What should I expect to pay to get my taxes done?

Lutherf · Mar 23, 2014

I'm just kind of curious about what's considered to be reasonable for professional tax preparation and consultation.

For the purpose of this poll I'll be discussing a return that is somewhat beyond 'basic' and has items that might be more prone to audit. The return consists of:
- Married couple with one retired and the other self employed as a real estate agent
- One pension distribution and two IRA distributions
- Social Security income for both
- 15 items of interest and/or dividends
- Schedule C with <$100k gross receipts that shows a small loss.
- Schedule E with two rentals
- Several stock sales reported in bulk
- Depreciation on the rentals
- Office in Home expenses on the Sch C
- Sch A with a lot of medical but minimal charitable contributions
- State return with no special adjustments

Generally speaking I see higher prices in major metropolitan areas than in other areas so I'll include that as a factor. If you participate please pick whether you're basing this on a major metropolitan area (M) of a rural/suburban market (R).

Muhammed · Mar 23, 2014

Lutherf said:
I'm just kind of curious about what's considered to be reasonable for professional tax preparation and consultation.

It depends on a lot of things. For instance, how many sources of income do you have?

Lutherf · Mar 23, 2014

Muhammed said:
It depends on a lot of things. For instance, how many sources of income do you have?

That was laid out in the question. At least I thought it was.

earthworm · Mar 23, 2014

Hard to say....for those who really know the code and with good computer programs and a cooperative client(record keeping), 1 to 2% of the gross income....wild guess, of course, I still do my own...its now easy.
Without good record-keeping and without a computer, it would be double that , or more , IMO.
no vote, of course...

vesper · Mar 24, 2014

Luther, I don't know what would be a fair price. A couple of years back we were given estimates between 300-400. We do our own but it's continually getting more complicated. The tax manual this year was the thickest I have ever seen and then there are several other manuals you have to read pertaining to additional forms. My spouse insists on doing it without the aid of a computer program like Turbo Tax. If you have a question and try calling the IRS for help, a person should make their lunch in advance so they can eat it while they put you on hold. It takes a good amount of time to complete the process. It shouldn't be that hard/complicated. If a person didn't have the time to dedicate, it would be worth every penny to have someone else deal with it for you.

MaggieD · Mar 24, 2014

Lutherf said:
I'm just kind of curious about what's considered to be reasonable for professional tax preparation and consultation.

For the purpose of this poll I'll be discussing a return that is somewhat beyond 'basic' and has items that might be more prone to audit. The return consists of:
- Married couple with one retired and the other self employed as a real estate agent
- One pension distribution and two IRA distributions
- Social Security income for both
- 15 items of interest and/or dividends
- Schedule C with <$100k gross receipts that shows a small loss.
- Schedule E with two rentals
- Several stock sales reported in bulk
- Depreciation on the rentals
- Office in Home expenses on the Sch C
- Sch A with a lot of medical but minimal charitable contributions
- State return with no special adjustments

Generally speaking I see higher prices in major metropolitan areas than in other areas so I'll include that as a factor. If you participate please pick whether you're basing this on a major metropolitan area (M) of a rural/suburban market (R).

I pay $450 to a tax professional (licensed to practice before the IRS, if that makes sense). I have stock gains/losses (probably three or four transactions); interest income from at least a dozen sources, tax-free income calculations, K-1, and personal deductions. I wouldn't do that return myself for all the tea, as they say. Happy to pay it. I just give them my 1099s and broker statements. They take it from there.

When I was active in real estate and had the Schedule C (is that what it's called?), I paid $700. Happy to pay it.

Major metro market.

Lutherf · Mar 24, 2014

MaggieD said:
I pay $450 to a tax professional (licensed to practice before the IRS, if that makes sense). I have stock gains/losses (probably three or four transactions); interest income from at least a dozen sources, tax-free income calculations, K-1, and personal deductions. I wouldn't do that return myself for all the tea, as they say. Happy to pay it. I just give them my 1099s and broker statements. They take it from there.

When I was active in real estate and had the Schedule C (is that what it's called?), I paid $700. Happy to pay it.

Major metro market.

That's actually pretty reasonable especially considering your market.

