Author Topic: Taxes 101 - How much should it cost to do your taxes?  (Read 1259 times)

HankWilliams

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Taxes 101 - How much should it cost to do your taxes?
« on: February 04, 2019, 02:51:42 PM »
Hi y'all,
We're shopping around for an accountant and I was just curious what a typical accountant charges for your 2018 tax return?
We're really simple. Married, no kids, some stocks, etc.

We have an appointment with somebody next week that charges... starting at $650 here in Longmont, CO.
Curious if that's high in your (wise but frugal) opinions. Thanks!

neutravlad

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #1 on: February 04, 2019, 03:13:26 PM »
It seems a lot. One of the big companies charged us ~$400 last year. W2 from 2 states, HSAs, Dependent Care, not very complicated. The reason we did it was because the of the two states income. Otherwise, we have always done it ourselves.
What's your situation? W2? 1099?

CareCPA

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #2 on: February 04, 2019, 04:17:18 PM »
I'm biased (I say that a lot around here), but that seems high to me given the information you have provided.
Of course, I tend to undercharge, so take that with a grain of salt.

Pricing seems to vary geographically, obviously it varies based on complexity, and sometimes it just seems to vary arbitrarily. I've seen people who won't touch an individual return for less than $1k - that's just the type of clientele they've built. I'm sure it's even higher for more specialized CPAs.

We've got clients in the low three-digits. Is it sustainable? Time will tell...
Anything in double-digits and I'd be very wary.

MDM

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #3 on: February 04, 2019, 06:10:01 PM »
We're really simple. Married, no kids, some stocks, etc.
If you have no business income, any of the commercial software packages will cost under $100 (much under, if you do even a little shopping) and should be more than sufficient.

You may even want to double check by hand (or with spreadsheet help) so you understand better.

boridi

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #4 on: February 04, 2019, 06:36:25 PM »
No kids? "some stocks"? What would an MMM blog post say about paying $600 for someone else to read a few pages of instructions and fill out simple forms for you?

kpd905

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #5 on: February 04, 2019, 06:45:25 PM »
Go with FreeTaxUSA, it'll be $12.95 for federal and state returns.  A bit cheaper than what your CPA is charging.

DadJokes

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #6 on: February 05, 2019, 09:25:05 AM »
My FIL was paying $300 for his former accountant to file. He didn't itemize, and only had W2 income. That's pretty usual for CPAs in the area.

I just put his info in Tax Slayer for him, so he ended up only paying a tiny fraction of the price. If there is nothing complex, and the services needed are limited to tax preparation, I see no reason to use a CPA (saying this as a soon-to-be CPA myself).

Livingthedream55

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #7 on: February 05, 2019, 10:53:37 AM »
I've posted this info several times, but I swear I have no vested interest! Just like to save a buck!

https://www.freetax.com/ is totally free, including for the state return. My two daughters and I, my brother and my two nieces have all used within the past week.

nburns

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #8 on: February 05, 2019, 11:14:44 AM »
I filed my return myself this year as I do every year.  Single, with some stocks as well with the addition of HSA, student loans, and bank interest.  You should be able to do yourself, especially if you are taking the standard deduction, not difficult at all if you only have a few forms to do.

nawhite

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #9 on: February 06, 2019, 09:47:41 PM »
I've posted this info several times, but I swear I have no vested interest! Just like to save a buck!

https://www.freetax.com/ is totally free, including for the state return. My two daughters and I, my brother and my two nieces have all used within the past week.

Another really happy use of freetax.com. That said, of you're only using your accountant for filling your taxes, you're doing it wrong. Accountants prove their worth when you visit them in October. Filling taxes is free, getting tax planning advice is not. If you haven't done any planning before right now, an accountant isn't going to save you any money over just filling yourself. They might absolutely be worth $650 if you had visited them throughout last year, but today with no previous discussions it is extremely unlikely they will be worth that much.

katsiki

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #10 on: February 07, 2019, 07:28:16 AM »
Go with FreeTaxUSA, it'll be $12.95 for federal and state returns.  A bit cheaper than what your CPA is charging.

