$1200 for a CPA a reasonable amount for W2 and small LLC?
Investor · Louisville, KY · Member since 2017 · 102 posts · 80 votes
$1200 for a CPA a reasonable amount for W2 and small LLC?
Most Popular Reply
Rental Property Investor · Dallas, TX · Member since 2019 · 88 posts · 55 votes
6y@Justine Scheuher lol I paid my CPA 350 to do taxes for my rental property (a duplex), W2 and both of my stock market brokerage accounts. 1200 seems really expensive!
49 Replies
Originally posted by @Derek Smith:
@Justine Scheuher.
Sounds high, like way too high.
We’ve only been paying 200-275 the last 5 years.
That included, W2 jobs, 1099, LLC with rentals, investments, etc.
I would definitely shop around for next year.
Good luck.
You had a CPA do a 1040 and a 1065 with tax consulting for $200-$275, or just a Single Member LLC flowed onto your 1040?
- Rental Property Investor · Waco, TX · Member since 2017 · 28 posts · 21 votes6y
@Scott Mac
Single member.
- Investor · Montgomery Village, MD · Member since 2017 · 31 posts · 9 votes6y
@Justine Scheuher
I'm a registered tax preparer in MD. I have the education needed to get the CPA but havent taken the exams. I would charge about $250 for that. When you have a CPA firm prepare, your paying for those 3 letters and the fact that they can represent you in court. I am just as capable of researching and interpreting tax laws and giving advice. So I would say if you're looking to lower costs, look for an EA or RTP.
- 6ySteven Hamilton IIPro MemberAccountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
I posted national average prices above. Be very wary of paying too little. The last thing someone wants is to work with a part timer who doesn't know everything needed.
Keep in mind if anyone needs audit representation or their returns fixed feel free to reach out to some of us professionals here as we spend a great deal of time fixing tax returns and representing clients who went with the cheapest option to begin with. @Jake Hottenrott @Natalie Kolodij @Nicholas Aiola are all some individuals I'd recommend.
Do you want a professional or a part timer?
- Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes6y
I paid around $550 last year for my W2 which included my wife, and 3 rental properties. My CPA is in TX and I've been using him for about 7 or 8 years. You'll never know if your CPA is getting you the maximum back, unless you are well educated in tax law. You could take it to another CPA or EA for comparison, and if that one said you could get more back, does that mean they have just 'won' (or more likely bid) for your business?
Kind of like shopping for a realtor to list your house with. How many times do you see a seller list with an agent that 'bought' the listing by telling the seller they can get a higher sales price?
- Investor · Saint Louis, MO · Member since 2020 · 9 posts · 2 votes6y
@Justine Scheuher Try turbo tax next year. It really is easy.
- Rental Property Investor · Newburgh, NY · Member since 2018 · 160 posts · 117 votes6y
@Justine Scheuher
Returns can be done for less, but if you are getting tax planning advice it might be cheap
- Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes6y
Not sure we have nearly enough info to determine if that's a good rate or not. The only real way to know is to call around your local area next year and find out. And that's if your taxes and the work required are very similar to what they were this year.
I have a CPA do my personal taxes and the taxes for the LLC, which consists of 3 unrelated partners. I paid $375 for my personal taxes and $400 for my LLC. Now, I am also a very organized person and hand my cpa exactly what he is looking for so as to make his job easier. That info was gathered from a pre-tax season meeting on what he would like to see from me. And none of that means I received a better deal than you. Very doubtful any two persons taxes are identical and require the exact same work.
@Justine Scheuher I am a CPA and have had my own practice for 18 years. It might be a little bit high of you are a single member LLC where you just had to file a 1040 and associates schedules. However, if you were filing a 1065 or 1120s plus your individual tax return it is reasonable.
I am biased... but a CPA can save you a lot more than they will cost you. You need to meet with your CPA at the very least in Q4 to see where you are at tax wise. Also, before you complete any transactions you should meet with them. The worst is when a client would come in and say here is what I did what are the tax consequences.
Bottom line the advise you receive throughout the year is where you are going to get the value over paying less for someone to just complete a tax return based on figures you provided.
- Investor · Tampa, FL · Member since 2019 · 29 posts · 45 votes6y
$1200 for a W2 and 2 properties? Thats straight up theft. No reason to pay that much for those services unless you're trying to pull off some off the wall tax shenanigans. A normal W2 with my tax guy is $100 or so. If you've kept good records then the properties wouldnt be too much extra work that would run it up to $1200. I would be happy to recommend a tax person if you'd like, but dont get robbed by a CPA charging that much for a relatively simple tax return.
- Los Angels, CA · Member since 2018 · 11 posts · 5 votes6y
As a master degree in accounting degree graduate, your bill seems too high.
