Author Topic: Tax Preparation costs  (Read 13437 times)

skyler

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Tax Preparation costs
« on: August 19, 2013, 06:52:25 AM »
I searched the threads and cannot see anything.

I am self employed and tried to prepare my taxes before using a tax preparation software online.
Ended up getting stuck when trying to figure out depreciation. Another problem was the use of my primary vehicle.
I ended up using my spouse's vehicle for part of the year last year and it got complicated when trying to list both.

So for a sole proprietor filing jointly (this April) I was charged $475.
I had a tax organizer filled out entirely and had all my expenses in an Excel spread sheet.
I got my copy of the return to sign and discovered the accountant did not report my traditional IRA contribution of $3600 on the return.
I called, pointed out the omission and had the return redone.
I was never offered a discount or even an apology (I did not ask ).
Don' t want to go back to the same firm this year (been using them for the past 8 years).

So my questions:

Is $475 a "good deal"? (my return is straight forward, one 1099 and just usual office expenses, mileage. Spouse only gets one W2.)
Can switching accountants after a long time be a red flag for audits?

« Last Edit: August 22, 2013, 09:53:03 AM by skyler »

RhythmKats

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Re: Tax Preparation costs
« Reply #1 on: August 19, 2013, 07:11:28 AM »
$475 seems expensive for your tax needs. I live in NYC and while it's not uncommon to see prices like that around here for tax prep, it's also possible to find more reasonable rates. I'm a freelancer, have many 1099's, write off part of my apt & utilities because I work from home, plus business supplies, etc and I paid $285 this past year for tax prep. I don't file a joint return, though. If you know other sole proprietors/freelancers, ask around and see who they use and how much they pay. That's what I have always done.

Saving mom

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Re: Tax Preparation costs
« Reply #2 on: August 19, 2013, 08:17:32 AM »
How many other schedules were being completed? $475 doesn't seem terrible if they get it right and are knowledgeable. I am in Dallas and that's about what I would pay if I had a simpler return. I just paid $718 for ours but it included a partial sale of inherited land (required some research on the part of the CPA), Schedule H, and two rental properties. I had run through our return on the Turbotax online version and estimated we would get back a certain amount in refund. CPA completed the return and his calculation was higher on refund by the amount of his bill. Compared to what my mother in law pays in Florida, our CPA is downright cheap.  My CPA answers questions throughout the year and I always check with him in December to see if there are additional deductions or donations I should be making to maximize tax savings.

skyler

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Re: Tax Preparation costs
« Reply #3 on: August 19, 2013, 08:38:05 AM »
How many other schedules were being completed? $475 doesn't seem terrible if they get it right and are knowledgeable.

Mine is a simple return, one 1099, one W2 and no rentals/assets. Office and mileage expenses are the two main things.  Nothing new on this year's return, except for the statement of closing for the refinance of our house.

BTW, she did charge me $250 additional (a separate bill) for a 1 hour consultation on the phone answering questions about Roth vs Traditional IRAs and maximizing spouse's 401k.
I called for a quick question, did not realize I will be charged, she did not tell me and I did not ask...Kindda assumed since I've been a customer for so long she would answer it  as a courtesy..anyway, I paid the bill, but I do not feel good about it.

Spork

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Re: Tax Preparation costs
« Reply #4 on: August 19, 2013, 09:24:13 AM »
Maybe a dumb question, but:  can you do it yourself using last years professionally prepared return as a "template"?  I know, tax laws change over time, but sometimes just having "the right answer" can help you back compute. 

skyler

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Re: Tax Preparation costs
« Reply #5 on: August 19, 2013, 09:47:03 AM »
@ Spork:
I am afraid I cannot this year :-(

We are loosing some deductions and I think it would be beneficial to have a professional guide me through this...

Don't get me wrong, I expect to pay for service. The last few years I have been on "autopilot" and did not give it much thought, just paid the bill.
 
My first return was prepared by the same firm (for the same 1099 amount, my income has not changed) the first two years for $275.
Than it went up (maybe because my spouses' income went up??)

It did not bother me all these years, it wasn't until they forgot to include my tax deductible traditional IRA that I got upset...


