How Much Does Your Accountant Charge To Do Your Taxes? Is It Worth It? Would You Recommend Them?

This is always a hot topic, especially around this time of year. To accountant or not to accountant, that is the usual question. For some it isn’t a question, accountants cost money they don’t have, but for a LOT of people, they can get their taxes done for a lot less than they think…

I paid my accountant $220.00 this year to do my 2007 taxes (up about $50 from my 2006 taxes). Is that too much?* Let’s break it down:

How much time did it save me?

Well, seeing as though all I needed to do was save all tax related docs in a folder through the year. The time it takes to walk from my mailbox to my “tax folder” – all in all took me about 28 seconds total. The last time I did my taxes on my own (2003), I spent probably 15 hours cumulatively on TurboTax.com hashing it out.

Breaking down the TurboTax time a bit more puts about an hour just figuring out how it worked. Granted, it is very straightforward and they ask very basic questions, but they ask a LOT of them. Within THOSE questions, there are other options to “granularize” it even more. It CAN get busy.

Being a frugal guy I wanted to get every single option that was available to me, so I clicked on every link to make sure I didn’t qualify for them. If I didn’t know with 100% certainty, I’d dig around the internet to find some more info on specific tax questions.

If you’re extremely frugal, you can even “trick” the system by getting your own w2s, 1099s, etc and fill them out at the end of the process as they show you what the finished process will look like. You then just mail them in like normal, saving you the e-file cost also, which I certainly did at the time, tacking on another hour or 2 of filling out forms.

Are you up to date on every tax bill passed last year?

This is another big reason I moved to having it done by someone else. I like following the basics of tax, but he gets paid professionally to follow up with all the laws that may or may not apply to me. I don’t want to have to investigate each and every one myself.

I’ve got several other things I would rather be doing with my time. If I were to follow/keep up on each of these, I have to assume it’d take SEVERAL hours (we’ll just say 10 to keep it an even number).

Do I get my moneys worth out of it?

So 27ish hours is what I estimate it would take me from the first tax doc I got, to putting it in the mailbox. My cost of $220 for his time works out, in my work hours (he has it down and probably spends 2 or 3 hours on it) to giving him about $8.14 per hour for his time.

That’s not much more than you’re going to get stocking shelves at Safeway for a professional accountants time. I like that rate, and I like saving the 16 hours 59 minutes and 32 seconds of my life to do something else.

If you look at it in regards to what THEY charge you for the process, it seems asinine to pay someone $75/hour to do your taxes. I agree, but think of what it costs YOU to do it, in YOUR hours, on YOUR time, and saving YOUR dime. Breaking it down like that makes me believe it is WELL worth it.

*As a note to this, I’m always interested in saving money. I’d LIKE to be able to do it for less than $220. Do you have an accountant you’d recommend?

This is probably a good place to get the name out there. :) Leave a comment here or contact me and I may post a list of “the best recommended accountants in the world” if I get enough firepower behind it. :)

Photo by: Zyphbear

Filed Under: adviceCompensationDebtfinancial educationFrugalInvestingPortfolioReaders RequestsTaxes

  • http://www.investmentplayground.net naveedsmind

    Great post Hank. Another reason that I have no problem paying my accountant is because he surely can get me more money back in my return than I could – regardless of how much research I do.

  • http://www.freefrombroke.com/ FFB

    We paid our accountant less than $200 this year. Remember, the fees you pay are deductible next year if you itemize so in a way you get a tax rebate on your accountant prep fees. We found our accountant through a friend so we may be getting charged less than normal. Still it’s more than worth it for us! There’s so many laws out there that I can’t keep track of. And I’ve used TurboTax before, which is great if you have just a W-2 to report, but it can still be confusing getting your head around everything.

    FFB’s last blog post..A Nice Surprise in our Bank Account

  • http://www.onfinancialsuccess.com Aaron Stroud

    Hank, I hope you keep that extra $220 in tax in mind when it comes time to vote!

    I use to do my taxes with pen and paper, but I’ve used TurboTax in recent years. You’re right FFB, it can get confusing as one’s financial situation changes. I think I’ll keep filing as long as I can make sense of my taxes.

