I have an S-corp that rehabs and I own a few rental properties personally.  I turn over my Quickbooks for the S-corp and a spreadsheet for the personal stuff.  Its pretty much fill in the blanks for my tax returns.  What should I be paying for this?

I have a CPA that specializes in investments and real estate. We pay $800 total for him to prepare our LLC taxes and two personal taxes. I found the price totally worth it because he knows how to get us the best situation/refund. I tried to do it via TurboTax first to "save money" and it was a disaster. 

My last two years - $670 each year for my S corp return and state franchise return.  In Oklahoma

Its going to depend on how many properties and deals you do every year. Ultimately, it comes down to time spent.

Our tax return for the s corp when we had 10 properties was right around 800 bucks and they did the individual for free. But they've gone up each year since. Last year's return for 2013 I think we had 17 properties and it was something like 1800. This year is going to be 32 properties.  

I had exactly 20 settlement statements this last tax year (purchases or refi's) that they'll have to go through as well. So if you're doing rehabs, then you'll need to account for those as well. 

Based on my past returns, I would say it would be about $100 per transaction and/or house owned.   But I have to say that I believe thats going to vary WILDLY based on area and based even on individual CPAs. Much like contractors. Some of those CPS firms charge $80/hr and others might charge $180/hr.  Just depends.

But if you own 4 rentals and say you did 4 deals, I'm going to estimate your bill around $800 - including the individual return, which I believe truly is fill in the blank work once you get past the real estate stuff.

I'd be curious to know from @Nicole W. and/or @Arlan Potter , how many properties they own and how many transactions they did (i.e. say flips) to see if that formula rings true at all. 

Its truly a guess though.

We have 3 rental properties in the LLC. We haven't done flips. We also have some rental income and also write offs on our personal house because we rent out extra rooms. So that adds a little bit of work to the personal returns.

@Mike H.  

The number of flips is irrelevant to a sub s corp return. I just send the CPA a QuickBooks P & L  and balance sheets.  $500,000 or $10,000,000 in sales should mean the same tax return, just bigger numbers. The number of pages is the same. If you are paying more for the increase in the P& L then you are getting ripped.    Now if you give your CPA a shoe box of receipts, and the closing statements for flips, and a checkbook register, then you will pay thru the nose.   

Now if you are talking about personal returns with a boatload of schedule "E"s. CPAs charge by the page.

Yea. I do total up the mortgage, interest, expenses for each property.

But I think the key is how to handle things from the settlement statements in terms of expensing vs depreciation. I also ask him to use accelerated depreciation as well. Those are the types of things that I want the cpa to do and not me. 

A mistake there can lead to huge headaches down the road. Not only that but when it comes to the IRS, I have one simple rule - I'm not doing anything on my return that risks getting hit with huge fines or anything worse. I purposefully don't take any mileage deductions or home deductions or anything else that would be a red flag or that might cause enough grief in an audit to simply not make it worth it to me.

@Mike H.  Mileage and home office deductions raising red flags for an audit are both myths. In fact, the IRS has made it easier for taxpayers to take advantage of the home office deduction.

Don't let that money go to waste. It's easy to deduct and support if you have solid, valid documentation. 

My S-corp & personal federal returns each contain about 25 pages.  Plus a few pages for the state returns.

@Mike H.  

My statement stands. If you are paying a CPA more than $700-800 for a Sub S with only one owner(husband and wife) then you are probably paying too much. Unless you are letting the CPA do your bookkeeping work for you. And at a CPA's high per hour rate, I wouldn't/don't do that.   (regardless of accelerated depreciation)

The CPA that does my Sub S return and my OKlahoma Franchise Tax return has never seen one of my settlement statements, He prepares tax returns based on my bookkeeping. I do my own bookkeeping.  If I needed bookkeeping help it would not be a CPA, it would be a bookkeeper at a fraction of the cost of a CPA.

Arlan Potter, CPA

I guess thats just it though. You are a cpa. I am not. I don't really want to learn how much to depreciate what. 

My corp tax return was over 100 pages last year and I'm sure its going to be around 140 to 150 this year given how many houses we added (from 18 or 19 to 32).   But I just don't know what items in a settlement statement would go where. And, to be honest, I don't want to have to go through and add them up.

