Tax return preparation -- how much should it cost?

January 16, 2016 12:17 PM

I have a pretty simple tax situation, and I'm pretty sure that preparing my return isn't difficult. The exact figures differ, but the overall structure is the same every year. Still, I'm phobic about the whole thing and greatly prefer to pay someone to do it for me. The price seems to creep up each year, though, and this year it could be as much as $600, which seems like a lot. I live in NYC, but still.

What is a reasonable price to pay an accountant for a pretty simple tax return? And can anyone recommend an affordable accountant in NYC?

posted by swheatie to Work & Money (19 answers total)

TurboTax is my accountant. Always less than 75$.
posted by w0mbat at 12:32 PM on January 16, 2016 [4 favorites]

Well, here in Southern NJ I have been going to a CPA for several years and he charges about $250 for our joint return, including electronic filing and document vault in the cloud. I realize it's not NYC but gosh, you could drive down here and back for less than $350, huh?
posted by forthright at 12:36 PM on January 16, 2016

Turbotax online is very user-friendly, I've used it without any problems for the last ten years. You should really give it a try.
posted by mareli at 12:58 PM on January 16, 2016 [1 favorite]

Unless you have self employment income, it should be in the $250-$400 range (I used to prepare taxes in NYC until I moved out of the area last year). TaxAct is fine for most people's situations though and way cheaper.
posted by melissasaurus at 1:00 PM on January 16, 2016

In Oakland, it's about $250-300.
posted by salvia at 1:00 PM on January 16, 2016

I understand you're question is a recommendation for a reasonable accountant to handle this for you. In order to help answer your questionI have a question to help guide future responses: What are you looking to optimize for?

Are you looking for the simplest, most painless option? Are you looking for the cheapest option? Are you looking to maximize your tax refund? Or maybe something else, or some combination of the above. Let us know, and how you rank them in importance.

I've had help with tax returns in the past and decided to do my personal income tax filing myself for the first time last year. I used the FreeTaxUSA software recommended by The Wirecutter and paid the $13 fee. I preferred this over TurboTax, as TT lobbies to make filing tax returns more difficult, and that's not cool. I believe it took me 30 minutes to an hour to complete? That worked for me, it may or may not work for you.

I consider my tax returns simple. I don't expect to have a lot of deductions, or anything too complicated, where it would make sense to pay someone $$$ to get me $$$$ back.

I guess what I'm saying is, if you consider your tax return simple, think about what you're looking to get out of it and use that as a guide to hone in on the right accountant (and what you're willing to pay). If it's not especially complicated, and you're not looking for superior service, it might make sense to have an average accountant handle this for you, or someone else you trust, if you're not willing to do it yourself. In other words, one of the first decent accounting office you find that's on your way. Take this with a grain of salt as IANAA, IANYA.

Good luck!
posted by Goblin Barbarian at 1:03 PM on January 16, 2016

One other piece of advice: if an unknown accountant is promising to get you a ton of deductions sight unseen, trust your instincts. While it's true that your specific circumstances may qualify you for certain deductions: I believe things like if you're a veteran or have dependents, etc., you may want to think twice about excessive deductions that could be dipping into shady territory. People like to joke about counting their pets as dependents, but yeah.

Also: The most common deductions are already included on the available software solutions. It makes sense to pay more when you're looking for help with more specialized situations finding deductions/tax credits you wouldn't otherwise know about.
posted by Goblin Barbarian at 1:16 PM on January 16, 2016

As another data point, we are having our taxes done professionally for the first time this year, and the CPA we are using is estimating $400-$600 depending on the complexity. I expect to fall in the middle of that range.
posted by blurker at 2:13 PM on January 16, 2016

We are in Queens and pay around 200.
posted by gaspode at 2:22 PM on January 16, 2016

Big fan of free. https://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free
posted by chrisinseoul at 3:02 PM on January 16, 2016

I'm a single person with a relatively uncomplicated return, and I pay about $200 to a professional CPA based in Rhode Island...
posted by TwoStride at 3:10 PM on January 16, 2016

Typically an accountant charges by the document, so depending on how many W-2s you have and how many tax forms you plan on filing, that's what drives the costs up. So if you're doing short form, I wouldn't bother.

Unless you're doing something really tricky with rental property or 401(k) withdrawls or stock transactions, I wouldn't bother with an accountant.

