CPA Fee Guidelines
Other than a few flat-fee services, the annual professional services are billed on a reasonable, per-issue basis; though the majority of traders do seem to fall within certain ranges as follows:
- Consultation and preparation of Form 1040 for a Schedule D / Form 8949 trader with the trades reconciled and listed by you with software such as a spreadsheet or listed in a report provided by the Broker has usually been in the range of $800 to $1,200.* Many brokers have this done in a reasonable manner, though the “wash sale” computations are inconsistently applied from one brokerage to the next.
- Consultation and preparation of Form 1040 for a Form 4797 mark-to-market trader with all trades reconciled and listed by you with software such as a spreadsheet or listed in a report provided by the Broker and most M2M computations listed by you in a spreadsheet has usually been in the range of $800 to $1,500.* Many brokers have this done in a reasonable manner, thought the “wash sale” computations can be difficult to deal with.
- Consultation and preparation of separate entity Forms 1065, 1120S or 1120 usually range about $300 to $600 higher than would the same level of activity reported on a Form 1040.
- Preparation of a basic** federal Form 1040 for each of the owners of the entity reflecting the flow-through from schedule K-1 is usually no more than $150 to $300. State and Local filings may incur an additional fee.
* Occasionally, complications will increase the level of work required and additional, but moderate, fees may be charged. Such as when:
- Trading in more than one of the three normal classes (securities, futures and forex) will cause conflicting complications.
- Additionally there are unique issues and special tax laws when trading some ETFs and Precious Metals.
- Trading via agency or using a nominee, rather than having the trader(entity) tax ID# being used by the broker.
- Holding open positions at year end.
- Having unsettled trades at year end.
- Issues regarding M2M vs. a capital gains realization method of accounting.
- Excessive wash sale complications, especially if accumulated near year-end.
- If you had losses in any given class (securities, futures and forex)
- Were you profitable in all areas of trading ? That’s often easier/cleaner than if there are losses.
- If you had certain gains or losses from an ETF or other pass-through entity K-1, that sometimes is a complication, or causes unhappy “surprises.”
- If you have more than one brokerage account, then each account creates more work.
- If you transfer open positions from one brokerage account to another brokerage account.
We do not like surprising a client with extra fees. In the rare situation that an issue is so complex, we are in communication with the client all along the way.
** If the personal Form 1040 goes beyond the basics (W-2, Sch. A itemized deductions, Sch. B interest & dividends and one of the basic States) then it would be billed accordingly, similar to fees charged by other CPA firms.
What are some examples of what is beyond a basic From 1040 tax return?
- One or more real estate rental properties.
- Real estate rentals that are missing a comprehensive asset & depreciation schedule, which needs to be re-constructed before the next tax year can be completed.
- Real Estate Rental Properties that have complex situations (such as historic area revitalization, and some complex repair vs. improvement complications).
- One or more other self-employed businesses, Schedule C.
- Schedule Cs that are missing a comprehensive asset & depreciation schedule, which needs to be re-constructed before the next tax year can be completed.
- One or more complex Schedule K-1s (such as hedge funds and some ETFs).
- More complex States (such as CA, KY, MI, MO, NH, NJ, NY, OH, OR, PA & SD).
- More than one State tax return.
- Non-resident or part-year resident State tax return.
- State domicile vs. resident issues
- Any complex issues regarding the Patient Protection and Affordable Care Act (PPACA or Obamacare)
- EIC issues or other tax credits.
Average of fees charged by (CPAs, EAs and non-licensed preparers) for income tax preparation (not including income tax planning)
What is considered a reasonable price to pay for having a basic (non-trader) tax return prepared?
The national averages for tax year 2014 for tax return preparation excluding any tax planning throughout the year:
- $250 for a Form 1040 and one State return (individual)
- $300 for a Form 1040, Schedule A and one State return (individual)
- $475 for a Form 1040, Schedule A, Schedule C, Home Office, and one State return (individual)
- $634 for a Form 1065 (partnership)
- $817 for a Form 1120 (corporation)
- $778 for a Form 1120S (S corporation)
- $600 for a Form 1041 (fiduciary, trust, estate)
- $2,300 for Form 706 (decedent’s estate)
- $650 for a Form 990 (tax exempt organization)
- Typical heavily advertised or promoted tax advisors and preparers add 50% to the fee to cover these client referral, acquisition and retention costs.
- A typical “final review” of the completed tax return by a manager, supervisor or partner adds $500 or more to the final bill.