Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Feb 1, 2011 21:57:03 GMT -5
Sorry if this is a repeat thread.
I know, I know, I know...I should just complete our tax return myself. This is one of those issues I concede on to dh. (I might have made up some numbers on a rental proprety depreciation one year, and he didn't get the joke.)
Let's move past that and let me know your answer to this:
If you pay an accountant, what caliber do you hire? How much do you pay? Is it worth it? Have I lost my mind (for this reason, I know I have for other reasons)?
We've used the pretty basic accountant, paying about $300.
This year we're converting two houses to rentals. We've moved, and my husband has found himself quite the accountant. The accountant is pretty clear: converting the two houses to rentals takes a bit of paper work. The accountant says we'll want to have him do our taxes this year to make sure everything is done correctly, and if everything stays the same for next year, we won't need as "good" of an accountant as he is. The accountant, looking at our last year's file almost turned us away, until we brought up the houses we now rent out. He says he'll charge us $1300 for the entire return.
Whatcha think?
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TheOtherMe
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Post by TheOtherMe on Feb 1, 2011 22:00:34 GMT -5
I've prepared tax returns for a living and it isn't that hard to do the paperwork to convert a personal house to a rental house on a tax return.
To me, $1300 is way too high to do this unless there are a lot of other complications on your tax return.
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bookcrazychick
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Post by bookcrazychick on Feb 1, 2011 22:23:47 GMT -5
WOW, converting rentals is not THAT difficult. Not fun, but not too hard. I think he feeding you all a line of bull. We have a few clients with millions in revenue and VERY complicated returns and we have never charged $ 1,300 for a return. So either you live in a very HCOL area, he is over charging or I need to look at what we are charging our clients!!
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Feb 1, 2011 22:33:14 GMT -5
We live in the Pacific NW and not in Portland or Seattle, so it's really not a HCOL. One thing he did mention was that one of his staff prepares the return and then another staff member double checks it. He professed this is not normal practice and is one of the reasons his firm charges more. He used the metaphor of his firm is the Mercedes version and H&R Block is the Kia version of CPAs.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Feb 1, 2011 22:37:47 GMT -5
I don't think there are too many other complications than the rentals: We do itemize because of mortgage interest. We don't have medical. We have two dependents. We have paid tuition this year in addition to student loan interest. Dh has alimoney--which the accountant mentioned had some weird trip up in it--not sure about that one, but he said he needed to check the divorce decree. No more day care, very very little charitable donations (not because we're mean, but because we have a lot of debt), and some money markets that have less than $10K combined.
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TheOtherMe
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Post by TheOtherMe on Feb 1, 2011 22:38:05 GMT -5
Every place I ever worked, a staff member prepared the return and either a partner or a senior preparer reviewed the return. That is normal procedure and does not add to the cost.
No, he isn't H &R Block, but sometimes their returns cost more than a return prepared by a CPA.
IMO, he is feeding you a line of BS.
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TheOtherMe
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Post by TheOtherMe on Feb 1, 2011 22:40:08 GMT -5
Uh, alimony isn't hard. All you need is the amount paid to her and her social security number.
Sounds like the only complicated item on this return is converting to rentals. My advice: find somebody else. They will not charge you $1300.
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bookcrazychick
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Post by bookcrazychick on Feb 1, 2011 22:58:11 GMT -5
Hmmm, I would have a hard time giving anyone my money to someone who referred to themselves as the "Mercedes" of their industry. Sounds to me like they know they are over charging and are trying to justify it. Interesting marketing ploy though. I guess our little practice is the Chevrolet of accounting firms. Need to think of how I can incorporate that into our advertising. Oh, and I agree with Taxpro. Anyplace I have ever worked, usually a junior member does the return and someone higher up reviews it. Common and does not add to the cost of preparation.
