Quickbooks and Turbotax

$1600 for just your tax return? Yikes that's way too high a price.

Are your personal finances fairly straightforward that you feel comfortable doing your own taxes? I used to do ours until our investment account started getting active and holding some unusual holdings. At that point I felt it best that an accountant handle the taxes. But if yours are simple then you should be able to do it yourself. Being a Sole P does not really complicate your tax return too much. A schedule C is fairly easy to fill out.

Having said all that...one thought would be to get a copy of TT this year and do your taxes yourself. Then compare your results with your accountants' return to see the areas you need more information/education before doing your 2010 returns on your own.

Hi, Laura.

See my comments inline...

Maybe. It depends on factors that neither you nor I know - and that Gene most likely should not disclose in an open public forum like this. We tend to see this fee information through the prism of our own situation and experience. If we've been paying $100 for our tax return preparation, then $1,600 seems outrageous. If we've been paying $5,000, then $1,600 may seem a bargain.

Right. But read on...

That depends! A lot!

Some businesses are simple, with no employees and no depreciable equipment; they may require entries on just a few lines of Schedule C. Others involve substantial payrolls and many pages of depreciations schedules for old and new buildings, machinery. Depreciations rules can get VERY complex and take lot of time. And some tax questions - depreciation and other subjects - have become so complex that the CPA may need to spend hours researching the proper treatment of some expenses or some income items.

For a fee that large, I would expect that the CPA does more than the simple mechanical preparation of the return. Ongoing advice during the year, from someone who already knows the client and his business, can be much more valuable than the actual preparation. The trusting relationship between the client and the professional is the most important part of the equation.

That's a good suggestion. But be sure that you feel confident that you have properly handled both the factors shown on your return AND any facts that may be omitted. One of the most important benefits of having a tax professional is the confidence that everything has been treated properly. My clients often told me that the peace of mind was a major reason for consulting a tax professional.

The bottom line, of course, is that no one but the taxpayer himself can decide whether the actual preparation, the ongoing relationship and the peace of mind are enough to justify the fee.

RC