I am using this for the first time based on some posts on MMM and elsewhere.  Really happy so far.  Much cheaper than TaxAct which I had used for years.

Yeah, OP, do this yourself for less than $25.

Boofinator

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #11 on: February 07, 2019, 07:51:09 AM »
How much does it cost to print a few forms (https://www.irs.gov/forms-instructions, https://www.irs.gov/publications), put some ink to them, put them in a couple* of envelopes, and mail them to their respective offices? If your tax return is relatively easy, as you state, this should be your approach. Just pull out last year's submitted tax return as a guide.

The big plus in my opinion, other than saving $20 or so (or $600 or so in your case), is that you actually get a good idea of the tax code and how you can implement changes in your life to reduce taxes. The time it take over tax software or an accountant is de minimis.

*Assuming you have state income tax in addition to federal. For those lucky individuals with just federal, you save essentially half the cost.

radram

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #12 on: February 07, 2019, 08:28:07 AM »
A $600 accountant bill is only worth it to me if it saves me more than $600 in overpaying my taxes. For about $26, I get very complete tax software ( have used H&R Block for about 15 years now).

First year was the hardest, but not at all hard. Following years are a breeze, especial if I was in the same job the next year. We have rental income, a home business, RMD's from inherited IRA's, ACA payments and documents, bank and CD dividends, capital gains, and take a standard deduction. Software works great, and I doubt an accountant could find any increased refund worth anything near $600.

You could do both this year. Buy some software and complete it, and then compare it to the return you hire someone to complete. You might confirm they are worth every penny, and you may decide that is the last time you need to hire it done.

I agree with @Boofinator in that the time I spend doing my own taxes is actually a BENEFIT in that I learn about things that I can do next year and beyond.

Keep us posted on what you decide.

DadJokes

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #13 on: February 07, 2019, 09:07:03 AM »
How much does it cost to print a few forms (https://www.irs.gov/forms-instructions, https://www.irs.gov/publications), put some ink to them, put them in a couple* of envelopes, and mail them to their respective offices? If your tax return is relatively easy, as you state, this should be your approach. Just pull out last year's submitted tax return as a guide.

The big plus in my opinion, other than saving $20 or so (or $600 or so in your case), is that you actually get a good idea of the tax code and how you can implement changes in your life to reduce taxes. The time it take over tax software or an accountant is de minimis.

*Assuming you have state income tax in addition to federal. For those lucky individuals with just federal, you save essentially half the cost.

I second the idea behind this.

While I don't go so far as to fill out my tax returns by hand, I have a spreadsheet that tracks my taxes, with different tabs for adjustments, deductions, and credits. It's nice to be able to see how changes I make during the year will impact my taxes.

Grafter

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #14 on: February 09, 2019, 11:04:39 PM »
No idea about CO prices, but here, it depends on the amount of time that goes into your return.  Generally, the simpler it is, the cheaper the return.  However, you haven't given a lot of detail.  What forms did you file last year, where there sch A to F, did you have a ton of stock sales without basis, PTP income, etc?  A ton of items that need to be input?  As well as different firms have different minimum prices.  I know a few firms in my town (in the midwest) that start at $300 and go up from there.  And even that is usually underbilling, especially in the first year (as there are a ton of inputs into the professional software to make sure that all of the state level items are correct (at least in my state).

But, like other posters mention, the real value isn't so much the compliance (filing out the return), it is the experience and and knowledge (especially if you don't know what you are doing or what is deductible) that is what you pay for.  Though this year is going to be somewhat screwy, due to the TJCA, and forms and regs still being finalized (for example: the 199A final regs were only posted to the federal register this week, and they had some wording changes from the final reg draft from a few weeks ago).

jc4

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #15 on: February 11, 2019, 09:23:12 AM »
I'll give a third, positive, review. I've used FreeTax for 3 years, and it's somehow been free. I've been surprised. But I doubled filling out TurboTax, and FreeTax. I got the same result. TurboTax does have some more efficient features, looks nicer, and has pretty helpful documentation on their site. So you get something.