Unless you evolved some complicated transactions, such as cost segregation, 1031 exchange, etc. - Real Estate Consultant · USA · Member since 2020 · 11 posts · 7 votes6y
It is ok however, you can maximize that by doing a Cost Segregation. A CPA is not an authorized by IRS to do a Segregation Study. You might pay a little at first for the study, however, it will shure help you get more money back in a short-term. Hope this information helps.
- Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes6y
Originally posted by @Account Closed:
It is ok however, you can maximize that by doing a Cost Segregation. A CPA is not an authorized by IRS to do a Segregation Study. You might pay a little at first for the study, however, it will shure help you get more money back in a short-term. Hope this information helps.
There is nothing in the IRS guidelines that disallows a CPA to do a cost segregation, many firms provide this service.
Many CPAs provide at minimum a partial segregation separating out acceptable 5,7 or 15 year assets.
A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties.
Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses.
- Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes6y
Originally posted by @Justine Scheuher:
I used a CPA for the first time and just got my bill $1200. I am a W2 and have LLC with 2 properties that I've kept good records for. My return was only for $1,200...
If your service is on par with @natalie K is providing then your CPA cost is in the range of normal.
I think there’s a difference better punching numbers into TurboTax and creating a plan to maximize the benefits when needed. That’s the reason for the 10x cost of a box store versus a personalized CPA.
- Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes6y
Originally posted by @Natalie Kolodij:
Originally posted by @Account Closed:
It is ok however, you can maximize that by doing a Cost Segregation. A CPA is not an authorized by IRS to do a Segregation Study. You might pay a little at first for the study, however, it will shure help you get more money back in a short-term. Hope this information helps.
There is nothing in the IRS guidelines that disallows a CPA to do a cost segregation, many firms provide this service.
Many CPAs provide at minimum a partial segregation separating out acceptable 5,7 or 15 year assets.
A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties.
Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses.
Do you provide cost segregation study as a part of your service?
- Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes6y
Originally posted by @Account Closed:
Originally posted by @Natalie Kolodij:
Originally posted by @Account Closed:
It is ok however, you can maximize that by doing a Cost Segregation. A CPA is not an authorized by IRS to do a Segregation Study. You might pay a little at first for the study, however, it will shure help you get more money back in a short-term. Hope this information helps.
There is nothing in the IRS guidelines that disallows a CPA to do a cost segregation, many firms provide this service.
Many CPAs provide at minimum a partial segregation separating out acceptable 5,7 or 15 year assets.
A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties.
Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses.
Do you provide cost segregation study as a part of your service?
We always do a basic break out- 5,7, 15 as we can.
I don't offer full cost segregations though
- Real Estate Consultant · USA · Member since 2020 · 11 posts · 7 votes6y
Originally posted by @Natalie Kolodij:
Originally posted by @Account Closed:
It is ok however, you can maximize that by doing a Cost Segregation. A CPA is not an authorized by IRS to do a Segregation Study. You might pay a little at first for the study, however, it will shure help you get more money back in a short-term. Hope this information helps.
There is nothing in the IRS guidelines that disallows a CPA to do a cost segregation, many firms provide this service.
Many CPAs provide at minimum a partial segregation separating out acceptable 5,7 or 15 year assets.
A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties.
Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses.
- Real Estate Consultant · USA · Member since 2020 · 11 posts · 7 votes6y
Natalie, it is not my intend to offend the professional service of a CPA. My response to a forum is to provide valuable information that can help other professionals like us. Yes, it is true, there is noIRS Guidelines or Regulations that disalow a CPA from conducting a Cost Segregation Study; yet IRS has specific requirements that need to be met in every Cost Segregation Study. As you know, the IRS Cost Segregation Audit Techniques Guide provides information regarding the specialization, methodologies, and frameworks one Cost Segregation Preparer should have in order to provide an accurate qualified study.
I. Chapter 4 of the IRS Cost Segregation Audit Technique Guide indicates:
1. Preparation By An Individual With Expertise And Experience
The preparation of cost segregation studies requires knowledge of both the construction process and the tax law involving property classifications for depreciation purposes. Unfortunately, there are no prescribed qualifications for cost segregation preparers. However, a preparer’s credentials and level of expertise may have a bearing on the overall accuracy and quality of a study.In general, a study by a construction Engineer is more reliable than one conducted by someone with no engineering or construction background. However, the possession of specific construction knowledge is not the only criterion. Experience in cost estimating and allocation, as well as knowledge of the applicable tax law are also important criteria.
2. Chapter 5: "Cost segregation is a factually intensive determination that is based on complex tax law and engineering analysis. While Examiners may be able to evaluate the adequacy of some cost segregation studies, other studies may require specialists with expertise, industry or construction experience and specialized training"..." The Engineering Program in the Large Business and International (LB&I) business unit of the IRS is the principal source of technical expertise for examining cost segregation studies".