*edited for spelling
« Last Edit: August 22, 2013, 09:54:00 AM by skyler »

Mr.Macinstache

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Re: Tax Preparation costs
« Reply #6 on: August 19, 2013, 11:33:39 AM »
BTW, she did charge me $250 additional (a separate bill) for a 1 hour consultation on the phone answering questions about Roth vs Traditional IRAs and maximizing spouse's 401k.
I called for a quick question, did not realize I will be charged, she did not tell me and I did not ask...Kindda assumed since I've been a customer for so long she would answer it  as a courtesy..anyway, I paid the bill, but I do not feel good about it.

That is outrageous. I would complain about that. And then drop them. Look for a better CPA. A good one will find you all sorts of deductions and maximize your return. I LOVE my CPA. Yes their cost is high, but it always pays off. They are on top of their game. There are so many ins and outs to take advantage of, and it changes every year, especially now with Obamacare coming up, so a good preparer is a must.

Saving mom

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Re: Tax Preparation costs
« Reply #7 on: August 19, 2013, 12:20:02 PM »
With that additional info, I would be in the market for a new CPA. Turbotax online is really very good. It includes links to read the source documents and has guides to see if you qualify for a deduction. If I ever have additional questions, the search feature works reasonably well. Frankly, I would just use that and make friends with someone who is a CPA (especially one who is also self employed) or personal finance-oriented to bounce questions off of.  I find that people who are focused on personal finances like to know about the tax code and think its fun to discuss how to maximize deductions.  I have found that I am generally more cautious than my CPA. As long as you keep all of your records and make reasonable assumptions when answering the questions on Turbotax, you should be fine with the IRS. I once made an error on a trust tax return (I do those on Turbotax business software and split the cost between multiple trusts) and the IRS said, in one case, actually you owe nothing - here's your refund, and on the other, charged me a small penalty. I don't use a CPA for those because the minimum CPA prep charge per return is more than the trusts ever owe in tax. I like to be up to date on tax issues and I am a huge advocate for simplifying the tax code.  It annoys the cr@p out of me that I have multiple degrees in finance but can't reasonably complete my tax return on my own.

Spork

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Re: Tax Preparation costs
« Reply #8 on: August 19, 2013, 01:03:34 PM »

If you use Turbotax, I would suggest using a desktop-installed version.  The online version has a bit of a history with leaking information.

RhythmKats

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Re: Tax Preparation costs
« Reply #9 on: August 19, 2013, 01:18:01 PM »
Charging $250 for the phone conversation seems a bit much. My guy includes phone consultations throughout the year as part of his fee for preparation, no additional cost. I agree, more complex returns deserve a higher rate, but once again, yours does not seem all that complex. I'd look around.

skyler

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Re: Tax Preparation costs
« Reply #10 on: August 19, 2013, 01:19:53 PM »
It annoys the cr@p out of me that I have multiple degrees in finance but can't reasonably complete my tax return on my own.
@Spork:
I couldn't have said it better!
I think I may give it another shot this year. I remember using the plain Turbo Tax while I helped a sibling with a simple return...
Perhaps I will invest in the business edition this year first...
Heck, even if I don't end up filing, I will at least learn more by going step by step...And ask someone to "proofread" my return for $100 :-)
« Last Edit: August 19, 2013, 01:25:42 PM by skyler »

skyler

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Re: Tax Preparation costs
« Reply #11 on: August 19, 2013, 01:24:44 PM »

If you use Turbotax, I would suggest using a desktop-installed version.  The online version has a bit of a history with leaking information.

Will keep it in mind...

BTW
Do I have to wait till January 2014 to prepare the 2013 return or can I get started now using the 2012 edition?

LowER

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Re: Tax Preparation costs
« Reply #12 on: August 19, 2013, 02:04:58 PM »

If you use Turbotax, I would suggest using a desktop-installed version.  The online version has a bit of a history with leaking information.

Will keep it in mind...

BTW
Do I have to wait till January 2014 to prepare the 2013 return or can I get started now using the 2012 edition?

Great question!