    Aaron Stroud’s last blog post..Time to buy a house?

  • http://chasingthebull.info Dustin

    Nice post Hank! Paying a CPA to do your taxes is a great idea for most people. It not only saves you time, but enormous amounts of frustration, that goes along with filling out the forms.

    I have passed the CPA exam, I did work for a Big 4 Accounting Firm, and I am the Controller of a small company. I do not say these things to brag, but simply to note that I have a strong background in tax and accounting and it still takes me about an hour to do my taxes every year. I cannot imagine how long it takes individuals who do not keep up with the laws to complete their taxes, even with the help of turbotax.

    That being said, for $220, maybe I should start doing other people’s taxes. I am qualified afterall :)

    Dustin’s last blog post..Can Fiscal Motivation Cure My Diet Coke Addiction?

  • http://myinvestingblog.com hank

    @Naveed – I may be able to grab the $ that my accountant found for me but it would cost me hours, of which I don’t like to part with. :)

    @FFB – Good call; I think $200 is standard rate it sounds.

    @Aaron – TurboTax is straightforward, but I agree, does get sticky as the variables of life get tossed in.

    @Dustin – I bet you’d get some hits if you advertised on your blog to do taxes, would be an interesting experiment, eh? :) Thanks for stopping by!

  • http://www.thepennysaved.com Jesse

    Actually hank, Ive found the newest version of Turbotax actually does quite a good job of handling a lot of the “exception” cases. Just personal opinion of course :)

    Jesse’s last blog post..Visa Stock – the Visa Stock release results

  • Pingback: How Much Is A Lawyer Worth? | Andrew Flusche, Virginia Lawyer

  • http://pf.thelocomonowebsite.com Mark @ TheLocoMono

    I paid my accountant $130 this year, down $20 from last year. I asked him why the savings and turns out he pro-rates his services for those under $25K a year. Last year, I increased my retirement contribution which nudged me under $25K so it was an added bonus.

    But simply put Hank, it is just too much tax information overload for me that it is worth paying someone to pay attention to detail for me. I am still responsible for the bottom line but all the same.

    Mark @ TheLocoMono’s last blog post..Rule of 72

  • http://myinvestingblog.com hank

    @Jesse – Hey, to each their own. I have H&R Block post on my site monthly, but I’ve got to be honest, I don’t use them. That’s why there are so many different tax softwares out there, everyone has a favorite! Glad it works for you!

    @Mark – I ABSOLUTELY agree. Too much detail to worry about not a huge amount of money…

  • http://www.savingtoinvest.com AndyS

    Great points. One more to add – Accountants could be great if you get audited. So there is the peace of mind factor.

    AndyS’s last blog post..The Magic of Compound Interest

  • http://myinvestingblog.com hank

    @Andy – good call on that as well; thanks for stopping by!

  • http://www.sgafc.co.za Sean Goss

    If you are numerate, maybe you can attempt to do your taxes, without the help of an accountant. But like anything else, ie, fixing your car, computer, building, or other appliances.These could be a things you understand and can do, but at a certain level, you have to call in the experts, if you not a specialist. The same goes for taxes.

  • http://www.discountcouponcode.com/mississauga-accountants Mississauga Accountant

    Excellent post Hank! and I absolutely agree with you, pay the professional to do it, it will cost way more (in terms of your time) to do it yourself.

    You can visit my site at http://www.discountcouponcode.com/mississauga-accountants to find the best accountant in my area :)

  • Anastasia

    OMG…I feel rubbed people, Today we went to do our taxes and I was expecting to pay about $120 which is what we paid in 2007, Was way off. In 2008 my husband done our taxes for free on line. And this year our friends and coworkers recommended a new accountant he charged us $292 i almost fell out of my chair. what in the world? Does that sounds right to anyone?
    please respond
    thanks
    Anastasia

  • Hank

    Well, that *does* seem a bit high, but not off the charts. I paid $220 this year. Did he/she break down the costs? What were they?