Using a regular software does not provide an accurate segregation study. The wide gap in MACRS recovery periods provides a strong incentive for taxpayers to allocate or reallocate costs of long-lived property to shortlived property, wherever possible. –CPA's provide clients with a standard depreciation that they know of but are not qualified engineers that can literally go in a property to identify tangible items that can be depreciated. Anyone can benefit from a Cost Depreciation Study
You wrote: "A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties."
The inexpensive softwares can lead to a major headaches for the client. IRS regulations require that a taxpayer compute depreciation on what is allowed or allowable. Therefore, if the CPA or client improperly depreciate a 7-year asset over 39 years, the IRS could disallow the depreciation on the asset beginning in year 8. In addition, if the building is sold the IRS could increase the gain by reducing the basis in the building by the depreciation that should have been taken in prior years, but was not.
You wrote: "Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses". This is a myth...Many clients and unfortunatelly CPA's are under think that a cost segregation study won’t save any money. This is true only if the entity or pass thru entity is losing money and has no ability to either carry back or carry forward the losses generated. Otherwise, the savings generally range from 35% to 46%* of the additional depreciation generated from the study. For example, if a cost segregation study results in additional depreciation of $1,000,000, then a taxpayer in the 46% tax bracket would save $460,000 in federal and New York state taxes over four years.
A Cost Segregation Study can be conducted for buth an Investor / Landord that rents or owns a commercial real estate property. Occupancy time back to 1987.
Reference https://www.irs.gov/businesses/cost-segregation-audit-techniques-guide-chapter-2-legal-framework
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Natalie Kolodij:
I think it's important for people to realize there are levels of quality in this industry as well any.
You can go to super cuts for $12 , you can go to a mall salon for $60 , or you can go to well known stylist who charges $300 for a haircut. Everyone technically got the same service- but likely the outcomes weren't the same.
Services aren't one size fits all. What's provided, what people need, and what people find valuable vary from person to person.
I completely agree, but I am also going to caution this works both ways. Paying more money doesn't guarantee higher quality. Although there is usually a perception that paying more gives you more, it can also be a false reality. Sometimes the extra money is paying for an expensive location, management overhead, brand name, higher profits or high marketing budget, rather than better quality service.
- Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes6y
Originally posted by @Account Closed:
Natalie, it is not my intend to offend the professional service of a CPA. My response to a forum is to provide valuable information that can help other professionals like us. Yes, it is true, there is noIRS Guidelines or Regulations that disalow a CPA from conducting a Cost Segregation Study; yet IRS has specific requirements that need to be met in every Cost Segregation Study. As you know, the IRS Cost Segregation Audit Techniques Guide provides information regarding the specialization, methodologies, and frameworks one Cost Segregation Preparer should have in order to provide an accurate qualified study.
I. Chapter 4 of the IRS Cost Segregation Audit Technique Guide indicates:
1. Preparation By An Individual With Expertise And Experience
The preparation of cost segregation studies requires knowledge of both the construction process and the tax law involving property classifications for depreciation purposes. Unfortunately, there are no prescribed qualifications for cost segregation preparers. However, a preparer’s credentials and level of expertise may have a bearing on the overall accuracy and quality of a study.In general, a study by a construction Engineer is more reliable than one conducted by someone with no engineering or construction background. However, the possession of specific construction knowledge is not the only criterion. Experience in cost estimating and allocation, as well as knowledge of the applicable tax law are also important criteria.
2. Chapter 5: "Cost segregation is a factually intensive determination that is based on complex tax law and engineering analysis. While Examiners may be able to evaluate the adequacy of some cost segregation studies, other studies may require specialists with expertise, industry or construction experience and specialized training"..." The Engineering Program in the Large Business and International (LB&I) business unit of the IRS is the principal source of technical expertise for examining cost segregation studies".
Using a regular software does not provide an accurate segregation study. The wide gap in MACRS recovery periods provides a strong incentive for taxpayers to allocate or reallocate costs of long-lived property to shortlived property, wherever possible. –CPA's provide clients with a standard depreciation that they know of but are not qualified engineers that can literally go in a property to identify tangible items that can be depreciated. Anyone can benefit from a Cost Depreciation Study
You wrote: "A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties."
The inexpensive softwares can lead to a major headaches for the client. IRS regulations require that a taxpayer compute depreciation on what is allowed or allowable. Therefore, if the CPA or client improperly depreciate a 7-year asset over 39 years, the IRS could disallow the depreciation on the asset beginning in year 8. In addition, if the building is sold the IRS could increase the gain by reducing the basis in the building by the depreciation that should have been taken in prior years, but was not.
