Would you pay $1125 for someone to do your (complicated) taxes?

[Sandia]

Hello Mustachians,

I am an American living and working abroad in Australia, which means I pay normal Australian taxes and I have to file US taxes. I muddled through my taxes last year, but found out in retrospect that I could've done them a lot better. I've tried to learn a lot more about taxes this year, but found it pretty overwhelming to try to find all the forms I need (for example, it took me ages to find out about FBAR and I kept finding seemingly contradictory info). Looking ahead, I'm complicating my 2016 taxes further by getting married and starting a small freelance business this year.

I contacted a small accountant company, recommended by a friend, which specializes in US and Australian taxes (among a few others). They've quoted me $1125 AUD to:
- file 2015 US taxes
- file 2015 FBAR to be FATCA compliant
- give me 45 minutes of tax planning advice for 2016 taxes
- review 2014 US taxes to see if I need to amend them

Is this a fair price for the work involved?
Would you pay someone this much to learn how to do this kind of complicated taxes correctly?
 

[NickNam]

Unless you made more than ~$95k in Australia then that portion is exempt from taxes in the USA if you lived there most of the year. The price sounds a bit high but thats just depending on the complexity of your taxes. I'd talk to a couple other places just to make sure you're getting a fair price. A friend of mine charges based on the # of hours he thinks it will take x his going rate.

I've filed taxes while living abroad but with wages well below the exemption of $95k and it was just 3 forms to fill out.

[Joe Moneybags]

The Foreign Earned Income Exclusion is actually $100,800 for 2015.

$1,125 does seem excessive especially when so much of your income is exempt from federal income taxes. You should definitely shop around.

Have you considered using tax software? It's free if you make below a certain threshold. Check out irs.gov for more information on this.

[Dee18]

One thing to consider is that if you have professionals do your taxes once, and you really understand what they did which the tax planning session seems to cover, you'll have a good template to follow yourself in the coming years.

[jwright]

I worked at a top 15 firm in the Southeast (so low cost of living), that seems fair if not on the cheap side to me.  You want someone senior level and higher to work on your file; they bill at least $300 an hour.  If the planning meeting and reviewing 2014 takes 1.5 - 2 hours; then that only gives them about 2 hours to prepare your 2015 return and FBAR reporting.  The first year they do your return they will have to do all of your data entry and get to know your file as well. 

[Sandia]

NickNam, which three forms did you have to fill out?? I'm finding the info available online pretty confusing.

Joe Moneybags, which software? I've been searching for software, but so far all the ones I've tried don't seem to have the forms for Foreign Earned Income Exclusion, which is what I need.

Dee18, this is exactly my thought, but $1125 is way more than what I was prepared to spend....

jwright, is there any way to determine if my accountant is senior level?

[jwright]

jwright, is there any way to determine if my accountant is senior level?

Just ask what their title is (senior associate, manager, partner), and ask if they are the ones that will be performing the work.  Most large firms will have an associate doing the bulk of the data entry/prep work at a lower billing rate, and then have a review by someone more senior so the client gets some economies of scale with the bill.  Who's signature will be on the paid preparer line?  Is that person actually taking the time to review?

[chesebert]

I am doing my own taxes this year and I worked abroad for most of 2015. I was fortunate to have a template from 2014, which was prepared by a team of experienced accountants (paid for by my employer of course). I am about 20-30 hours into the process for 2015 and I am almost done. I could not have done it without the template from 2014, which was well over 100 pages with all the schedules and worksheets.

The foreign earned income/housing exclusion and the foreign tax credit are the two most difficult forms to fill out (well, there are numerous worksheets). I also had to do the AMT calculations, which meant I had to work through all the forms using AMT adjustments (much of it was automated with the tax software, but the foreign ones I had to fill out myself). It was painful, but the accountants I worked with in 2014 wanted $5,000 for their service... talking about price gouging.

FBAR in comparison to tax forms is a much easier form to fill out, and should take no more than 30 minutes.

