CPA (tax) advice - costs & finding one

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psteinx
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CPA (tax) advice - costs & finding one

Post by psteinx »

My brother and I are handling our elderly parents' finances.

2023 is currently on extension (self-filed), quarterly '24s have been paid.

'23 return (fed and Missouri) should be a mix of 1099 income, RMDs, a few minor odds and ends, standard deduction, and, most notably, 2 K-1s. AGI in the $200-300K range.

One of the K-1s is a mostly (financially) dormant company - no money flowing to/from my parents, minor updates in some of the carryover balances. Notably, this K-1 is hard to extract from the company - I don't have the '23 in hand yet, not sure if/when I'll get it (i.e. close to the 10/15/24 filing deadline). I don't think it'll change taxes due in any case.

Other K-1 is significantly more active. Old investment into a business that was sold, with ongoing payments. The '23 payments to may parents are in the five figures, but figuring out the gain/loss from those payments is complex (tricky basis, prior credits received, etc.)

Want to use a preparer for simplicity, accuracy, accountability. DIY is ~out of the question.

Had been using one small local firm (~3 preparers) on similar return in prior years, at cost of ~$800. Need to switch to new one for 2023. Have 2022 returns in hand (printed and electronic) and some prior years (paper).

===

Reached out to 2 preparers recommended to me.

One was regional/national firm (Wipfli) with ~200 preparers/CPAs in St. Louis. Preparer I spoke to was familiar with the specific K-1 company that's in payout (that's how the recommendation came). Said minimum fee $1500, but for this return, likely $2000. Focus is more business returns, but they do some purely individual returns such as this one. Would likely assign return to more junior person, overseen by senior person/partner.

Other was very small local - ~two-man shop plus some seasonal part-time help. Seemed comfortable with my description of the K-1s, carry forwards on them, etc. Said price would be $250-300.

I was, frankly, blown away by the second figure - seems WAY too low to me. I'm not looking to overpay, but also want adequate service, accuracy, etc. First one, much bigger firm, pricier. Maybe high fee justified for first year, but ideally would like a little lower fee ongoing. (Unfortunately both K-1s likely to drag on for years with no easy way to exit.)

Or, open to finding other preparers/CPAs, but not sure how to do so beyond simple internet searching. I think we are above H&R Block level here, but below big-four level.
jebmke
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Re: CPA (tax) advice - costs & finding one

Post by jebmke »

seems low to me too. Do they have friends in the area who use firms?
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AnswerMan
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Re: CPA (tax) advice - costs & finding one

Post by AnswerMan »

I would not use the firm with the $300 quote. Sometimes you get what you pay for. Shoddy tax prep work can cost far more than saving a few hundred in preparation fees. Seems like there should be some decent options between the $800-$1,500 range for a return like you describe. Most states have a CPA society with a "find a preparer" option. I would consider starting there. You can also find paid preparers using the IRS website.

https://irs.treasury.gov/rpo/rpo.jsf
nonnie
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Re: CPA (tax) advice - costs & finding one

Post by nonnie »

You might also consider using an enrolled agent.

https://www.naea.org/
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neurosphere
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Re: CPA (tax) advice - costs & finding one

Post by neurosphere »

Regarding the $300, I've seen some quality returns prepared by people charging in that range. It's quite surprising. Perhaps not returns with a complicated K-1 however.

There is an enormous range of costs for similar tax prep services, and many times the cost does not align with the quality. There are some very competent tax preparers out there who simply are not entrepreneurs when it comes to pricing their services and will offer those services for well below market rates. Or who live in low cost areas and are thrilled to make $75,000 a year because that's a great salary compared to their upbringing. On the other end, there are busy people/firms who will charge "a lot" (however you define that) because people will take them up on it.

For very similar sets of personal taxes, I've seen prices range from $600 to $7000. Yes, these are prices actually paid in the same geographic area for a married couple with typical tax issues that would considered quite straightforward by BH standards. The $7000 taxes only had one added wrinkle, which was a one time exercise of incentive stock options, but which likely would take an experienced preparer 10 minutes to enter into software and then triple check the inputs/outputs for accuracy. The next year they found a new preparer for their taxes for $2500 (and there were errors in the $7000 taxes which would have cost $8000 in unnecessary tax had the error not been found and taxes amended).

Summary: Cost and quality are not always correlated.