Another idea, if you're uncomfortable. Pay the CPA this year. After he's done, fill your info into TurboTax, etc. If you fill get the same result, and are comfortable with the software, switch over next year.


I've posted this info several times, but I swear I have no vested interest! Just like to save a buck!

https://www.freetax.com/ is totally free, including for the state return. My two daughters and I, my brother and my two nieces have all used within the past week.

Another really happy use of freetax.com. That said, of you're only using your accountant for filling your taxes, you're doing it wrong. Accountants prove their worth when you visit them in October. Filling taxes is free, getting tax planning advice is not. If you haven't done any planning before right now, an accountant isn't going to save you any money over just filling yourself. They might absolutely be worth $650 if you had visited them throughout last year, but today with no previous discussions it is extremely unlikely they will be worth that much.

merula

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #16 on: February 11, 2019, 09:38:24 AM »
$600 is way too much for something that simple. Unless your "some stocks" don't come with a 1099-DIV or you have to do basis calculations yourself or something, but that would be very rare.

Also, PSA, anyone with adjusted gross income under $65,000 can get free tax prep either through DIY software or through volunteer tax preparers. I'm one of those volunteers, and it's a really great program.

OurTown

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #17 on: February 11, 2019, 01:28:25 PM »
How much does it cost to print a few forms (https://www.irs.gov/forms-instructions, https://www.irs.gov/publications), put some ink to them, put them in a couple* of envelopes, and mail them to their respective offices? If your tax return is relatively easy, as you state, this should be your approach. Just pull out last year's submitted tax return as a guide.

The big plus in my opinion, other than saving $20 or so (or $600 or so in your case), is that you actually get a good idea of the tax code and how you can implement changes in your life to reduce taxes. The time it take over tax software or an accountant is de minimis.

*Assuming you have state income tax in addition to federal. For those lucky individuals with just federal, you save essentially half the cost.


TL;DR  $0 plus postage.

wbranch

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #18 on: February 11, 2019, 08:23:10 PM »
I am a CPA at local firm in a MCOL area. Our minimum fee is supposed to be $400 for a simple 1040. We don't "make" money the first year when overhead is factored in, but we assume we can make money going forward as long as interns are preparing the returns. Still there are a significant number of returns that have been around for ages that are <$400. Some like to say how they paid $25 when they started coming here 30 years ago.

SeattleCPA

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Re: Taxes 101 - How much should it cost to do your taxes?
« Reply #19 on: February 12, 2019, 08:23:51 AM »
Most folks in my opinion should use a product like TurboTax. A longer discussion appears at blog post linked to below, but if a taxpayer keeps their financial affairs simple, someone usually can't justify paying a high enough price to get a really excellent tax return from a CPA or EA:

https://evergreensmallbusiness.com/your-cpa-versus-turbotax/

Also if you're someone who has complicated their finances to the point where you can't self-prepare? Often the optimal course is to simplify. Here's an older post that provides a bit more instruction for DIYers...

https://evergreensmallbusiness.com/getting-a-great-tax-return-prepared-for-less-than-100/

Responding to remarks earlier in thread: IMHO if you have complexity or risk in your return, you can still get high value from a skilled tax accountant (either a CPA or EA). Lots of expensive basically catastrophic mistakes can be made on a DIY tax return with international or multistate issues. Lots of optimization can be done on a return with Section 199A qualified business income.

Finally, these two other comments to add context and give a bit of prospective:
1. I think our average 1040 price last year was $1000? (One of the blog posts above says our minimum price equals $500 but that number is five years old.)
2. What you get from a large retail chain IMHO is often mostly data entry from a preparer making $12 an hour as a seasonal employee. That should tell you quite a bit...