The national average cost of tax preparation is under $300, including all unlicensed and non-professional preparers. A CPA with tax experience, especially in the higher cost of living northeast region, is more. But that’s not the main point. Most CPAs in practice today do not offer to do just your tax return and nothing else. A CPA’s services are more holistic; designed to minimize your taxes, mesh with your overall financial planning, avoid trouble with other government agencies, provide for audit protection, providing support throughout the year, and many other important functions. (See this longer list of included services). These other services are far more important and more expensive than just filing the tax return. If, for example, the value of the tax return prep is $600 and the CPA charges $200 x 12 months throughout the year, that means that the cost of the other services is $1,800. That’s three times higher than the value of just filing the tax return.
We like to say that we hope that filing the tax return is the least important thing we do for our clients. Our approach is focused on building wealth and financial security, while reducing taxes with safe and well-established practices.
Many of our clients are small business owners, passive investors, or active real estate investors. They are subject to much bad advice and misinformation through social media. Telephone and email scams promising tax credits pose additional risks. A few years ago we calculated that the amount that our investor clients lost to scams was about three times larger than our firm’s total fees to all clients for the year. This emphasized, to us, that the tax service we provide is only a small portion of the value. Helping our clients steer clear of these threats is, in itself, far more valuable, in dollars saved, than filing the tax return. Now we discuss planning throughout the year. It often starts with the observation that ‘if it seems too good to be true, it usually is’. Then we begin to analyze the proposal with an addition set of experienced professional eyes. The value of this collaborative work far exceeds the included tax preparation service.
The lesson is that the cost of CPA file your taxes is a small number, but it would be silly to purchase this alone and would be irresponsible for us to offer it that way.