That said, I agree with AnswerMan that $800 to $1500 would be the range I would expect to pay from a credentialed tax preparer (CPA or EA...although there are many great preparers out there without either designation).
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Cuzz35
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Re: CPA (tax) advice - costs & finding one

Post by Cuzz35 »

I would ask Wipfli if they have any firms that they refer smaller work to. My firm is much smaller than them on a national level and our minimums are double theirs for 1040 work. We have an internal list of firms we refer smaller prospects to.
Dufus
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Re: CPA (tax) advice - costs & finding one

Post by Dufus »

If you are willing to post which state/region your parents reside in, someone may have someone in the area they could recommend.
retiredude24
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Re: CPA (tax) advice - costs & finding one

Post by retiredude24 »

I would suggest whomever you end up going with get an engagement letter which spells out work to be done and fees before any work is done.
Topic Author
psteinx
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Re: CPA (tax) advice - costs & finding one

Post by psteinx »

Dufus wrote: Wed Jul 10, 2024 9:43 am If you are willing to post which state/region your parents reside in, someone may have someone in the area they could recommend.
St. Louis Missouri (I think it was ~in the OP)
Topic Author
psteinx
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Re: CPA (tax) advice - costs & finding one

Post by psteinx »

AnswerMan wrote: Tue Jul 09, 2024 3:58 pm I would not use the firm with the $300 quote. Sometimes you get what you pay for. Shoddy tax prep work can cost far more than saving a few hundred in preparation fees. Seems like there should be some decent options between the $800-$1,500 range for a return like you describe. Most states have a CPA society with a "find a preparer" option. I would consider starting there. You can also find paid preparers using the IRS website.

https://irs.treasury.gov/rpo/rpo.jsf
Unfortunately, that link doesn't seem especially helpful - just returns lots of individual's names (no addresses, no firm names) within radius X of the zipcode I enter. Not really actionable, unless I'm missing something.
Topic Author
psteinx
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Re: CPA (tax) advice - costs & finding one

Post by psteinx »

Cuzz35 wrote: Wed Jul 10, 2024 9:24 am I would ask Wipfli if they have any firms that they refer smaller work to. My firm is much smaller than them on a national level and our minimums are double theirs for 1040 work. We have an internal list of firms we refer smaller prospects to.
Well, I'm reluctant to blow off the Wipfli contact, in case we *do* decide to go with him.

So, based on the desciption in the OP (individual 1040, 1099 & RMD income, 2 K-1s, one of which has inflows and a somewhat complex history/backstory including basis, claimed credits, etc.), what might your firm charge? (I'm not soliciting you/your firm for the job, just trying to gauge what are reasonable rates.)
Topic Author
psteinx
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Re: CPA (tax) advice - costs & finding one

Post by psteinx »

neurosphere wrote: Wed Jul 10, 2024 8:26 am Regarding the $300, I've seen some quality returns prepared by people charging in that range. It's quite surprising. Perhaps not returns with a complicated K-1 however.

...

That said, I agree with AnswerMan that $800 to $1500 would be the range I would expect to pay from a credentialed tax preparer (CPA or EA...although there are many great preparers out there without either designation).
I worry the lowball guy would either do a low-end job, or be uncommunicative - I anticipate that for at least the first tax return, there will be some back and forth and we (brother and I) will want/need some handholding and/or have questions about the returns prepared. The previous year's preparer (in the $800 range) didn't want to talk to me to explain how she produced the numbers related to the K-1 (which had some counter-intuitive/non-obvious results, tax-wise), and she was charging ~3x what the lowball guy this year is saying...

That said, I'm just not sure how to find someone good who might be in that middle range.
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psteinx
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Re: CPA (tax) advice - costs & finding one

Post by psteinx »

nonnie wrote: Tue Jul 09, 2024 5:42 pm You might also consider using an enrolled agent.

https://www.naea.org/
I'm not averse to this, though I'm not entirely sure how an EA would compare to a CPA in terms of complexity handled, reliability/accuracy, and cost. It's kind of like comparing an MD to a nurse practitioner (maybe), but I'm on even shakier grounds with the EA designation. In any case, I'd still need to find one.

Just doing an internet search or a Yelp search seems, I dunno, kinda random...
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yankees60
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Re: CPA (tax) advice - costs & finding one

Post by yankees60 »

psteinx wrote: Wed Jul 10, 2024 2:18 pm
nonnie wrote: Tue Jul 09, 2024 5:42 pm You might also consider using an enrolled agent.

https://www.naea.org/
I'm not averse to this, though I'm not entirely sure how an EA would compare to a CPA in terms of complexity handled, reliability/accuracy, and cost. It's kind of like comparing an MD to a nurse practitioner (maybe), but I'm on even shakier grounds with the EA designation. In any case, I'd still need to find one.

