CPA Fee Guidelines (more detail)

CPA Fee Guidelines

Other than a few flat-fee services, the annual professional services are billed on a reasonable, per-client 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 $900 to $1,300.* Many brokers have this done in a reasonable manner, thought 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 $900 to $1,600.* 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 $350 to $650 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 $400. 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.
If you trade stock options and were put to, exercised, or called.
If you have an active account held at Fidelity, extra work is often needed to correct your 1099-B gain or loss.

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 Form 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.
NOLs.

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)

National averages for tax return preparation

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.

Other than the above normal, reoccurring annual services, some other services occasionally will include:

Review of tax returns previously filed, usually is no charge (but see Form 1040-X amended returns further down).
Review and interactive consulting with you regarding your own self-prepared current year tax return before filing with the IRS, ranges at about $450 to $850.
Trader entity formation tax consulting is flat fee of $500. To form the entity there may additional costs – with those being charged by you directly to your own credit card and legal fees paid by you directly to your own lawyer.
Consultation and preparation of mark-to-market (M2M) election(s) or Sec 988 election(s) is built into the annual fee that is charged.
Form 3115, usually required only once, one year after filing the election for M2M, is usually a flat fee of $450 for most taxpayers. but more complicated situations may be charged accordingly.
Form 3115, one year after filing a revocation of a M2M election, is usually a flat fee of $800 for most taxpayers.
Preparation of Form 3115 if required for other than M2M changes, will incur fees starting at $1,000 and up.
Preparation of Form 3115 for taxpayers not currently an ongoing client may incur fees starting at $2,500 and up.
Net Operating Loss (NOL) federal tax election to carry forward or a Futures Loss carry forward is built into the annual fee that is charged.
Net Operating Loss (NOL) carryback or Futures Loss carryback on an amended return, Form 1040-X, is usually a flat fee of $400 per year that is “touched.” e.g. a $100,000 NOL from 2016 carried back to 2014 where it is all used up would be a $800 flat fee. Another example would be – same as the above but after 2014 there still remains some unused NOL that is carried forward to 2015 – this would be a $1,200 flat fee. Also see the Form 1045 preparation fee below which most often accompanies the 1040-X computations.
Form 1045 when prepared for the NOL is usually $250 additional over the 1040-X fee schedule above. (Form 1045 may not be filed later than December 31st of the year after the year that had the loss).

Additional fees are charged when there are more complex carryback computations involved. Generally about $200 to $500 per year that is “touched.” Complications might be: deductions for charitable donations, other itemized deductions, alternative minimum tax, credit for prior year alternative minimum tax, or multiple different state tax returns being involved.

Certain State NOL carryback work will be charged separately. CA, GA, NY, NYC can have particularly complicated situations. The additional fee for these and some other complicated States might range from an additional 50% of the cost for the IRS carryback to an additional 200% of the cost for the IRS carryback. e.g. if the Federal cost was $1,200 + $250 then a particularly complicated NY/NYC could be $1,200 + $250 + $2,400 for a total of $3,850.

Unfortunately, sometimes a taxpayer is selected for an IRS or State inquiry or audit examination:

We welcome new clients who have a controversy matter that needs to be resolved to their best advantage.

IRS audits of returns prepared here that are closed and settled before the need for an appeal, often range $1,000 to $4,000.
IRS audits of returns prepared elsewhere that are closed and settled before the need for appeal, often range $1,500 to $7,500.
A decision to go through an appeal of an unsettled audit usually falls within the range of $4,000 to $8,000 (or more) additional. While it is rare that we need to go through an appeal, most of these situations do run a minimum of $5,000 additional.
If the limited window for filing an appeal is blown (before you become a client here) and a 90-day letter is issued, requiring you to file a petition with tax court, we can generally review your basic self-prepared petition (rather than hiring a tax lawyer) and get the matter kicked back down to appeals to be resolved with us as you new CPA firm.
In some situations if not too much time has elapsed, then rather than file a petition, we can take over the matter and obtain an audit reconsideration to be your advocate and make arguments outside of the tax court and outside of the formality of an appeal.

When receiving a letter from the IRS via certified mail, that indicates that they mean business. Time is of the essence in these situations.