Part of the reason I'm asking is because I jacked up prices this year and an now discounting because I'm feeling guilty. The other part is because I picked up a LOT of new business this year and have seen wild variations in pricing.

MaggieD · Mar 24, 2014

Lutherf said:
That's actually pretty reasonable especially considering your market.

Part of the reason I'm asking is because I jacked up prices this year and an now discounting because I'm feeling guilty. The other part is because I picked up a LOT of new business this year and have seen wild variations in pricing.

The fault of every entrepreneur is being afraid to raise their prices . . . or thinking they're charging too much. Please remember that it's not the time it takes you to fill out the returns that matters. It's the knowledge you've gained over your thirty-year career that allows you to fill them out in the time it takes you that needs respecting.

Want to add value? Send a mailing a few times a year...reminding people, for instance, to send in their estimated tax payments...reminding them of deadlines for IRA contributions...reminding them not to move their IRA money without a call to you to discuss basic elements of transfer...those kinds of things.

But don't sell yourself short, Luther. It's a very common thing for self-employeds to do.

Lutherf · Mar 24, 2014

vesper said:
Luther, I don't know what would be a fair price. A couple of years back we were given estimates between 300-400. We do our own but it's continually getting more complicated. The tax manual this year was the thickest I have ever seen and then there are several other manuals you have to read pertaining to additional forms. My spouse insists on doing it without the aid of a computer program like Turbo Tax. If you have a question and try calling the IRS for help, a person should make their lunch in advance so they can eat it while they put you on hold. It takes a good amount of time to complete the process. It shouldn't be that hard/complicated. If a person didn't have the time to dedicate, it would be worth every penny to have someone else deal with it for you.

LOL!!

Those phone calls to the IRS absolutely suck and, truth be told, a lot of the advice you get from them is pretty bad. The problem you run into is that most of the time the correct answer is dependent on the circumstances AND on the other stuff on your return. It's really easy to spend hours to get an answer to a question only to find that it makes little or no difference on your return.

Lutherf · Mar 24, 2014

MaggieD said:
The fault of every entrepreneur is being afraid to raise their prices . . . or thinking they're charging too much. Please remember that it's not the time it takes you to fill out the returns that matters. It's the knowledge you've gained over your thirty-year career that allows you to fill them out in the time it takes you that needs respecting.

Want to add value? Send a mailing a few times a year...reminding people, for instance, to send in their estimated tax payments...reminding them of deadlines for IRA contributions...reminding them not to move their IRA money without a call to you to discuss basic elements of transfer...those kinds of things.

But don't sell yourself short, Luther. It's a very common thing for self-employeds to do.

That's funny. It's the same advice I give my business clients!:lamo

canman · Mar 24, 2014

My advisor does them as part of his service. My return is not at all complicated.

MaggieD · Mar 24, 2014

Lutherf said:
LOL!!

Those phone calls to the IRS absolutely suck and, truth be told, a lot of the advice you get from them is pretty bad. The problem you run into is that most of the time the correct answer is dependent on the circumstances AND on the other stuff on your return. It's really easy to spend hours to get an answer to a question only to find that it makes little or no difference on your return.

And please! Let's not forget that if you get the wrong answer over the phone, it's all on you!

I've actually had pretty good success with the IRS. I've been penalized several times for things and took my accountant's advice: paid it immediately and then asked the Problem Resolution people for a rebate of the penalty. I've always gotten it. I would never attempt to navigate my return on my own.

I used to do my mom's return on Turbo Tax. Hers is very simple. Pension/dividend and interest income and standard deduction. My guy does that for $150 and I choose to take advantage of that now. I just don't enjoy wading through the Turbo Tax questions...usually end up with a question . . . so for me (her), it's a matter of convenience. But my own? No way.

Lutherf · Mar 24, 2014

MaggieD said:
And please! Let's not forget that if you get the wrong answer over the phone, it's all on you!

I've actually had pretty good success with the IRS. I've been penalized several times for things and took my accountant's advice: paid it immediately and then asked the Problem Resolution people for a rebate of the penalty. I've always gotten it. I would never attempt to navigate my return on my own.

I used to do my mom's return on Turbo Tax. Hers is very simple. Pension/dividend and interest income and standard deduction. My guy does that for $150 and I choose to take advantage of that now. I just don't enjoy wading through the Turbo Tax questions...usually end up with a question . . . so for me (her), it's a matter of convenience. But my own? No way.