You wrote: "Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses". This is a myth...Many clients and unfortunatelly CPA's are under think that a cost segregation study won’t save any money. This is true only if the entity or pass thru entity is losing money and has no ability to either carry back or carry forward the losses generated. Otherwise, the savings generally range from 35% to 46%* of the additional depreciation generated from the study. For example, if a cost segregation study results in additional depreciation of $1,000,000, then a taxpayer in the 46% tax bracket would save $460,000 in federal and New York state taxes over four years.
A Cost Segregation Study can be conducted for buth an Investor / Landord that rents or owns a commercial real estate property. Occupancy time back to 1987.
Reference https://www.irs.gov/businesses/cost-segregation-audit-techniques-guide-chapter-2-legal-framework
My point was just saying a CPA can't do it isn't factual- and there are firms who have experts on staff who do offer Cost segregations.
And you're misunderstanding how passive losses work- this isn't a Myth. It's tax law.
You can't carry back passive losses. They'll always carry forward.
But if someone isn't a real estate professional and makes over $150,000 they are not allowed to use any passive losses generated.
So if they have a normal $5,000 loss generated they can't use it.
If they have a cost segregation generated $500,000 loss they can't use it.
It carries forward until they either sell the property or have equal passive income to use it against.
So if someone isn't able to use passive losses- generating a whole bunch of them won't save them a penny in tax that year, or any year, until those circumstances change.
- Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes6y
@Yonah Weiss is the resident cost segregation expert so I'll let him speak to it.
I don't want to misconstrue any information on the topic- Just want to make sure people realize they have options. So I'll let him clarify who can do it, different in segregation types, and using the rental losses generated.
- 6yYonah WeissPro MemberCost Segregation Expert and Investor · Lakewood, NJ · Member since 2017 · 1k+ posts · 1k+ votes
Originally posted by @Natalie Kolodij:
@Yonah Weiss is the resident cost segregation expert so I'll let him speak to it.
I don't want to misconstrue any information on the topic- Just want to make sure people realize they have options. So I'll let him clarify who can do it, different in segregation types, and using the rental losses generated.
Thanks for the shout-out Natalie! I think everything you have said is accurate.
@Account Closed you are quoting the CS ATG and looks like some other article as well,
The points about the quality cost segregation study having to be performed by someone with expereince, because of teh detailed and labor intensive approach, if done right will stand up in the event of an audit.
As Natailie mentioned, the losses created by cost segregation are only beneficial to someone that can use them.
In your example:
For example, if a cost segregation study results in additional depreciation of $1,000,000, then a taxpayer in the 46% tax bracket would save $460,000 in federal and New York state taxes over four years.
That would only be true if that taxpayer has $1,000,000 of income that can be offset by that depreciation. Otherwise it creates a loss and is carried forward to be used in future years if they are able. (Passive loss carry-backs were ruled out in the TCJA). - Real Estate Consultant · USA · Member since 2020 · 11 posts · 7 votes6y
Originally posted by @Yonah Weiss:
Originally posted by @Natalie Kolodij:
@Yonah Weiss is the resident cost segregation expert so I'll let him speak to it.
I don't want to misconstrue any information on the topic- Just want to make sure people realize they have options. So I'll let him clarify who can do it, different in segregation types, and using the rental losses generated.
Thanks for the shout-out Natalie! I think everything you have said is accurate.
@Account Closed you are quoting the CS ATG and looks like some other article as well,
The points about the quality cost segregation study having to be performed by someone with expereince, because of teh detailed and labor intensive approach, if done right will stand up in the event of an audit.
As Natailie mentioned, the losses created by cost segregation are only beneficial to someone that can use them.
In your example:
For example, if a cost segregation study results in additional depreciation of $1,000,000, then a taxpayer in the 46% tax bracket would save $460,000 in federal and New York state taxes over four years.
That would only be true if that taxpayer has $1,000,000 of income that can be offset by that depreciation. Otherwise it creates a loss and is carried forward to be used in future years if they are able. (Passive loss carry-backs were ruled out in the TCJA).Exacltly is what I said. Thanks for your feedback
- Real Estate Consultant · USA · Member since 2020 · 11 posts · 7 votes6y
Originally posted by @Account Closed:
Originally posted by @Natalie Kolodij:
Originally posted by @Account Closed:
It is ok however, you can maximize that by doing a Cost Segregation. A CPA is not an authorized by IRS to do a Segregation Study. You might pay a little at first for the study, however, it will shure help you get more money back in a short-term. Hope this information helps.
There is nothing in the IRS guidelines that disallows a CPA to do a cost segregation, many firms provide this service.
Many CPAs provide at minimum a partial segregation separating out acceptable 5,7 or 15 year assets.
A Full cost segregation used to require an engineer- but in more recent years software and more streamlined cost segregation have becoming available that are allowable which has brought the cost down from around $10k to closer to $1,500 for smaller properties.
Also worth noting a cost segregation study only helps people get money back if they are in a tax position to use rental losses.
Do you provide cost segregation study as a part of your service?
Yes
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