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Updated almost 7 years ago on . Most recent reply
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Tax preparation costs for business+ individual
Ok, so I got my tax prep bill and I think its way high. For discolsure, my accountant had to file 5 forms:
1040 US tax ind return
1040-ES Estimated Tax
Kentucky Ind tax
Kentucky Est tax
Kentucky Single member LLC tax return
For that he charged me a flat fee of 1 grand. I thought it was a hair high but not awful. Where he really got me was billing for 1.8 hours for several emails we exchanged throughout the year. He hit me up for an additional $526 there.
Now, keep in mind I have nothing complicated but I do have two 1040s, one W2, and my miscellaneous income from 9 rental units. But each of those will be spelled out in PAINSTAKING detail on a form I filled out and I had itemized receipts of everything. My most complicated itemized deductions are my SEP IRA, HSA, and charitable deductions, but it is literally all numbers listed clearly on a ten page form I fill out, and it's literally plug and play for him.
Please advise if $1526 for tax filing and tax planning seems high compared to anyone else, especially in a "cheap state?"
Thanks!
Most Popular Reply
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Well no, it's not "5 forms"
You've got 1040, Schedule A (probably) and Schedule E x 9 plus a few more miscellaneous forms.
The ES may or may not have involved some manual calculation or he could have just accepted what the software calculated.
plus your state forms.
The NSA Survey for Tax/Accounting firms for 2017 shows the following as national averages:
1040 with Schedule A and State Return - $273
Schedule E - $135 x 9 = $1215. Even if we're being generous and allow that you can fit 3 rentals on one Schedule E, that's still $135 X 3 (I don't know anybody who charges by the form, not by the property, so I'm really gonna go with $1215).
So if your guy charges by the form (some do, some don't....), then by this ranking, the average fee would be between $678 and $1488.
Then you have average rate for Management Advisory Services, which is what your "several emails" would fall under. The national average for that is $146/hour, so that's an additional $263.
So your bill of $1000 is pretty much right in the middle of where it should be. The emails might be a tad high, but I have no idea if you were asking him to explain to you, in painstaking detail, exactly how the various different tax bill proposals throughout the fall might or might not affect you, if you were asking him to calculate possible 1031 deferrals, preparing a significant tax plan, or whatever.
Your "plug and play" comment is a bit out of line. While there may be many tax professionals who "plug and play", the vast majority of CPAs who are worth their fee really do think about the numbers you've presented. They are, at a minimum,
1. Comparing them to prior year figures to see if there is an anomaly.
2. Checking for completeness (did you remember to find out the insurance amount on your rentals if they aren't reported on your 1098?)
3. Reviewing repairs/maintenance and several other categories to make sure the deduct vs capitalization exercise has been considered.
4. Review overall passive income/loss to see if there are recommendations to be made based on your income levels
5. Apply interest tracing rules for any applicable HELOCs
6. Make sure you're declaring all your possible rental deductions (mileage, cell phone, internet???)
7. Is there a different business structure that would work better for you based on what you're doing?
8. Are you still on track towards your goals? Have your goals changed? Any differences between your stated goals and your actual results will need to have a note taken for future discussion.
Some of those tasks will have been done on a property by property basis while some are done as a whole. $1000 is a very fair rate if your tax preparer works like this.