  • Rachel

    So, in general.. how long would everyone say that it takes your accountant to complete your taxes?? I took my info in a month ago today and still have not gotten my completed return to sign. My husband has called the office twice and gets no response, even tho the secretary says she’ll leave him a message. Do you think he’s lost our info or is he messing with us? We’ve been going to him for several years and never had a problem before! (p.s. our return is not complex, we don’t own a business, etc)

  • Hank

    Hey Rachel – I’d say it’s peculiar certainly. If he’s not getting back to you though, that’s just poor customer service. For that alone I’d find someone else, but you’re kinda stuck in it for this year… Have you tried to stop by his office?

  • Hank

    …or check the BBB to see if he’s been good/bad to others in the situation? A threat may make him work harder on it as well, but it should be warranted…

  • Jennifer

    I am a certified tax preparer and what most people don’t know is that I am required by the company I work for to take a minimum of 30 hours of tax classes each year just to keep my job. That does not include additional tax updates throughout the tax season. I don’t know if all tax firms have this requirement but we do have to be on top of each new tax law no matter how new it is! That being said you are not just paying someone to fill out forms, you are paying them for their expertise in their field just like any other professional.

  • http://forexkagi.org Gan

    I personally always feel that it is not worthwhile to pay for the high charge my accountant charges our company.

    I agree if they are up to date and innovative, like any professional you are paying for expertise. But for mine, I often feel that I’m better than them.

  • Jim

    Your obviously a moron if it took you 27 hours to use Turbo Tax. It took me about 1 1/2 hours to do it the first time… and I doubted myself so I took it to a professional who gave me the exact same figure down to the penny that I got using Turbo Tax. I paid $140 for his service. I've used Turbo Tax after that from then on.

  • Spike

    An average tax payer pays around 10,000 in taxes……..what they heck's another 200 bucks to make sure it's done right ??

  • TedWillam

    Taxes can be a real challenge each year. However, I found a great company in Georgia that prepares tax returns at unbelievably low prices. Give them a call at 678 403-2000. They also have a web presence at http://www.ProgressiveTaxPreparers.co....
    They are both knowledgeable and incredibly reasonable when it comes to getting your taxes done. Their motto is simplicity, speed, accuracy and affordable and they certainly live up to it.
    Ted Williams

  • webmaster loans

    Life assurance policies are designed for the help of the people in future but to enjoy these types of services we have to follow all its rules to pay its returns.

  • Angie

    I need to know where everyone else goes, my tax preperation fees at H & R Block are over $500.  Mine are alittle more complicated due to a singe rental property.  I don’t even think its a CPA that does them.

  • Melicolon76

    I don’t appreciate the “moron” comment as it probably would have taken me a month to figure out!!

  • Edward

    I’m a CPA  and charge less than any of the big tax firms. You should check out your local CPA’s who are single office preparers. 

  • Baileyamanda77

    well i am just needing to no we have a cpa that has done our taxes for the last 4 years, i have always thought he charged to much, i mean my husband and i only have w2s, mind you 1 each.. and our cpa has charged us 330.00 to file them… well we reacenty got audited and we proved everything that they needed. so we dont owe them.. well our cpa has told me that for him taking time to look over things that we now owe him 2,100.00.. is this right.. can he charge us for something that was not our fault..then not to mention while this is going on taxe time came again so we had to file with the same cpa, now he is charging us 487.00 to file, and nothing has changed still just 2 w2s.. please i need advice….

  • Angelfly

     If all you have is two W2 forms and you make under a certain income, then you can free-file online at several different sites or you can fill out the 1040 form on your own and send it in.  There is no reason to be paying someone if all you have is a W2.  If the CPA is really charging you that amount, it seems you have a LOT more going on that just a W2 form.  My husband and I worked in a foreign country last year, had unemployment pay from the USA, rental income and expenses, mortgage and student loan interest deductions, and various div and int forms.  H&R block said that would cost $400-500 and recommended I try doing them on my own (which I am).  It’s a shame that taxes are so complicated.

  • CPAGuest

     If you were audited by the IRS and had to “prove” anything, then you must have had more than 2 W-2s. If the CPA did not make a mistake on the original return, then he should be able to charge you for any additional services he performs for you. After all, you are taking him away from working on other profitable work. Now, if he had made a mistake that triggered an audit, then he should correct it free of charge.