Just doing an internet search or a Yelp search seems, I dunno, kinda random...
Though most CPAS have excellent tax knowledge and prepare a lot of tax returns That is not all the work they do in their practice. On the other hand the sole purpose of being an enrolled agent is to prepare tax returns and be able to represent Clients in tax court. So it is possible that Many enrolled agents Are more tax aware than a lot of CPAS.
Last edited by yankees60 on Wed Jul 10, 2024 7:29 pm, edited 1 time in total.
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LotsaGray
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Re: CPA (tax) advice - costs & finding one

Post by LotsaGray »

psteinx wrote: Wed Jul 10, 2024 2:18 pm
nonnie wrote: Tue Jul 09, 2024 5:42 pm You might also consider using an enrolled agent.

https://www.naea.org/
I'm not averse to this, though I'm not entirely sure how an EA would compare to a CPA in terms of complexity handled, reliability/accuracy, and cost. It's kind of like comparing an MD to a nurse practitioner (maybe), but I'm on even shakier grounds with the EA designation. In any case, I'd still need to find one.

Just doing an internet search or a Yelp search seems, I dunno, kinda random...
EA is by definition a tax expert. Many CPAs are not. There are also many CPA who are expert in taxes. So really you cannot tell by the designation the skill level.

CPAs do have professional standards where if the come up to something they cannot handle, they should hand it off. EAs also have such standards. In both cases it is up to that person to realize they are in over their head and then follow the proper ethics.

Yes, finding any new professional is always to some degree a crap shoot. Ask friends, critically read reviews, do solid interviews if needed pick two with one doing a review of the other. You can go with one of the nationals. They may not do the optimal return, but should produce acceptable one. You can always go with big local firm (they might even have EAs on staff). Will likely cost significantly more but they will want to protect their reputation so they will find the correct resource.
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Re: CPA (tax) advice - costs & finding one

Post by bsteiner »

yankees60 wrote: Wed Jul 10, 2024 4:20 pm
psteinx wrote: Wed Jul 10, 2024 2:18 pm
nonnie wrote: Tue Jul 09, 2024 5:42 pm You might also consider using an enrolled agent.

https://www.naea.org/
I'm not averse to this, though I'm not entirely sure how an EA would compare to a CPA in terms of complexity handled, reliability/accuracy, and cost. It's kind of like comparing an MD to a nurse practitioner (maybe), but I'm on even shakier grounds with the EA designation. In any case, I'd still need to find one.

Just doing an internet search or a Yelp search seems, I dunno, kinda random...
Though most CPAS have excellent tax knowledge and prepare a lot of tax returns That is not all the work they do in their practice. On the other hand the sole purpose of being an enrolled agent is to prepare tax returns and be able to represent Clients in tax court. So it is possible that Many enrollments Are more tax aware than a lot of CPAS.
Nonlawyers have to pass an exam to practice in Tax Court. Very few have done so.
nonnie
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Re: CPA (tax) advice - costs & finding one

Post by nonnie »

psteinx wrote: Wed Jul 10, 2024 2:18 pm
nonnie wrote: Tue Jul 09, 2024 5:42 pm You might also consider using an enrolled agent.

https://www.naea.org/
I'm not averse to this, though I'm not entirely sure how an EA would compare to a CPA in terms of complexity handled, reliability/accuracy, and cost. It's kind of like comparing an MD to a nurse practitioner (maybe), but I'm on even shakier grounds with the EA designation. In any case, I'd still need to find one.

Just doing an internet search or a Yelp search seems, I dunno, kinda random...

"Enrolled Agents (EAs) can become credentialed in one of two ways: with five years of IRS experience regularly interpreting tax regulations or through the successful completion of the three-part Special Enrollment Exam (SEE). "
nonnie
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Re: CPA (tax) advice - costs & finding one

Post by nonnie »

I don't necessarily recommend Yelp reviews but if you use them judiciously they can help. If St Louis Missouri is your area, here's a start:
https://www.yelp.com/biz/jl-accounting-saint-louis

https://www.yelp.com/search?find_desc=E ... ouis%2C+MO

Here's another website recommending EA's
https://taxcure.com/eas/missouri/saint-louis

TurboTax also has "verified pros" where you can get a recommendation, not necessarily all EAs, and then an introductory interview--
https://pros.turbotax.intuit.com/
bsteiner
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Re: CPA (tax) advice - costs & finding one

Post by bsteiner »

Reviews are unlikely to be helpful. Are the reviewers qualified to evaluate the accountant?
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