The price quoted is not bad. I would pay them at least this year so you have a good template going forward.

[Sandia]

So, I have just spent several painful hours filling in tax forms by hand after Turbotax told me I'd have to pay to get the forms I need (despite several people telling me they did it free with Turbotax...).

I've done Form 2555 and Form 1040 (plus an FBAR) to the best of my ability. I *think* I've done it right, but I'd rather be a bit more confident in my numbers before I submit my forms to the IRS.

What should I do?
a) pay for the advanced version of Turbotax and see if my long-hand forms match the software (~$40 USD);
b) pay for the very nice accountant to do it properly the first time (~$650 USD);
c) just submit the forms and be optimistic in myself ($0 USD, unless I fucked up somehow [unlikely?] and get audited).

[hb187]

So, my job is expat taxes. We charge $250 for a regular tax return with a 2555. We charge about $65-75 for an FBAR, and $200/hour for consultation. All in all, it sounds like you're paying double what you'd pay in my office.

[hb187]

Oh, also that's in USD and only for the US taxes. If the accountant is also doing your Australian taxes it gets closer to not-outrageous.

[jwright]

So, my job is expat taxes. We charge $250 for a regular tax return with a 2555. We charge about $65-75 for an FBAR, and $200/hour for consultation. All in all, it sounds like you're paying double what you'd pay in my office.

How can you quote a flat fee if you don't know what details the return entails?  How long does it take you to prepare?  Do you have an internal review process or does only one person work on the return?

[hb187]

That's not a quote, it's more of an average. Still, it would be very unlikely for us to charge $650 (1125 AUD is 850 USD, and assuming 200 for the consultation, that leaves 650 as the return price) for a return and FBAR unless there are foreign corporations (form 5471) or something else not discussed in this thread. For a regular tax return with just wages and a 2555, the fee is $250. If the return has other investments, say a rental home and some stock transactions, of course the price goes up from there.

Yes, we have an internal review process. It's a ten person office located in Costa Rica. I am a CPA, EA, and attorney.

[hb187]

I worked at a top 15 firm in the Southeast (so low cost of living), that seems fair if not on the cheap side to me.  You want someone senior level and higher to work on your file; they bill at least $300 an hour.  If the planning meeting and reviewing 2014 takes 1.5 - 2 hours; then that only gives them about 2 hours to prepare your 2015 return and FBAR reporting.  The first year they do your return they will have to do all of your data entry and get to know your file as well.

Assuming you mean southeast US (rather than say, southeast Asia), the prices you're used to are going to be high by my standards. Our support staff earns about $800-$1000/month.

[jwright]

I worked at a top 15 firm in the Southeast (so low cost of living), that seems fair if not on the cheap side to me.  You want someone senior level and higher to work on your file; they bill at least $300 an hour.  If the planning meeting and reviewing 2014 takes 1.5 - 2 hours; then that only gives them about 2 hours to prepare your 2015 return and FBAR reporting.  The first year they do your return they will have to do all of your data entry and get to know your file as well.

Assuming you mean southeast US (rather than say, southeast Asia), the prices you're used to are going to be high by my standards. Our support staff earns about $800-$1000/month.

Well, $800-$1000 per month is not a living wage in the US, so that makes more sense.

A starting salary for associates was in the mid 40,000s I believe.  They are billed out at $150 per hour.  And they must be reviewed.  Even if it takes half an hour to prepare, 15 minutes to review, and 10 minutes to process... not going to get close to your numbers. 

[hb187]

We aren't a CPA firm, I'm actually the only CPA here. Mostly EAs, but since we're located overseas, we are able to charge a lot less. We also don't charge per hour. My salary is mid 40s, and my boss significantly more than that, but basically nobody else is pulling a US wage. I am from the U.S., btw, I'm just here for work. I did my own tax return in about 10 minutes.