You can complete your own taxes on Turbo Tax on line, both state and federal. See how it goes, they only charge you to file. You may be pleasantly surprised at how easy it is to do your own taxes.
posted by Ruthless Bunny at 3:20 PM on January 16, 2016

I also use FreeTaxUSA for the price of two coffees.
posted by roomthreeseventeen at 3:47 PM on January 16, 2016

I have been using TaxAct for years. They seem to be the cheapest computer tax return. I think Fed+OneState is now about $20, and there are free options too.

I often get something wrong. This is not awful. Sometime during the summer, you get a form from the govt saying ''you owe $200 more''' and you pay it and it all goes away. The feds actually do your return, and bill you for the difference. Just send in a 1040 form with some stuff on it and the govt will treat you fairly and equitably.

The one time (in the last few years) I used a preparer, they omitted several items that underpaid about $1000 altogether (in uinpaid taxes--it happened fast, so there were no penalties). So I had more mail action with that return than my TaxAct returns.

In general--despite your fears--the IRS is your friend, who knows what you owe and won't take crap from you, but is perfectly happy with any 'fair' settlement. Note--I once (before computers) misinterpreted some instructions and computed a bogus amount. It was slightly less than what I actually owed, but (after a phone call) my innovative computation was accepted.

My advice: Save your $200-$500, file as cheaply as you can, and accept the consequences fearlessly.
posted by hexatron at 6:05 PM on January 16, 2016

If you have anything going on that you're uncertain of, or if you have a business, you should use a CPA, and yes, it's going to cost you real money. If you just have a reasonably simple 1040, even if you itemize, TurboTax or any of its competition may indeed be a better option. But it's impossible to give an adequate answer to how much it should cost without a ton more information about what's going on that had you going to a real accountant instead of doing it in TurboTax to start with. If you think it's simple just because they do the same thing every year, that doesn't mean it's actually simple. When I hear "simple", I'm thinking that you have a W-2, maybe a mortgage, an IRA, some student loans. If you have a bunch of investment accounts, a schedule C that's more than just reporting a 1099, or more than one K-1? You aren't simple.

Your question history suggests to me that it's very possible that you do actually have a business--which might be wrong! And that's fine, if you don't then doing it yourself could be very viable. But if you do, remember that "complicated" for a business is the sort of thing where you have a accounting department on payroll before you even have anyone external involved at all. The presence of even a "simple" business drives up the complexity considerably, so that could account for a lot of this.

The tl;dr is that if you have a 1040 with some employment income and, I don't know, student loans and an IRA or whatever--then sure, do it yourself. If not, you're probably not as simple a return as you think you are.
posted by Sequence at 11:14 PM on January 16, 2016

If it's that simple, why not just follow the instructions for the forms and do it yourself? Taxes really aren't as complicated or difficult to file as most people seem to assume they are. (Source: used to be professional tax preparer and 90+% of the forms I filed were things that literate people could have easily figured out for themselves if they'd ever bothered to try.)
posted by Jacqueline at 11:33 PM on January 16, 2016

I paid 500-700 dollars in Boston for a couple of years when my taxes were a bit (but only a bit) complicated. I've since switched back to turbotax as the CPA didn't actually save me that much work, and didn't seem more knowledgeable than the software.

Is now a good time for my rant about how the IRS should just tell us what we owe and remove all the cost and stress from the process?
posted by david1230 at 5:49 AM on January 17, 2016

I have a CPA in CO that accepts clients from all over the country (and indeed, the world!). Everything can be done electronically (you fill out their forms and upload your own online), and they charge about $250-300 for the simple stuff. PM me if you want the recommendation.
posted by the_wintry_mizzenmast at 7:57 AM on January 17, 2016

Response by poster: OP here. Sorry late getting back. To clarify and maybe guide any further responses. Maybe my return isn't quite as simple as I implied. As I said, I'm pretty avoidant about the whole thing. I AM self-employed and I have about five W-9s. And I do have some investment income. So it's not a wham-bam 1040. But it is pretty much plugging in numbers -- just like last year and the year before that. For someone who's a pro at this sort of thing, I still think it's probably pretty quick. But if Ruthless Bunny is right about each document affecting the cost, then maybe my return IS an expensive one.

As for Goblin Barbarian's question: I'm not looking for someone to pull deductions out of thin air. My deductions pretty much are what they are. I'm really looking for someone competent and affordable. Someone who will take my paperwork, plug in the numbers, get it done legally and on time. Ideally for $500 or less. Still open to referrals!
posted by swheatie at 11:12 AM on January 17, 2016