SavingMon(k)ey

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Re: Tax Preparation costs
« Reply #13 on: August 19, 2013, 02:13:49 PM »
Your tax situation seems a bit more complex than mine, but I have used a desktop deluxe version of TurboTax for several years and this last year a slightly fancier version because of one form that wasn't supported by the deluxe. I discovered that several federal returns (on the deluxe it is 5) can be filed with one CD ROM, so I shared it with my SO (we still filed separately) and some friends and coworkers. The state I just print out and send on paper so as not to pay the e-file fee, though I discovered that there is a free way to do it on the state revenue site (I will check that out this year). Everybody pitched in 1/5 of the price and passed the CD on after installing it on their machines. It has been working great for the past few years.
« Last Edit: August 19, 2013, 02:16:24 PM by worldstrad »

skyler

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Re: Tax Preparation costs
« Reply #14 on: August 19, 2013, 02:30:47 PM »

If you use Turbotax, I would suggest using a desktop-installed version.  The online version has a bit of a history with leaking information.

Will keep it in mind...

BTW
Do I have to wait till January 2014 to prepare the 2013 return or can I get started now using the 2012 edition?

Great question!

Did a quick search. Looks like you need to get a new package for the respective year to keep up with the new laws/changes.  I found Tax Act offers a "preview" in October. Not sure if they mean you can look at it or use it???
Majority of 2013 software (major players) will be released in January 2014 :(

Spork

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Re: Tax Preparation costs
« Reply #15 on: August 19, 2013, 03:52:32 PM »

If you use Turbotax, I would suggest using a desktop-installed version.  The online version has a bit of a history with leaking information.

Will keep it in mind...

BTW
Do I have to wait till January 2014 to prepare the 2013 return or can I get started now using the 2012 edition?

Great question!

Did a quick search. Looks like you need to get a new package for the respective year to keep up with the new laws/changes.  I found Tax Act offers a "preview" in October. Not sure if they mean you can look at it or use it???
Majority of 2013 software (major players) will be released in January 2014 :(

Turbotax usually releases something late Decemberish (?), but there is a clear version per year.  The tax laws are not firm when they go out, but they do self update.   

kkbmustang

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Re: Tax Preparation costs
« Reply #16 on: August 19, 2013, 04:18:06 PM »
BTW, she did charge me $250 additional (a separate bill) for a 1 hour consultation on the phone answering questions about Roth vs Traditional IRAs and maximizing spouse's 401k.
I called for a quick question, did not realize I will be charged, she did not tell me and I did not ask...Kindda assumed since I've been a customer for so long she would answer it  as a courtesy..anyway, I paid the bill, but I do not feel good about it.

That is outrageous. I would complain about that. And then drop them. Look for a better CPA. A good one will find you all sorts of deductions and maximize your return. I LOVE my CPA. Yes their cost is high, but it always pays off. They are on top of their game. There are so many ins and outs to take advantage of, and it changes every year, especially now with Obamacare coming up, so a good preparer is a must.

$250 an hour is actually quite reasonable. When I left tax consulting, I was being charged out to clients at $740 an hour. Granted they were corporate clients, but it gives a frame of reference.

kkbmustang

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Re: Tax Preparation costs
« Reply #17 on: August 19, 2013, 04:23:30 PM »
BTW, she did charge me $250 additional (a separate bill) for a 1 hour consultation on the phone answering questions about Roth vs Traditional IRAs and maximizing spouse's 401k.
I called for a quick question, did not realize I will be charged, she did not tell me and I did not ask...Kindda assumed since I've been a customer for so long she would answer it  as a courtesy..anyway, I paid the bill, but I do not feel good about it.

That is outrageous. I would complain about that. And then drop them. Look for a better CPA. A good one will find you all sorts of deductions and maximize your return. I LOVE my CPA. Yes their cost is high, but it always pays off. They are on top of their game. There are so many ins and outs to take advantage of, and it changes every year, especially now with Obamacare coming up, so a good preparer is a must.

$250 an hour is actually quite reasonable. When I left tax consulting, I was being charged out to clients at $740 an hour. Granted they were corporate clients, but it gives a frame of reference.