I figure I'm doing good just putting together the property taxes, 1098s, and rehab/repairs for the year.   :-)

But I will take that into consideration when I get my bill this time. Maybe I need to find out where they're spending so much of their time given I am adding everything up for them. And if its really just costing me the 2k to 3k to figure out the settlement statement stuff, then maybe I'll just ask them what they need to save them the time and me the money.

So thanks for the heads up. I just thought everybody was paying these types of prices once you started getting into that 20 to now 30 property territory.....

Ok so,  we have paid  500-1000 legitimately and  the tax strategy guy I stopped counting at $2200-before I terminated that relationship-what a crock. No-I did not hand him a shoebox and the taxes were no more complicated then the previous and subsequent year.   I just should have recognized what he was doing when he handed us his 10 page agreement to sign.  So don't just take a referral even from your regular tax guy.

Our returns includes W-2, stock options, and 8 units in 4 properties no flips.   I don't mind reasonable cost if there are issues to deal with and there is always a complication for us each year, sometimes related to real estate sometimes not.  We file in at least 2 states for taxes but just personal returns. I would let the CPA do them even if I had the time because the whole process really aggravates me.  It is also worth it because when we got the bill from the state for 2011 underpayment I just call the tax guy.  He looks it up and  and he says you didn't underpay looks like your company didn't file their corrected w-2 with the state. So it is worth it.  Colleen

Originally posted by @Brandon Hall :

@Mike H.  Mileage and home office deductions raising red flags for an audit are both myths. In fact, the IRS has made it easier for taxpayers to take advantage of the home office deduction.

Don't let that money go to waste. It's easy to deduct and support if you have solid, valid documentation. 

I pay $750 for the tax prep returns for each corp including my personal.

On mileage.

The legitimate mileage claims attributed to the large number of properties we own was their reason for an audit. Regardless of complete 'daily calendar' documentation they literally denied it.  I then reduced it by 25% & broke it down under each property, resubmitted it & it went through???

However, the audit then grew tentacles & it became a three day event. 

On the home office deduction....

I own a mixed use commercial building (held by one LLC) & it's rented to various tenants. However, another business I own occupies an office in the building & pays a nominal rent & the 'rent' deduction was disallowed?? Yet they allowed my 'occupying business' to deduct all the expenses incurred to run & maintain that office. During the audit I filed an amendment for a home office deduction which they allowed, (which also explains the 25% reduction in recorded mileage).

I was finally excused after paying what I thought was a significant tax, penalty & interest assessment. 

14 months later they returned the entire amount plus interest having decided I was in fact over-assessed????

Discounting blatantly obvious tax evasion, I am convinced it's simply numbers game, as there appears to be absolutely no logic attached to the decision to audit. 

Wow. That sounds like nothing but a major headache that I want to avoid. And thats exactly it. Even with documentation on the mileage, they discounted it, took it all away and then sounds like they gave it all back.

I just figure I'm getting so much free money with depreciation on the real estate itself, it simply isn't worth the paperwork I would need to maintain in order to report it.

My understanding was you had to have a log for mileage. I'm just too overloaded and simply not disciplined enough to do it. And don't want to make one up either. 

But that is exactly one reason I don't. Its easy hanging fruit for them to pick at just to get their tentacles into everything else.  The less of these deductions you take, the less reason they'd have to want to audit - in my mind anyway.

And if they really did audit me and I had to deal with the headache, then I'd probably ask my cpa to add some of these things in there and they may risk costing the govt money in an audit with me. :-)

@Mike H.  I understand your pains. You may want to try creating a documentation system that makes it easier on you and keeps things more organized. For instance, create weekly trip reports when you travel out of town. Google map your house (or place of business) to the destination, scan in receipts you incurred (including food/coffee), and attach to the expense report. If the IRS ever questions the legitimacy, you will have easy documents to show them and they won't be able to put up much of a fight. 

But as you said, if it's not worth the hassle then don't do it. I just like to advise my clients to take advantage of all possible tax breaks and not leave money on the table. $0.56 per mile can really add up.