[Midwest]

We aren't a CPA firm, I'm actually the only CPA here. Mostly EAs, but since we're located overseas, we are able to charge a lot less. We also don't charge per hour. My salary is mid 40s, and my boss significantly more than that, but basically nobody else is pulling a US wage. I am from the U.S., btw, I'm just here for work. I did my own tax return in about 10 minutes.

If you don't mind sharing ,what are you bosses qualifications?  You seem very qualified for what you are making (given US standards).

[hb187]

He's an Enrolled Agent, which is a tax certification given by the US Treasury. I've also taken the EA exam. As far as tax related items, it's about equal to the CPA exam (but the CPA exam tests a lot more than tax). Also, he started the company and has run it for more than 20 years.

Yes, the salary is on the low side. And, I'm pretty well tired of Costa Rica. Probably going to relocate back to the US later this year. Just need to get a visa for my wife and find a job in one of the cities I'm looking in (Charlotte, Charleston, Savannah, or similar). But that's several months away.

I could go on, but I don't want to derail the thread any further - back to the question at hand - given that Aus is a 1st world country and after converting from AUD to USD, the price is not unreasonable. If it were $1125 USD (which I thought at first when I'd first commented that it was too expensive) I'd say it's too high. However, there are tons of firms doing what my firm does but on an all online basis and could probably do the work for cheaper. Still, if you want to talk to a person in person, I wouldn't say the price is all that bad.

[Midwest]

He's an Enrolled Agent, which is a tax certification given by the US Treasury. I've also taken the EA exam. As far as tax related items, it's about equal to the CPA exam (but the CPA exam tests a lot more than tax). Also, he started the company and has run it for more than 20 years.

Yes, the salary is on the low side. And, I'm pretty well tired of Costa Rica. Probably going to relocate back to the US later this year. Just need to get a visa for my wife and find a job in one of the cities I'm looking in (Charlotte, Charleston, Savannah, or similar). But that's several months away.

I could go on, but I don't want to derail the thread any further - back to the question at hand - given that Aus is a 1st world country and after converting from AUD to USD, the price is not unreasonable. If it were $1125 USD (which I thought at first when I'd first commented that it was too expensive) I'd say it's too high. However, there are tons of firms doing what my firm does but on an all online basis and could probably do the work for cheaper. Still, if you want to talk to a person in person, I wouldn't say the price is all that bad.

Thanks.  I'm a CPA who is familiar with the EA designation.

[jwright]

He's an Enrolled Agent, which is a tax certification given by the US Treasury. I've also taken the EA exam. As far as tax related items, it's about equal to the CPA exam (but the CPA exam tests a lot more than tax). Also, he started the company and has run it for more than 20 years.

Yes, the salary is on the low side. And, I'm pretty well tired of Costa Rica. Probably going to relocate back to the US later this year. Just need to get a visa for my wife and find a job in one of the cities I'm looking in (Charlotte, Charleston, Savannah, or similar). But that's several months away.

I could go on, but I don't want to derail the thread any further - back to the question at hand - given that Aus is a 1st world country and after converting from AUD to USD, the price is not unreasonable. If it were $1125 USD (which I thought at first when I'd first commented that it was too expensive) I'd say it's too high. However, there are tons of firms doing what my firm does but on an all online basis and could probably do the work for cheaper. Still, if you want to talk to a person in person, I wouldn't say the price is all that bad.

I'm actually in Charleston if you need any tips when it comes time to make the move. 

[neo von retorch]

I would think the best way to determine the value of what you're getting is to get three quotes (or maybe a fourth if you want an online quote) from three local accountants. If they are comparable, go with the one a friend recommended. If the others are lower, and they can back up their capabilities, you might be able to get a better deal.

Another question I might ask is "are they so complicated that you really can't figure it out?" I use software to help me with my taxes (this year, I used TurboTax) and that wasn't free. But it was able to get me through renting out a house, moving, getting married, multiple 401(k)s, an IRA, student loans, tax losses in investments... taken as a whole, it's complicated, but broken into each component, you figure out what you need to input, and you do it, and it's not bad at all. Maybe you can do the same thing for each of these scenarios.