And, she gave you an hour of her time answering your questions using her expertise. She might have comped you the time as a courtesy, but if you benefitted from her advice and you asked the question, then she has every right to charge you for it.

skyler

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Re: Tax Preparation costs
« Reply #18 on: August 19, 2013, 04:25:50 PM »
BTW, she did charge me $250 additional (a separate bill) for a 1 hour consultation on the phone answering questions about Roth vs Traditional IRAs and maximizing spouse's 401k.
I called for a quick question, did not realize I will be charged, she did not tell me and I did not ask...Kindda assumed since I've been a customer for so long she would answer it  as a courtesy..anyway, I paid the bill, but I do not feel good about it.

That is outrageous. I would complain about that. And then drop them. Look for a better CPA. A good one will find you all sorts of deductions and maximize your return. I LOVE my CPA. Yes their cost is high, but it always pays off. They are on top of their game. There are so many ins and outs to take advantage of, and it changes every year, especially now with Obamacare coming up, so a good preparer is a must.

$250 an hour is actually quite reasonable. When I left tax consulting, I was being charged out to clients at $740 an hour. Granted they were corporate clients, but it gives a frame of reference.

I am thinking perhaps in the past they had an "intern" do my taxes and now a partner got involved, that's why the bill was lower??

BTW
AS an accountant, while on the phone, does one advise clients when the clock  starts and remind they will be charged a certain rate, or is it expected everyone knows and therefore if client engages in a conversation, it is assumed he/she consents?



kkbmustang

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Re: Tax Preparation costs
« Reply #19 on: August 19, 2013, 04:34:16 PM »
Full disclosure, I'm an attorney, not an accountant, but won't make a difference as to what you are asking. It is possible an intern or lower level associate did your work before and, therefore, the previous fee was lower. However, you should have signed an engagement letter before the accountant did any work for you which would outline the fees per hour (subject to annual increase) and/or flat fee. If you no longer have a copy, you should request one from your accountant.

As for billing for phone conversations or advice via email, it is generally understood that when you call/ask for tax advice, you are on the clock. I didn't charge for calls that were 5 minutes or whatever, but for an hour? Absolutely. I did not answer my phone and immediately say "you're on the clock." It was understood.

skyler

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Re: Tax Preparation costs
« Reply #20 on: August 19, 2013, 04:44:39 PM »
Full disclosure, I'm an attorney, not an accountant, but won't make a difference as to what you are asking. It is possible an intern or lower level associate did your work before and, therefore, the previous fee was lower. However, you should have signed an engagement letter before the accountant did any work for you which would outline the fees per hour (subject to annual increase) and/or flat fee. If you no longer have a copy, you should request one from your accountant.

As for billing for phone conversations or advice via email, it is generally understood that when you call/ask for tax advice, you are on the clock. I didn't charge for calls that were 5 minutes or whatever, but for an hour? Absolutely. I did not answer my phone and immediately say "you're on the clock." It was understood.

@kkbmustanng

Thank you for your response.
I never signed anything, ever, about fees or rates.

I just asked how much it would be the first year because a relative  has been using them for years and recommended them.

After the first year, I just turned my spreadsheet/1099 in and paid the bill when it came.
I never questioned the cost or doubted the quality of their work.
The $250 was not the deal breaker for me. Just surprised me.

The fact that they did not list my traditional IRA, a pretty important document (the only form of retirement I have) and did not even offer an apology or a symbolic discount--that's what got me.

God knows I make mistakes, but if I find out I did --I go above and beyond to make it up to my customers.
I guess I just assumed everyone does the same...

kkbmustang

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Re: Tax Preparation costs
« Reply #21 on: August 19, 2013, 04:53:24 PM »
I wasn't talking about the error they made on your return. They shouldn't have charged you to fix their own error. But an hour long phone consultation giving you advice on tax planning strategies, the differences between different types of IRAs? Yes.

kkbmustang

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Re: Tax Preparation costs
« Reply #22 on: August 19, 2013, 04:54:51 PM »
And next time you engage a professional, make sure you get the arrangement details in writing. For attorneys and accountants, it's called an engagement letter.

skyler

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Re: Tax Preparation costs
« Reply #23 on: August 19, 2013, 05:04:42 PM »
And next time you engage a professional, make sure you get the arrangement details in writing. For attorneys and accountants, it's called an engagement letter.

Ask for an "Engagement  letter!"
Mental Note Made! Thank you for the tip.