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wvugurl26
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Post by wvugurl26 on Feb 1, 2011 23:04:22 GMT -5
Probably not on returns I prepared but I'm sure we might have charged close to $1300 for some returns at my old firm. Now granted hers doesn't sound that complicated but I could see it. This was a firm in a LCOL area. I say this bc as an entry level associate my tax fee per hour was $150. Then we charged the electronic filing fees and the bookkeeper's time to process the return in the system. I think the partner's rate for tax was near $400/hour. One thought on converting houses to rentals, is he charging them to set up depreciation tables and the like? Standard practice is to have a senior manager or partner review the return for individuals before it is processed. Its called cya. Corporate returns got a partner cold review and a review by the partner for the team who did the return. Those are a different beast though.
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TrixAre4Kids
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Post by TrixAre4Kids on Feb 2, 2011 3:20:44 GMT -5
I live in Seattle and have my taxes done by CPA firm in Marysville (appx 1 hr north) Their real estate is cheaper there and so they can charge less. I have one rental, but I don't want to mess with depreciation etc, hence the accountant. I am charged appx $285 and most of that is expensed against the rental. I think $1300 is a rip off - Find somebody else. Trix
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michelyn8
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Post by michelyn8 on Feb 2, 2011 9:05:00 GMT -5
One thing he did mention was that one of his staff prepares the return and then another staff member double checks it. He professed this is not normal practice and is one of the reasons his firm charges more. Read more: notmsnmoney.proboards.com/index.cgi?board=finance&action=display&thread=2741#ixzz1CoHpER4cI worked part-time for a little while last year for a financial firm. My job to was either input the info into the computer for the return and then turn it over for someone else to check or check what someone else had entered. Makes sense when dealing with returns that are itemized and may have multiple schedules, etc. I would think this is the norm in any firm that does tax returns. Its a way for them to ensure the returns are correct (or as correct as the info provided by the client) before filing. I know they had some high dollar clients and fees varied but I don't think they ever went above $5-700 on even the most complicated returns.
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Gardening Grandma
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Post by Gardening Grandma on Feb 2, 2011 10:49:23 GMT -5
I have one rental, but I don't want to mess with depreciation etc, hence the accountant.
We also have one rental. I use Turbo Tax Premier. It calculates the depreciation (and shows you the worksheet).
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ihearyou2
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Post by ihearyou2 on Feb 2, 2011 12:02:27 GMT -5
I saw an article discussing H & R Block and that their best days are behind them. More people are seeing the ease and convenience of doing their tax returns themselves. The programs are getting better and better at walking you through even complex transactions and getting it right. The same will be occurring for CPAs which are completely inefficient in getting tax returns done at a good price. The days of having a professional do your tax return are going bye bye except for the most complex returns.
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souldoubt
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Post by souldoubt on Feb 2, 2011 12:06:56 GMT -5
"One thing he did mention was that one of his staff prepares the return and then another staff member double checks it. He professed this is not normal practice and is one of the reasons his firm charges more."
In my limited experience this is not true. I worked during tax season probably 5-6 years ago for a guy who ran a small firm that made a lot of it's money during tax season. There were 3-4 of us turning out the returns all using the same system and my boss (the owner with his MBA in taxation) would review all of the returns. I don't see how this is not normal because some of the people he hired knew how to use the system and where to plug things in but they had 0 experience with doing tax returns. The owner could glance over a return and easily spot things that stood out, that were incorrect and so on that an untrained eye might not question.
As far as what you are being quoted I saw people get charged various fees. Some people were charged slightly more because of the number of schedules, because they made more and so on. The dollar amounts weren't huge persay but it was almost like there were brackets he put people in and I turned out returns in 15 minutes for people who would be charged different amounts because of what they made. I made $14 an hour and some of the people were $300 for 15 minutes of my time and maybe 5-10 of his.
Edit - if your return is detailed and out of your league then pay for someone's expertise. Unfortunately though a lot of people seem to have basic returns that they don't mind getting charged for when it would be more beneficial for them to do on their own.
