Death and taxes
November 7, 2021 2:24 PM   Subscribe

I’m the executor of the estate of a family member who recently passed away. I’m getting astronomical quotes from CPAs to file the final taxes. Can I just use H&R Block instead?

A CPA I talked to last week says just for form 1041 (estimated estate tax), their fee will “start at $10,000”, and that’s not even including a 2021 form 1040 for the decedent. That seems really high to me, so I’m looking for a sanity check.

This estate is just not that complicated or large. It consists of long-term securities in a brokerage account, a Roth IRA, a rental property that grosses $2500/month, and a primary residence that will be sold as part of settling the estate. It’s way, way below the federal estate tax threshold. Is “starting at $10,000” really the going rate? Am I an idiot for turning to a CPA for this? For reference, the decedent paid H&R Block about $600 to do their 2020 form 1040. Would it be a mistake for me to have H&R Block do the estate tax?

I don’t have the time or mental energy to attempt to do the taxes myself.
posted by qxntpqbbbqxl to Work & Money (4 answers total) 2 users marked this as a favorite
Best answer: It's not about filing taxes, it's about planning taxes. What you want is a CPA that structures the estate properly and files the proper forms to rationalize your ongoing tax burden (not just the estate tax). Within the range of legal, there is smart and there's not so smart.

For example, with the rental property, depending on how things are handled, you could end up paying ongoing property taxes on the current market value. However, if there's a provision for a "step-up basis," you can keep the previous tax rate. This affects whether or not you can afford to keep the rent at the same level.

There's the potential for a huge mistake here. The planning should have started years ago; your relative's lawyer might be able to tell you what they did to prepare. In fact, you might want to engage them. In any case, a seasoned professional is well worth it here.
posted by dum spiro spero at 3:08 PM on November 7, 2021 [3 favorites]

Best answer: At minimum get a couple other quotes. You don't need a CPA - there are competent financial planners & tax preparers who are not CPAs.
posted by latkes at 3:21 PM on November 7, 2021 [3 favorites]

Best answer: I am also dealing with managing my dead parents' estate this year. I've worked with a) the basically free lawyer I have access to through my work benefits - gave me overview of all the stuff I need to do - a to-do list basically b) A NOLO press book called The Executors Guide, c) my parent's estate planning lawyer (figured out the minimum I need lawyerly help with and focused his time on that) and d) plan to pay a regular tax preparer to do their taxes. I have a guy I've worked with in previous years for their taxes.
posted by latkes at 3:23 PM on November 7, 2021 [3 favorites]

A. If you are the executor (court appointed) you need to add to your 1040 the form 1310 which allows you to file for a refund.
B. These types of earners usually have a bookkeeper or accountant
C. The H&R payment can come out of whatever refund is due
posted by The_imp_inimpossible at 10:38 PM on November 7, 2021

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