Can't say I have a lot of experience in interaction with attorneys (other than the one time estate planing kit, flat fee deal).
Never had any questions to my accountant either...
But now I know!

tomsang

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Re: Tax Preparation costs
« Reply #24 on: August 19, 2013, 06:37:36 PM »
Our firm has a minimum of a $1,000 fee for a 1040. Regarding paying for tax information or research, one thing to keep in mind is that accountants, lawyers, plumbers, etc. only get paid when they are being called on to assist clients. You should not call to just chat or ask basic questions as billable hours determine how productive we are for a given year, month, week, etc.  For a good client, I will answer simple questions off the top of my head and not charge them for my time.  If it gets into research, complications, etc. then I bill.  The other thing to keep in mind, if you professional provides you with bad information, then you have the ability to sue them for costing you tax, penalties, etc.  So answering a question off the top of your head can incur a lot of risk to the provider for whihc they are not being compensated. Not a good business model.

I look at it like other providers.  If I see my doctor, dentist, or plumber in the grocery store, I don't ask them to provide services for free unless they are good friend (I have been known to call my childhood friend who is an ER doctor at 11:00 p.m. on New Years to walk me through resetting my popped out arm, but that is another story)

If they are not providing value, than I think it is fair to question the bill.  Of course, if after the fact you Google the question and find the answer, that does not mean that you should not receive a bill as you should have wasted their time with a simple question.

skyler

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Re: Tax Preparation costs
« Reply #25 on: August 19, 2013, 06:53:41 PM »


Can switching accountants after a long time be a red flag for audits?

Can anyone comment on that?

tomsang

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Re: Tax Preparation costs
« Reply #26 on: August 19, 2013, 06:58:35 PM »


Can switching accountants after a long time be a red flag for audits?

Can anyone comment on that?

No.  If you are switching to another reputable firm, you will not be red flagged.  If you are switching to a firm that the IRS believes is over aggressive then you may be audited.  Chance of audit is still less than 1% unless you are making $500k+.  If you have a simple return, they pretty much audit through matching up w-2's, 1099, etc.  If something does not match up they just send a letter correcting the typo.  No audit.

kkbmustang

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Re: Tax Preparation costs
« Reply #27 on: August 19, 2013, 07:02:01 PM »


Can switching accountants after a long time be a red flag for audits?

Can anyone comment on that?

I wouldn't sweat it. I know there are plenty of red flags but I've not heard of that being one of them. Unless the CPA has been called out by the IRS or other taxing authorities for illegal activity or something. Even then they wont be giving up a list of clients without a protracted legal battle and are required to do so by a court of law. I don't get the impression that or anything similar is your circumstance.

skyler

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Re: Tax Preparation costs
« Reply #28 on: August 19, 2013, 07:05:39 PM »



I look at it like other providers.  If I see my doctor, dentist, or plumber in the grocery store, I don't ask them to provide services for free unless they are good friend (I have been known to call my childhood friend who is an ER doctor at 11:00 p.m. on New Years to walk me through resetting my popped out arm, but that is another story)

If they are not providing value, than I think it is fair to question the bill.  Of course, if after the fact you Google the question and find the answer, that does not mean that you should not receive a bill as you should have wasted their time with a simple question.


Tomsang, I hear you. Thank you kindly. I agree that professionals need to be paid and I totally understand it.
As I mentioned  in earlier posts, I do not begrudge the $250 charge. I paid it. Did not expect it, but learnt from it.

But my initial post was regarding cost and whether it would flag me in anyway for audit if I changed my CPA after 8 years.
That said,
What are your thoughts on the implication of my CPA's mistake?

What if I did not notice their error? What would have the tax implication been for me?

When including my traditional IRA in our return, it actually resulted in a refund to us, vs a payment to the IRS initially (the one that did not include my IRA). So that was supposed to be money out of our pocket (over 1k).


kkbmustang

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Re: Tax Preparation costs
« Reply #29 on: August 19, 2013, 07:10:35 PM »
You are always responsible for everything in your return regardless of who prepares it. That being said, if you show a good faith effort to file a correct return and reasonable reliance on a third party, it is likely (not guaranteed) that the IRS would waive penalties and interest, but still collect tax due. Another issue is whether you can go after the CPA for the cost of the defense, etc. this would be covered in the engagement letter. In other words, who is liable for what and under what circumstances. Which is why you want one of those.

skyler

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Re: Tax Preparation costs
« Reply #30 on: August 19, 2013, 07:48:53 PM »
You are always responsible for everything in your return regardless of who prepares it. That being said, if you show a good faith effort to file a correct return and reasonable reliance on a third party, it is likely (not guaranteed) that the IRS would waive penalties and interest, but still collect tax due. Another issue is whether you can go after the CPA for the cost of the defense, etc. this would be covered in the engagement letter. In other words, who is liable for what and under what circumstances. Which is why you want one of those.