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hsclassic
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Post by hsclassic on Feb 2, 2011 12:12:04 GMT -5
We spend about $500 per year. Although no rental property (had it previously), and used to have a sole proprietorship business, every year we do have something quirky that makes me decide to go back to the CPA. (Used to do my own taxes, and the frustration and time drove me to a CPA.)
However, the 1st year, we paid closer to $700 because of the CPA having to get us set up, get familiarized with the history, so she could properly support us.
Yes, both a bit pricey, but piece of mind in our situation makes it well worth it.
I agree that $1300 seems very pricey, but check what an alternative would cost you to not only become a new client, but with the unique aspect of this year's return. Also, is the $1300 a 1x event? Or is this the price every year going forward? (It shouldn't be, but doesn't hurt to ask.)
And since you've been a repeat customer, I'd definitely be asking for the "loyal customer" discount!
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Deleted
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Post by Deleted on Feb 2, 2011 12:29:34 GMT -5
I believe we were charged $1000 in 2008 by our SF Bay Area CPA (we moved to Germany in 2009 and the company pays KPMG to do both our US and German tax returns. I shudder to think how much they get paid. Our US tax return was 218 pages last year!).
We're somewhat complicated with 4 rentals, oil royalities, stocks, 2 states, AMT schedule et cetera. The problem is I can't keep up with all the tax changes so I count on her to help me do some planning. I'd shop around too. How did you find your CPA? Ours was a referral from our insurance agent about 10 years ago.
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hsclassic
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Post by hsclassic on Feb 2, 2011 16:04:19 GMT -5
Our CPA was a referral. More times than not, a referred professional is a better fit than not in my experience.
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Post by hawkeyes2001 on Feb 2, 2011 19:21:27 GMT -5
DBF and I use a tax accountant even though our returns are pretty simple. The tax accountant is my brother. I typically pay him $200-300 for an hour of his time. I do this because my brother's wife is a financial train wreck and thus he can use the extra money.
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lajes
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Post by lajes on Feb 2, 2011 19:40:22 GMT -5
Your returns are pretty standard and converting rentals properties is not that hard. Your return is 3 hours tops.
I did returns for years -- as a junior, senior and managing CPA and the figure you were quoted is way too high.
The most I would charge for this is $600.
I live in Maryland -- a few hours from DC.
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Nazgul Girl
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Post by Nazgul Girl on Feb 2, 2011 19:53:51 GMT -5
We spend $1000 a year, but it includes five face-to-face meetings with our accountant and investment advisor. We've been happy with the service they provide us, and everything is coordinated. The accountant also performs some other services for that $1000, so it isn't strictly taxes.
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sesfw
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Post by sesfw on Feb 2, 2011 22:34:55 GMT -5
Hubby works for H&R so he does our taxes. He gets some very complicated returns but I haven't heard him say anything about doing a $1300 fee return. The advantage to going to a tax preparer over a CPA is ....... not all CPAs go to on-going tax classes to keep up with the changes in the laws. Hubby starts tax classes in August and takes a couple per month until the start of the season in January.
Something to think about.
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TheOtherMe
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Post by TheOtherMe on Feb 2, 2011 22:46:50 GMT -5
CPAs have continuing education requirements to maintain their licenses and their courses are more complicated than H & R Block has. My brother-in-law works for Block and he can pass their continuing education classes without even reading the coursebook.
Since we, the preparers, were not CPAs, the CPA owner would go to the classes and then require us to read his materials and we would have a meeting to discuss them.
The IRS is also in the process of implementing education requirements for all tax preparers.
Enrolled Agents also have continuing education requirements.
People who just hang up their shingle as a tax preparer haven't had continuing education requirements, but they will in the near future.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Feb 2, 2011 23:36:36 GMT -5
Thanks for the advice and help. The accountant did say it would be substantially less in subsequent years as this was a set-up year and the conversion of the houses year. I'll get quotes from a few others and see what they say.