One of the returns I got in was just like that. 4 distributions from various retirement accounts and some interest from the bank. The invoice she paid the previous year was over $800.

Gipper · Mar 24, 2014

With everything listed I would probably charge 350-400. Doubt they'd be itemizing so I wouldn't go over 500.

Lutherf · Mar 24, 2014

Gipper said:
With everything listed I would probably charge 350-400. Doubt they'd be itemizing so I wouldn't go over 500.

The kicker for me on most returns like this is the complexity of the Sch C. If it's clean and I can rely on the numbers I'm given it will be a whole lot less than if it appears to be cobbled together and I need to do some accounting just for due diligence purposes.

tecoyah · Mar 24, 2014

Gipper said:
With everything listed I would probably charge 350-400. Doubt they'd be itemizing so I wouldn't go over 500.

A good CPA will charge you $4-800 and guarantee you no audit (representation if it occurs), based on your listed criteria. However, that CPA will likely add $4-5000 to your return.....spend the money as if an investment.

Mithros · Mar 24, 2014

Lutherf said:
That's actually pretty reasonable especially considering your market.

Part of the reason I'm asking is because I jacked up prices this year and an now discounting because I'm feeling guilty. The other part is because I picked up a LOT of new business this year and have seen wild variations in pricing.

I heard a pretty good line about setting prices. If no one is complaining that your prices are too high, they're probably too low.

Lutherf · Mar 24, 2014

Mithros said:
I heard a pretty good line about setting prices. If no one is complaining that your prices are too high, they're probably too low.

I bought a practice 10 years ago and the guy was running a charity. In the first year I doubled prices (was still below the local average) and lost about 20% of the practice. I figured that was a decent trade off because I made more than he had with less clients. Over the years, though, it's been difficult to move much higher. I'll normally bump about 5%/yr but when someone retires and pays off their house their return gets a lot less complex so I'm uncomfortable raising the price for an easier return. New clients, however, tend to come in at a higher rate so I'm making up for it. That being said, when my new business comes from a referral and the returns are similar I run into the quandary of "do I charge this one a lot more? What if they compare notes?"

My current solution has been to prepare my invoices differently so that the client can (generally) see what a full cost return would be versus what they are actually being charged.

Mithros · Mar 24, 2014

Lutherf said:
I bought a practice 10 years ago and the guy was running a charity. In the first year I doubled prices (was still below the local average) and lost about 20% of the practice. I figured that was a decent trade off because I made more than he had with less clients. Over the years, though, it's been difficult to move much higher. I'll normally bump about 5%/yr but when someone retires and pays off their house their return gets a lot less complex so I'm uncomfortable raising the price for an easier return. New clients, however, tend to come in at a higher rate so I'm making up for it. That being said, when my new business comes from a referral and the returns are similar I run into the quandary of "do I charge this one a lot more? What if they compare notes?"

My current solution has been to prepare my invoices differently so that the client can (generally) see what a full cost return would be versus what they are actually being charged.

That's a good approach. Humans are weird. I'd be upset If you charged me one amount, and my neighbor less; but I'd be much more comfortable with us being invoiced the same and my neighbor receiving a "coupon".

Gipper · Mar 24, 2014

Lutherf said:
The kicker for me on most returns like this is the complexity of the Sch C. If it's clean and I can rely on the numbers I'm given it will be a whole lot less than if it appears to be cobbled together and I need to do some accounting just for due diligence purposes.

I was thinking that too, but I've discovered that most business owners learn after one year that it's in their best interest to minimize the legwork of the preparer.

Gipper · Mar 24, 2014

tecoyah said:
A good CPA will charge you $4-800 and guarantee you no audit (representation if it occurs), based on your listed criteria. However, that CPA will likely add $4-5000 to your return.....spend the money as if an investment.

I couldn't charge what a CPA charges because, although I've prepared returns for years, I don't have that designation. I can just legally prepare (I have a PTIN). However I cannot represent them, as I'm not an attorney, a CPA, or an enrolled agent.

tecoyah · Mar 24, 2014

Gipper said:
I couldn't charge what a CPA charges because, although I've prepared returns for years, I don't have that designation. I can just legally prepare (I have a PTIN). However I cannot represent them, as I'm not an attorney, a CPA, or an enrolled agent.