I am seriously thinking about preparing my own return.
If I start early, I will have plenty of time to do research. And I can call the 1800 number for the IRS people (I''ve doneit for questions). Nevermind the 18-20 min on hold, if I start early, I'll get there by the 15th.
And assume full responsibility for my return. Seriously, how hard can it be?


kkbmustang

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Re: Tax Preparation costs
« Reply #31 on: August 19, 2013, 07:51:25 PM »
I'm a tax attorney and my husband is accountant and we use turbotax. Our taxes are pretty straight forward. If/when we add rental properties, we might consider outsourcing, but I doubt it.

skyler

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Re: Tax Preparation costs
« Reply #32 on: August 19, 2013, 08:04:52 PM »
I'm a tax attorney and my husband is accountant and we use turbotax. Our taxes are pretty straight forward. If/when we add rental properties, we might consider outsourcing, but I doubt it.
Saw your post...
Yep, there is the universe telling me I can do it...

Now I just wait for the 2013 TurboTax edition to roll out...and hope that if I get stuck, I can ask the right questions...

I remember in 2004, when we bought our home,  I could not follow through our closing statement to figure out closing costs etc.
It was very confusing.
A year ago I did not know the difference between Roth and Traditional IRA.
This past two weeks I managed to open a brokerage account with Vanguard, learn about Index Funds and make changes to allocations for an existing 529 Plan.
I am out of debt, building a stach and about to prepare my own return! Just wow!

kkbmustang

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Re: Tax Preparation costs
« Reply #33 on: August 19, 2013, 08:19:34 PM »
You can do it. Remember IRS.gov is your friend. They also have a YouTube channel. Pull the 1040 instructions, too, for extra help. There are also a lot if great publications on their website.

skyler

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Re: Tax Preparation costs
« Reply #34 on: August 19, 2013, 08:22:18 PM »
You can do it. Remember IRS.gov is your friend. They also have a YouTube channel. Pull the 1040 instructions, too, for extra help. There are also a lot if great publications on their website.
Thank you kkbmustang,
On it!

moostachio

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Re: Tax Preparation costs
« Reply #35 on: August 19, 2013, 09:16:55 PM »
This is a good post.  I have noticed my tax preparation costs have gone up a lot over the last 4 or 5 years.  I am paying about $650.  The taxes have become more complicated, but it has been the same guy.  Originally he worked with another CPA and all they did was taxes.  Now he works as part of a Financial Planning company.

He used to offer just advice on tax related items but I notice lately he keeps recommending I speak with a financial planner.  It is difficult for me to gage if his recommendation is based on really his sincerity that I need a planner or pressure by his new bosses to push the financial planning aspect of his new employer.  It would be interesting to hear from some of the CPAs on the forum what their thoughts are on this.  I was thinking about looking for an alternative preparer because of it.  I think I pay a lot of money for sincere tax advice, not to be steered down the financial planner path.  I also feel his rise up to $650 is related to this financial planning group now used to charging hefty fees.

skyler

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Re: Tax Preparation costs
« Reply #36 on: August 20, 2013, 05:52:12 AM »
I think I pay a lot of money for sincere tax advice, not to be steered down the financial planner path.  I also feel his rise up to $650 is related to this financial planning group now used to charging hefty fees.


Knowledge is power!
Seems that those who hang around here a lot -- sure seem to have all their ducks (or should I say$$ little employees:) in a row.

It's my hope that once I become better informed and know my options, it will be easier to recognize the bull***
I still think there is room for professional guidance, but at that stage in the game, I will be an informed partner in decision making, not a ignorant customer....
That's my hope anyway...