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Feb 2, 2011 23:38:18 GMT -5
Hah! I had no idea there was a "Tax Talk" Board! Whooooppppssssiiiiiieeeeee!!!!
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Deleted
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Post by Deleted on Feb 3, 2011 2:48:03 GMT -5
Yes, it was also at the MSN board. But I think It's fair to ask your question in both places. Not directly, but there's the unasked question, is my situation so difficult I really need a pro? Since many on the tax board are professionals you wouldn't get an unbiased opinion. And a lot more folks post on this board and from all walks of life, including a fair number of LLs. So you're getting opinions from a lot of tax professional "customers".
That board is great for specific tax questions. I think I've asked 4 or 5 over the last 3 years.
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kimber45
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Post by kimber45 on Feb 3, 2011 10:20:28 GMT -5
Yes, because we run a small business on the side. We usually pay around $250-$275 per year.
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Deleted
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Post by Deleted on Feb 3, 2011 11:05:20 GMT -5
My guy did my personal and business tax returns and I think it cost me $450 last year. $1200 is WAY too high. Most CPA's charge by the hour so I'd be curious what his hourly rate is and if he really thinks it's going to take that long. He probably is charging you that for the PITA factor.
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TheOtherMe
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Post by TheOtherMe on Feb 3, 2011 20:06:17 GMT -5
And you haven't been a PITA yet.
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formerexpat
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Post by formerexpat on Feb 3, 2011 23:27:31 GMT -5
Yeah, sounds like a line of BS to me too. I would also recommend looking it over multiple times yourself after they do their double checks. I had one of the big 4 completing my taxes when I was overseas because of some of the complications in my return and caught mistakes in both years that would have cost my company thousands of additional taxes paid. Simple mistakes too that if the "double checker" was double checking then they should have caught them.[/size]
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mwcpa
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Post by mwcpa on Feb 4, 2011 7:03:47 GMT -5
Whether one uses turbo tax, h&r block (who advertises here), a local practitioner who is an EA or CPA (with tax experience), a tax attorney, or one of the final 4 CPA firms comes down to personal preference and comfort level.
Many of my clients are more than able to use the 'turbo taxes' of the world, but they have come to me for the other things that my staff and I share with them, things that turbo tax cannot, such as advise in other areas such as business planning, estate planning, general financial planning, etc., etc. Many of my clients have stated to me that they would rather pay me $500-$600+ to deal with their tax stuff as they feel the money spent is better than losing a few weekends stressing over things....
In regards to the original posters concern about the quoted fee, shop around if you feel it is high.... fees in LA or NYC would probably seem high to someone in Nebraska... ask friends and family with a similar situation a yours, seek out another local professional... the line about the double check has me nervous if that is the only reason to support why his fee is higher than the ones in the area... most reputable firms have some sort of process to prepare, review and assemble tax filings... even when I had no staff I had a review process, I prepared the return one day and then came back it it a day or two later to give it a once over to make sure nothing was missed....
Also, taxpayers should review their tax filings BEFORE they sign it, no matter who prepares it... heck, when I do my own return I have my wife who has zero tax knowledge look it over to look for things that seem out of wack.... once she even found a typo, I added an extra zero to my real estate taxes, but as I am in the AMT I failed to catch it as it did not change the current tax....
I assume we have all made mistakes in life so if a paid professional makes one give him or her a break, unless you happen to be perfect and never made an error in your life.... the way someone deals with the error is more important and often, in the preparation of a tax filing, there are 3 different ways to address a matter or something you know was not effectively communicated to the professional (once I had a PITA that faxed me some documents, we addressed the matter, sent the filings, he calls up complaining that we left off a material matter.... upon review he never sent the missing data, but we changed the filings and did not charge him extra for his mistake..... but as he was a jerk about it he was fired the next year, life is too short to have to deal with angry people)
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