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My wife and I have an accountant that is currently charging us $700 to do both of our taxes. Is this normal? What are other people paying?

Our taxes are fairly complicated (home office, rental income, stock portfolio) but not overly so.
 

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My wife and I have an accountant that is currently charging us $700 to do both of our taxes. Is this normal? What are other people paying?

Our taxes are fairly complicated (home office, rental income, stock portfolio) but not overly so.
Around here (Newfoundland), CA's charge around $150/hr. For my wife and I, it typically costs around $400-$500.
 

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Maybe thats a more or less reasonable charge for a complex case. However, I found found that the quality of the tax preparer really varies and that price is absolutely no indication of quality. I am an accountant by education, but I don't do much taxes by trade. However, I had a lot of friends brining me their tax returns to check over and telling me they had paid $100-$200 for their personal taxes! When I took their original slips and calculated the exact same refund in 10 minutes (for free of course), their reverence for their accountant quickly changed.

Typically the young accountants are not so experienced, but are very diligent in researching deductions when they are first starting their practice. It is critical that they build their reputation, so they tend to go the extra mile. Over time, as they get more experience of common situations, they can get a little lazy in their questions (some just print out letters with the most common information and questions rather than doing an interview) and in some cases, they are no better than H&R Block (although 5-10x the price). The more common your situation, the more likely you can find someone much cheaper if you only want to prepare and file the taxes.

Where you really need the accountant is to introduce you to new ideas and to discuss tax consequences of things you are doing in your business and investments. Tax planning is an often ignored, but critical phase of the tax preparation that you should demand for the price you are paying.

For an experiment, go out and buy tax software and try and duplicate the results of the accountant through the step by step interviews. This is what your accountant is using to prepare your return. You will find the quality of his work in the difference between what you calculate and what the accountant calculates. Tax software works best with the most common situations, but does not handle special cases well. Analyze the difference and where it originates from, you may learn that preparing and researching taxes is not as difficult as it seems (you just need that kind of mind to tolerate it long term).

A lot of accountants tend to become primadonnas since the majority of people who come to them don't truly understand (and don't really want to understand) what it is they do. The way to judge the quality of the accountant is by the quality of questions they ask during the interview and the tax planning advice they give.

A good tip is to be proactive in your questions. Ask in general if you get a deduction for certain kinds of things if you feel the accountant has not covered that area. They are often too busy to go through the whole interview, so you have to take matters into your own hands.

$350 each just for the guy to fill out your forms is not too bad if you really have a lot of slips, receipts and special cases, he is asking a lot of good questions, and you are getting good tax planning advice.
 

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I work for a a large accounting firm. The per-hour cost of employing an accounting firm for tax services is pretty consistent across the big four. It does, in part ,depend upon the market though.

Please bear in mind that these are estimates.
A junior accountant with 0-2 years of experience bills $120-$250 per hour.
A senior accountant with 3-5 years of experience bills $250-$350 per hour.
A manager with at least 5 years of experience bills anywhere from $350 to $600 per hour.
The partner's time is typically billed for at least $600 per hour.

The junior accountants do most of the grunt work, with the seniors and managers doing review. Typically all the partner does is sign off. Given these ranges, you can see that it doesn't take much time to get to $500+. Personal tax services are regarded as a fairly low-margin service, and the billable rates quoted may be discounted up to 40%.

Tax planning is a much more valuable activity (for both the clients and the accountants). That is where hiring an accountant can really add value. Max is right. If you are employing an accountant, you should try to get any advice you can.

Before you start complaining about the cost though, take a moment to consider what it's worth to you. It might take a person 5-10 hours or more to do their taxes by hand depending upon their complexity. You save time by employing a professional; your time is valuable too.
 

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It depends on the accounting professional. There are people that are willing to do it for $30 and then there are those for $150. There is a reason there is a difference. When you pay $150, you will have a sense of security that your taxes were done right. Most cases, these are professionals who have been doing this for years.
 
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