Spork

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Re: Tax Preparation costs
« Reply #37 on: August 20, 2013, 08:52:29 AM »
I'm a tax attorney and my husband is accountant and we use turbotax. Our taxes are pretty straight forward. If/when we add rental properties, we might consider outsourcing, but I doubt it.

+1 on Turbotax.  I've used it for 20 years or more.  I started trying to read the IRS instructions and... while I consider myself of at least reasonable intelligence, it made me feel like a stupid kindergartener. 

After doing it myself with TurboTax, I got worried one year (many years ago) and went to one of those H&R block type places.  I found that I was instructing her on what was and was not deductible.  (For crissakes, she didn't understand mortgage interest and property taxes were deductible... and that's back when interest was 8% ish on mortgages!)

There are things in TT that can be confusing... like buying/selling stocks.  But even those have become easier over time.  I know my brokerage gives me an exact figure for basis cost for stocks now.  For some of those stocks that have split/spunoff/split again/merged.... it can be confusing to sort out.  Now it's all "here's your cost basis". 

skyler

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Re: Tax Preparation costs
« Reply #38 on: August 20, 2013, 11:35:28 AM »
I'm a tax attorney and my husband is accountant and we use turbotax. Our taxes are pretty straight forward. If/when we add rental properties, we might consider outsourcing, but I doubt it.

+1 on Turbotax.  I've used it for 20 years or more.  I started trying to read the IRS instructions and... while I consider myself of at least reasonable intelligence, it made me feel like a stupid kindergartener. 

After doing it myself with TurboTax, I got worried one year (many years ago) and went to one of those H&R block type places.  I found that I was instructing her on what was and was not deductible.  (For crissakes, she didn't understand mortgage interest and property taxes were deductible... and that's back when interest was 8% ish on mortgages!)

There are things in TT that can be confusing... like buying/selling stocks.  But even those have become easier over time.  I know my brokerage gives me an exact figure for basis cost for stocks now.  For some of those stocks that have split/spunoff/split again/merged.... it can be confusing to sort out.  Now it's all "here's your cost basis".

Here is another question:
Say I go ahead with a different CPA that charges me around $300 to prepare the return.
Is this $300 spending going to fall under "business expenses" ? (I am self employed)
I know there was a separate category for tax preparation fees/materials on the regular return in TT, just don't know how it gets credited.

If it is 100% deductible office expense, it may be prove more valuable for this year's return ...
Any thoughts???
« Last Edit: August 20, 2013, 12:01:37 PM by skyler »

tomsang

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Re: Tax Preparation costs
« Reply #39 on: August 20, 2013, 12:22:25 PM »
Skyler you asked me a few questions earlier about the fees, discounts, refunds of fees, etc.  It is hard for me to answer those questions, because each firm has different policicies.  Our firm's policy is to pay for any interest or penalties associated with our mistake and fix the problem without additional charge.  The taxpayer is responsible for the taxes owing as that would have been the case if we did not make an error.  As I mentioned our minimum is like $1,000 with a typically return costing $2k - $3k and larger returns costing $20k+ for an individual.  What you get is someone preparing the return, an experienced person reviewing the return, then a partner level person reviewing the return and signing the return.  If there are complexities, then experts in those areas would also review certain components of the return.  This multiple review process catches most issues, before it goes out the door.  With that being said, we still have instances where we drop the ball.  That is when we appologize, fix the problem, and pay any penalties or interets that are incurred because of our issue. 

I look at this approach very similar to any other professional service.  I have not been offered a discount from doctors, lawyers, plumbers, mechanics, etc. if the work that they performed did not fix the problem.  I have had them redo something at no additional cost, which I was happy about.  Typically, those other providers would charge you extra to solve the problem.  So I would think your current CPA was fine on the billing side, it sounds like the appology was lacking.

CPA fees are deductible as a business expense.  In some cases, preparers allocate some small amount as a personal expense and the rest as a business expense.  I would also say that there would be a case to expense Turbotax or anything else that was needed to run your business as an expense.

If you choose to prepare your own tax return, you will learn a lot, you can ask for advice from those on the board, and there are lots of other resources.  Turbotax, the IRS, and others are typically not fully ready to finalize a tax return before year-end and depending on the last minute tax law changes they sometimes don't have the systems in place to finalize before mid to late January.