Which is the reason I recommend a CPA (no offense intended), going by the information presented there are risks involved in tax preparation that are worth the added expense and protection. I have learned this the hard way...and so goes my recommendation.

But, it is only personal opinion.

molten_dragon · Mar 24, 2014

Lutherf said:
I'm just kind of curious about what's considered to be reasonable for professional tax preparation and consultation.

For the purpose of this poll I'll be discussing a return that is somewhat beyond 'basic' and has items that might be more prone to audit. The return consists of:
- Married couple with one retired and the other self employed as a real estate agent
- One pension distribution and two IRA distributions
- Social Security income for both
- 15 items of interest and/or dividends
- Schedule C with <$100k gross receipts that shows a small loss.
- Schedule E with two rentals
- Several stock sales reported in bulk
- Depreciation on the rentals
- Office in Home expenses on the Sch C
- Sch A with a lot of medical but minimal charitable contributions
- State return with no special adjustments

Generally speaking I see higher prices in major metropolitan areas than in other areas so I'll include that as a factor. If you participate please pick whether you're basing this on a major metropolitan area (M) of a rural/suburban market (R).

My wife and I paid about $500 a couple years ago when our tax situation was more complicated than usual due to inheriting a bunch of money (some directly, some from the estate, some from sale of real estate, etc.) when her parents died. We live in the suburbs of detroit.

Lutherf · Mar 24, 2014

Gipper said:
I was thinking that too, but I've discovered that most business owners learn after one year that it's in their best interest to minimize the legwork of the preparer.

Here's an example of the problem I'm having:

The return I just finished is for a woman who only has W-2 income and a rental in another state. She makes next to nothing on the rental but this year she had to put in most of a new kitchen and new bathrooms. The new depreciation rules consider those things to be 'improvements' instead of 'repairs' so I have to go in and figure out what percentage of the basis in her house is bathroom and kitchen, back that out and 'sell' it then enter all the new stuff as pieces and parts to be depreciated separately. That takes a while and since it's kind of subjective it opens up room for an adjustment if she's audited. I also wouldn't be surprised if there's an audit because she makes decent money and the result is a larger than normal loss on the rental. The IRS seems to be eating that kind of thing up.

I'm not concerned that if they decide to examine there will be an issue but it's the process that sucks. So what do I do? Do I charge her double what I normally do or suck it up in the interests of keeping a customer happy? I decided to split the difference on the invoice withthe understanding that it's going to be a "one off".

MaggieD · Mar 24, 2014

Lutherf said:
Here's an example of the problem I'm having:

The return I just finished is for a woman who only has W-2 income and a rental in another state. She makes next to nothing on the rental but this year she had to put in most of a new kitchen and new bathrooms. The new depreciation rules consider those things to be 'improvements' instead of 'repairs' so I have to go in and figure out what percentage of the basis in her house is bathroom and kitchen, back that out and 'sell' it then enter all the new stuff as pieces and parts to be depreciated separately. That takes a while and since it's kind of subjective it opens up room for an adjustment if she's audited. I also wouldn't be surprised if there's an audit because she makes decent money and the result is a larger than normal loss on the rental. The IRS seems to be eating that kind of thing up.

I'm not concerned that if they decide to examine there will be an issue but it's the process that sucks. So what do I do? Do I charge her double what I normally do or suck it up in the interests of keeping a customer happy? I decided to split the difference on the invoice withthe understanding that it's going to be a "one off".

You made a good business decision, Luther. I'm not surprised.

What should I expect to pay to get my taxes done?

How much is reasonable?

<$250(M)

<$250(R)

$250-500(M)

$250-500(S)

$500-750(M)

$500-750(R)

>$750-either

>$1000-either

More options

Lutherf

Muhammed

Lutherf

earthworm

vesper

MaggieD

Lutherf

MaggieD

Lutherf

Lutherf

canman

New member

MaggieD

Lutherf

Gipper

Lutherf

tecoyah

Illusionary

Mithros

Lutherf

Mithros

Gipper

Gipper

tecoyah

Illusionary

molten_dragon

Anti-Hypocrite

Lutherf

MaggieD