Tax preparation amount charged

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
cjniemiec
Posts: 16
Joined: Mon Jan 15, 2018 3:04 am

Tax preparation amount charged

Post by cjniemiec » Tue Jan 23, 2018 12:01 am

My wife and I are both teachers - we are in our 40's and have 3 kids.

Do most accountants charge based on salary and the size of one's savings/investments/assets?

or would you expect each client to pay roughly the same amount to prepare one's taxes, regardless of income/savings?

Our taxes are fairly simple - lots of investments, but almost all purchases - rarely do I sell an investment.

Memory says I pay between $400-500 - which seems high when most of their work is adding updated numbers into a spreadsheet from the year before.

Thanks

navyitaly
Posts: 237
Joined: Fri Jun 13, 2014 7:18 am

Re: Tax preparation amount charged

Post by navyitaly » Tue Jan 23, 2018 12:05 am

If yours is simple forget the accountant use a commercial software program for $30 and call it a day.

123
Posts: 3609
Joined: Fri Oct 12, 2012 3:55 pm

Re: Tax preparation amount charged

Post by 123 » Tue Jan 23, 2018 12:08 am

You may want to try modern tax software like Turbo Tax. I do our returns for under $100. It's actually faster than dealing with a tax guy since you can do it all from home at your leisure, or at night when everyone else in the house is asleep.
The closest helping hand is at the end of your own arm.

cjniemiec
Posts: 16
Joined: Mon Jan 15, 2018 3:04 am

Re: Tax preparation amount charged

Post by cjniemiec » Tue Jan 23, 2018 12:23 am

Thanks - I should have included....

I agree, turbo tax is a no brainer - except we own rental property and I don't trust my ability to properly take care of it via turbo.

It has sat vacant for a number of years due to a structure issue - but still is eligible for some deductions (at least that is my understanding)

I'm unwilling to educate myself and risk doing something wrong - therefore, am comfortable paying an accountant - but would love to know what is a fair/reasonable amount charged.

Thanks

ElwoodBlues
Posts: 66
Joined: Wed Jul 19, 2017 10:00 pm

Re: Tax preparation amount charged

Post by ElwoodBlues » Tue Jan 23, 2018 12:48 am

I think I've been paying about $160 for MFJ plus they do my college kids returns for free. I don't believe their fee is based on number or value of assets, although I might expect them to charge a little more for rental property or a side gig or something else that substantially increases their doc review or data entry time.

anonsdca
Posts: 186
Joined: Mon Jun 01, 2015 11:47 pm

Re: Tax preparation amount charged

Post by anonsdca » Tue Jan 23, 2018 1:23 am

cjniemiec wrote:
Tue Jan 23, 2018 12:23 am
Thanks - I should have included....

I agree, turbo tax is a no brainer - except we own rental property and I don't trust my ability to properly take care of it via turbo.

It has sat vacant for a number of years due to a structure issue - but still is eligible for some deductions (at least that is my understanding)

I'm unwilling to educate myself and risk doing something wrong - therefore, am comfortable paying an accountant - but would love to know what is a fair/reasonable amount charged.

Thanks
I have been in and out of this boat. Last year I did my own taxes, the two years prior I hired an EA. Prior to that I did my own, but in the mid-2000's I had some tax issues so hired an EA. I have rental property, various accounts but what scared me off was some moving expenses plus income in two+states.

As you mention, if you are not willing to educate yourself, or just plain nervous ---pay to have them done. My EAs charged 350-500. When it hit the $500 amount I said, OK, I am going to educate myself. I used Turbo Tax last year and carefully reviewed all my EA returns for the past two years. I think I did alright.

User avatar
BL
Posts: 8235
Joined: Sun Mar 01, 2009 2:28 pm

Re: Tax preparation amount charged

Post by BL » Tue Jan 23, 2018 1:46 am

I expect that you pay based on each of the various forms filled or generated, + some starting basic number. How many pages (forms) did you have last year? I recall the computer generated a bill, back in the day when I did taxes for H&R Block. We tended to discount those numbers, but that might be rare in urban areas.

There could also be a formula to calculate based on estimated time to complete the forms. I believe I have seen that estimate on various forms and other places.

If you choose not to do it yourself, then you will either have to pay for it there or go elsewhere for something cheaper, which may not mean better.

User avatar
BL
Posts: 8235
Joined: Sun Mar 01, 2009 2:28 pm

Re: Tax preparation amount charged

Post by BL » Tue Jan 23, 2018 1:55 am

cjniemiec wrote:
Tue Jan 23, 2018 12:23 am
Thanks - I should have included....

I agree, turbo tax is a no brainer - except we own rental property and I don't trust my ability to properly take care of it via turbo.

It has sat vacant for a number of years due to a structure issue - but still is eligible for some deductions (at least that is my understanding)

I'm unwilling to educate myself and risk doing something wrong - therefore, am comfortable paying an accountant - but would love to know what is a fair/reasonable amount charged.

Thanks
You are ultimately responsible for the return, whether you prepared it or not. So educating yourself should probably be a prerequisite whether you do the taxes yourself or not.

Daryl
Posts: 423
Joined: Thu May 22, 2008 9:34 am
Location: Malvern, PA (I like to sleep near my money!)

Re: Tax preparation amount charged

Post by Daryl » Tue Jan 23, 2018 5:31 am

In most cases, there isn't a lot of risk in doing your taxes yourself. If you make a mistake, the IRS is likely to send you a letter explaining the error and what needs to be done to fix it.

