do you think you should be paying?

why do you think a return should be about only a 4 hour job?

What was the advice that you think should have involved no more than 1 hour's work?

K-1s, business deductions and commercial RE investments are complicated. Try doing them yourself. Business deductions have high audit potential which requires careful preparation.

I am always amused by taxpayers who think they know how much time should be spent on providing advice on a tax question that they cannot figure out the answer to. If you know how much time should be spent then you should be able to answer the question correctly yourself in that time frame.
I don't know what I should be paying; that was why I posted the question. I don't want to do my own taxes or research complicated tax questions. I want professional expertise. The question I asked my CPA had to do with the taxes I would pay on a 1031 commercial real estate investment that my CPA had helped set up in 2005. The data he provided came from one page in the previous year's tax return which summarizes past depreciation and cost basis on the investment. He added some penciled computations on the additional depreciation for the current year and applied new tax capital gains tax rates in effect for 2013. He also spoke with me on the phone after sending me the scanned page with the note, but the phone conversation added nothing and he seemed to be dragging out what ought to have been straightforward information. I was very surprised to be billed $550. I did not protest the bill, but it aroused distrust.
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Re: What does your CPA charge?

Post by travellight »

I found 3 CPAs by internet research for best reviews and one was a recommendation by a guy I met once at my bank. I gave two of them my past year's tax return because it showed the complexity and work ahead and asked for a bid. The one recommended by the bank guy came in with the lowest bid and was most service oriented so I went with him. He has been great so far. The work was far more than either of us anticipated and he held to his original price that he had promised to adhere to.
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travellight
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Re: What does your CPA charge?

Post by travellight »

btw, I pay $1000 for my income taxes, k1, and 6 rental properties, sfrs.
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obgyn65
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Re: What does your CPA charge?

Post by obgyn65 »

To the OP: I used HR Block to do my taxes and it costs me about $400 per year.
Last edited by obgyn65 on Fri Nov 01, 2013 3:54 am, edited 1 time in total.
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umfundi
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Re: What does your CPA charge?

Post by umfundi »

Grt2bOutdoors wrote:
umfundi wrote:I pay about $500 for the family returns: Joint including schedules C and D plus separate returns for two sons with kiddie taxes. State and Federal returns

I am astounded that anyone is paying thousands for this, since it is equivalent to a few hours with TurboTax.

I usually buy TaxCut (HR Block) and run my own numbers in January. Then, I turn it all over to the CPA for the details.

Keith
I'm astounded you'd pay $500 especially since you run your own numbers. The minors return shouldn't take more than 10-20 minutes each if it's relatively straightforward.
Well, I am a procrastinator and he has saved me a lot over the years, with things like tuition credits and some weird credit I got after I retired and got a part time job.

Actually, this is quite a funny story: In 2004 I figured my approximate taxes, paid the bill (with a cushion of about $100) and filed an extension. Come August, I decided to bag it, the kiddie tax iterations between my return and the kids' were too much hassle.

Four years later, I got a notice from the IRS that they had figured my 2004 tax as single with no dependents, and that with interest and penalties I owed $48,000! So, I found my CPA.

The net of the story is that the IRS acknowledged I was entitled to an $87 refund for 2004, but they would not pay it since the statute of limitations for refunds had expired. The CPA charged me less than $250 for this exercise, he has my business for life. I was amazed to find that if you do not owe money (and can prove it) there is nothing the IRS can do to penalize you if you do not file a return.

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G12
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Re: What does your CPA charge?

Post by G12 »

My tax filing scenario is quite similar to the OP's. While I am more than capable of computing/filing the return myself and run estimates the second half of any given year to fine tune numbers and take any tax advantaged steps, etc my CPA is a personal friend and he charges me a whopping $250/yr for providing him very clear documentation and backup. I also like that he would represent me in any tax dispute with no additional charge and when one starts filing returns with multiple business interests, numerous brokerage accounts, multiple RE investments, etc a CPA stamp on the return can't hurt. I am not sure what my breakpoint would be for resuming self filing status, probably $400 or so.
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Rob5TCP
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Re: What does your CPA charge?

Post by Rob5TCP »

I have been paying the same $1,000 to do my corporate and personal returns since I started my business 20 years ago. I give my information in quite the coherent form
(detailed financial statements). His could raise them, but we go back even further. I will probably pay the same rate for the next 10 years (when I will probably retire).
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Re: What does your CPA charge?

Post by Cuzz35 »

Some of the partners at my firm have a billing rate of $400-$500 an hour. They don't prepare any of the returns themselves but they still bill about $100-$125 for associate level staff.
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Re: What does your CPA charge?

Post by fredflinstone »

On the advice of people on this Forum, I have been using H&R Block "professional" services. This is H&R Block's division for people with somewhat complicated tax needs.

I saved about a thousand dollars per year switching from a CPA and have been happy with the results. That said, I still go to the CPA once in awhile if an unusually complex issue arises.

I do not think $1500/yr is unreasonable given the OP's situation but he or she can probably do it for a bit less using H&R Block.
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