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Q & A: Individual Tax Return Preparation

Q: I've scheduled a phone consultation with you - what is your process?

I like to speak with potential clients on the phone for 15-20 minutes to learn about their tax situation - their sources of income, deductions they've taken in the past, changes that have taken place relative to prior years, etc.  I have a set of questions that I ask that help me to gauge the complexity of the return and the time it will take to file.

Q: How do you determine your fees?  Can you quote a fee up front?

For individual tax preparation my fees are based mainly on two things.  First, on the complexity of the return - the schedules that need to be filed and the volume of transactions behind them (for example, if someone has investment gains and losses, the number of trades that make up that income).  Secondly the condition of the client's records - how organized they are with their federal forms and whether they have spreadsheets and other supporting documentation for things like self-employment or rental income. 

I can usually estimate a fee with a high degree of accuracy after talking to someone for 15-20 minutes about these things.  For most clients who just have wage income, perhaps some employer stock compensation and simple itemized deductions, the fee to prepare individual federal and state returns falls in the $300-$600 range.  

Q: How does your service compare with something like H&R Block or Jackson Hewitt?

Franchise services are certainly less expensive, however you are not likely to have a CPA preparing your return so they may not ask relevant questions to ensure that you're minimizing the tax that you owe.  For my clients who have told me their experiences it seems like the quality of service is really dependent on who you're assigned to when you walk in the door.

If a client comes to me with a very simple return I tell them that I'm happy to prepare it at a certain fee but that there's nothing in their return that couldn't be done either by a lower-cost service or even by the client themselves using a product like TurboTax.

Q: I've decided to move forward and have you prepare my return - what next?

There are three main next-steps:  First I will send you an organizer to fill out your personal information.  Second I will create a secure online portal account where you can begin to upload your supporting documents once you have them,  Third I just ask that you let me know when you think you're going to have everything available so that I can schedule time to prepare the return.

Q: I'm getting a huge refund or owe alot of money and I didn't expect this.  Can you help?

Yes, I can help in two ways.  First we can review the information on the return to ensure that it's correct and that everything you provided has been entered, and we can talk about whether anything might be missing.  If everything is correct then I can explain the tax calculation and we can compare it to your withholdings and/or estimated payments.  I like my clients to walk away understanding how the tax they owe was determined under IRS rules and feeling comfortable that it was done correctly.

Secondly we can look at your payroll withholdings or estimated payments and change them so that the next year they're closer to what you are going to owe.  There's no reason to give the government an interest-free loan or to pay underpayment penalties when we can come up with more accurate estimates off of which to base your withholdings.

Q: My life is changing next year - can you help me plan?

Yes.  In most cases I don't charge extra to answer a few questions about common changes - buying a home, having a child, etc.  If the change is bigger - becoming self employed or buying a rental property for example - I charge an hourly rate to talk through the change and run calculations on how it will affect your next year's return.  Most consultations for changes like this don't take more than 1-2 hours.

Q: What is your working style? 

Most clients find me to be personable, calm, helpful and knowledgeable.  I recognize that my clients have varying levels of financial expertise and I don't judge or use harsh language when I think they can do something better, I simply suggest solutions to problems and point them in the direction to help solve them.

Q: How do you stay current with the tax law?

I only prepare individual returns, corporate returns for small businesses and a few nonprofit returns, so the types of returns I do and the laws my clients are subject to is limited in scope.  I generally don't do returns for ex-pats or foreign nationals unless the international tax implications of their returns are simple.  I don't do complex corporate returns.  By limiting the scope of the tax law I need to know I can stay current much easier.

As a CPA I am required to do 80 hours of continuing education every two years and I do at least half of that in tax law (more this year because of the significant changes).

Q: What kind of software do you use?  How secure is it?

I use CCH Axcess by Wolters Kluwer.  It is a cloud solution hosted by them so it has the full security support of a $5 Billion public company.  They also allow me to create and transmit encrypted and password-protected documents so your tax information is secure.