The real value in hiring a tax professional isn't the compliance work that we've been discussing, rather it is in the upfront planning / strategy work and understanding the underlying rental business and what can be done (legally) to maximize after tax income.

carolinaman
Posts: 3204
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

Re: Tax preparation amount charged

Post by carolinaman » Tue Jan 23, 2018 7:20 am

cjniemiec wrote:
Tue Jan 23, 2018 12:23 am
Thanks - I should have included....

I agree, turbo tax is a no brainer - except we own rental property and I don't trust my ability to properly take care of it via turbo.

It has sat vacant for a number of years due to a structure issue - but still is eligible for some deductions (at least that is my understanding)

I'm unwilling to educate myself and risk doing something wrong - therefore, am comfortable paying an accountant - but would love to know what is a fair/reasonable amount charged.

Thanks
Good point. That is the kind of issue that merits expert advice. If you are claiming deductions for the property, having a CPA do your return provides greater assurance that your return is correct and less likely to be audited. CPAs have greater credibility with IRS than us mere mortals.

forgeblast
Posts: 137
Joined: Fri Oct 13, 2017 8:45 am
Location: PA
Contact:

Re: Tax preparation amount charged

Post by forgeblast » Tue Jan 23, 2018 7:32 am

Teacher here too, If you go to the https://www.neamb.com/ which is the NEA member benefits section, there is normally a savings through Jackson Hewitt. I think we paid $250, but I also have a small side business and we have other incomes we have to pay tax on.

panhead
Posts: 269
Joined: Fri Feb 22, 2013 10:53 am

Re: Tax preparation amount charged

Post by panhead » Tue Jan 23, 2018 8:00 am

anonsdca wrote:
Tue Jan 23, 2018 1:23 am
As you mention, if you are not willing to educate yourself, or just plain nervous ---pay to have them done. My EAs charged 350-500. When it hit the $500 amount I said, OK, I am going to educate myself. I used Turbo Tax last year and carefully reviewed all my EA returns for the past two years. I think I did alright.
This is exactly what happened to me. Once it hit the $500 mark I figured it was worth my time to (better) educate myself. So, yes, I think the OP is in the range that isn't unreasonable, but I think that $500 is generally high. I'd say either shop around a bit or suck it up and educate yourself. If you decide to learn, looking at the previous year(s) tax returns will greatly help you understand what the CPA did to get those deductions you speak of. I also have rental property so I get the added complexity, though it isn't "that" bad. In my case, when I decided to take over, I found many mistakes that my CPA had made in the past (I have a previous post about one of these),

Either way, do what makes you comfortable, but I would say finding a good CPA is difficult, only because they never get evaluated unless a problem pops up, or you really go over their work carefully. If you don't review their work, you may never know if they're good or not, and if you do, you probably have the knowledge to do this yourself.

Good luck.

-Pan-

Edited for clarification
Last edited by panhead on Tue Jan 23, 2018 8:08 am, edited 1 time in total.

Angelus359
Posts: 845
Joined: Tue Mar 04, 2014 12:56 am

Re: Tax preparation amount charged

Post by Angelus359 » Tue Jan 23, 2018 8:03 am

I just use turbotax
IT-DevOps System Administrator

User avatar
HueyLD
Posts: 5938
Joined: Mon Jan 14, 2008 10:30 am

Re: Tax preparation amount charged

Post by HueyLD » Tue Jan 23, 2018 8:16 am

It is not that hard to find a good CPA if you are willing to pay to the north of $1,000 for more than tax prep.

Due to competition from retail tax software, most CPA firms (except the very small ones) in my area have set a minimum price of $1,000+ for individual returns unless they are already maintaining clients' business records. In other words, potential clients who generate little revenues are not worth the hassle.

It is the economic reality.

J295
Posts: 1552
Joined: Sun Jan 01, 2012 11:40 pm

Re: Tax preparation amount charged

Post by J295 » Tue Jan 23, 2018 8:24 am

Fee amount you were charged seems reasonable , at least in these parts. It’s based on the accountant’s work, not your income or assets

panhead
Posts: 269
Joined: Fri Feb 22, 2013 10:53 am

Re: Tax preparation amount charged

Post by panhead » Tue Jan 23, 2018 3:16 pm

HueyLD wrote:
Tue Jan 23, 2018 8:16 am
It is not that hard to find a good CPA if you are willing to pay to the north of $1,000 for more than tax prep.
Just because you paid a lot does not mean they are good. One needs a metric, and this is where it gets difficult. If your metric is not being audited, then that's a very low bar and you still don't know if it has been done correctly.
HueyLD wrote:
Tue Jan 23, 2018 8:16 am
Due to competition from retail tax software, most CPA firms (except the very small ones) in my area have set a minimum price of $1,000+ for individual returns unless they are already maintaining clients' business records. In other words, potential clients who generate little revenues are not worth the hassle.

This.
This is pretty much what my accountant said to me as well. The retail tax shops can do this work for very cheap and it's not cost effective for a CPA to try to compete on price.

These are the reasons I have decided to do it myself. If I have a very complicated year, I may have the return reviewed by a CPA, but now some of the tax software companies offer this service as well (or so I read).

Johnsson
Posts: 120
Joined: Mon Jul 17, 2017 2:28 pm

Re: Tax preparation amount charged

Post by Johnsson » Tue Jan 23, 2018 3:32 pm

Turbotax Premier (for $25!! :D )

You will NEVER understand taxes so well as when you do them yourself. What you learn is well worth the aggravation.

A minor pain the 1st time but easy peasy after that (I have capital gains, dividends, charitable contributions and rental properties). It's all in the data collection (that you're doing anyway).

Note: I lied a little. You understand them even better when you do them with a pencil and a calculator.

Post Reply