If you are going to stick with a CPA, which I recommend for complex tax returns, then I would check on credentials. I would ensure that they have a multiple stage review process, and that they are as aggressive or conservative as you feel comfortable.  Typically, those who are charging very little are being prepared by a sole owner who is working 80-100 hours per week. They can be brilliant, but still make mistakes based on no review and fatigue.

Good luck!   

P.S. I do a very narrow tax incentive for corporations, so I am worthless to friends and family.  The wife is not always sure that I should be preparing our own return:)  I have prepared a few thousand individual returns over my career so I understand how a tax return works, but the rules and the software tends to be the hardest hurdles to overcome each year.

 

Rebecca Stapler

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Re: Tax Preparation costs
« Reply #40 on: August 20, 2013, 12:32:34 PM »
I'm a tax attorney and my husband is accountant and we use turbotax. Our taxes are pretty straight forward. If/when we add rental properties, we might consider outsourcing, but I doubt it.

Awesome! I have used TurboTax for years and have been considering hiring someone for our 2013 taxes ever since my spouse picked up a freelancing gig from a Canadian company. But now I think I'll give it a try again on TT before finding an accountant. Hopefully it will have what we need.

skyler

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Re: Tax Preparation costs
« Reply #41 on: August 20, 2013, 01:03:39 PM »
Skyler you asked me a few questions earlier about the fees, discounts, refunds of fees, etc.  It is hard for me to answer those questions, because each firm has different policicies.  Our firm's policy is to pay for any interest or penalties associated with our mistake and fix the problem without additional charge.  The taxpayer is responsible for the taxes owing as that would have been the case if we did not make an error.  As I mentioned our minimum is like $1,000 with a typically return costing $2k - $3k and larger returns costing $20k+ for an individual.  What you get is someone preparing the return, an experienced person reviewing the return, then a partner level person reviewing the return and signing the return.  If there are complexities, then experts in those areas would also review certain components of the return.  This multiple review process catches most issues, before it goes out the door.  With that being said, we still have instances where we drop the ball.  That is when we appologize, fix the problem, and pay any penalties or interets that are incurred because of our issue. 

I look at this approach very similar to any other professional service.  I have not been offered a discount from doctors, lawyers, plumbers, mechanics, etc. if the work that they performed did not fix the problem.  I have had them redo something at no additional cost, which I was happy about.  Typically, those other providers would charge you extra to solve the problem.  So I would think your current CPA was fine on the billing side, it sounds like the appology was lacking.

CPA fees are deductible as a business expense.  In some cases, preparers allocate some small amount as a personal expense and the rest as a business expense.  I would also say that there would be a case to expense Turbotax or anything else that was needed to run your business as an expense.

If you choose to prepare your own tax return, you will learn a lot, you can ask for advice from those on the board, and there are lots of other resources.  Turbotax, the IRS, and others are typically not fully ready to finalize a tax return before year-end and depending on the last minute tax law changes they sometimes don't have the systems in place to finalize before mid to late January.

If you are going to stick with a CPA, which I recommend for complex tax returns, then I would check on credentials. I would ensure that they have a multiple stage review process, and that they are as aggressive or conservative as you feel comfortable.  Typically, those who are charging very little are being prepared by a sole owner who is working 80-100 hours per week. They can be brilliant, but still make mistakes based on no review and fatigue.

Good luck!   

P.S. I do a very narrow tax incentive for corporations, so I am worthless to friends and family.  The wife is not always sure that I should be preparing our own return:)  I have prepared a few thousand individual returns over my career so I understand how a tax return works, but the rules and the software tends to be the hardest hurdles to overcome each year.

 
tomsang
I so appreciate you taking the time to answer.
My plan is to wait for the 2013 TT software to roll out and give it a try (on or before Jan 2014).
I f I get stuck, I will have time to go to a professional.
Meanwhile, will check with friends for a TT desktop version from 2012 just to "practice".

Every year I maintain my receipt and update expense spreadsheets.
I have one folder where I drop anything tax related and at the end of the year I have it all in one place.
Most of the effort is in gathering all the stuff to take to the accountant.  So it should be fairly easy.