Tax preparation ridiculousness

[y4m]

I think I posted before that we used DH's firms tax preparer, who didn't have K-1 forms prepared before tax day, so then had to file an extension for our taxes.  We knew we'd have to file in California and Virginia since we lived in both, but she also added an additional state where DH's firm is headquartered--she said we owed $82 there in the extension, so we sent a check, but then the actual form showed we owed $0 and they had to send us the $82 back, which makes me think we didn't need to file there at all.  Total cost for preparation was $900.

But here's the kicker.  We got the bill today, and copies of our returns, and buried in there there's this letter informing us that they like to be proactive with their clients and so they will be preparing some tax projections for us, to the tune of $250 or so a pop, several times this year unless we specifically tell them not to by sending them a letter telling them that we will be handling our own 2013 taxes.  

My head about exploded.  If you use a tax person, do they do unprompted tax projections for you and then send a bill?

[sicilygirl]

No way. I'm a CPA, and I would never do that, nor have I ever heard of that being done! Is that even legal? Did you sign an engagement letter with them at the beginning of the process?

[spunkarella]

Jun 5, 2013 16:27:39 GMT -5 sicilygirl said:

No way. I'm a CPA, and I would never do that, nor have I ever heard of that being done! Is that even legal? Did you sign an engagement letter with them at the beginning of the process?

All of this!!! That sounds shady.

[SJ]

I'm sorry this has been such a frustrating process.

Are these in order to calculate quarterly estimated payments? Do you pay those?

We often provide periodic tax projections of our investment accounts to our clients' CPA's, at the request of client or CPA, so that they can accurately predict/prepare estimates and that there are no surprises at tax time.

I cannot recall the clients ever receiving separate invoices for these, but perhaps it is all wrapped up in their yearly invoice paid upon receipt of return.

[jwright]

Our tax engagement letter does not include quarterly estimate projections. We usually give people the numbers for safe harbor projections with their tax returns so they can pay the estimates in over the year. I also mass email clients and ask if they would like me to do a more specific projection; it is more of a way of staying in front of clients. I don't charge unless they agree to the work.

In their defense on the state filing, just because there is no tax liability does not mean there was no filing requirement. That could very well have been necessary for compliance.

[gardengal]

No.
We do quarterly estimated taxes and we ask our CPA to help with those. It's never been automatic.

[aurora]

Our CPA has always given us the forms for quarterly taxes for the next year when we file for the previous year (so for 2013 he gave us the 4 slips and an estimated amount based on what we owed last year when we filed our 2012 taxes). We've never gotten a breakdown of how much that costs compared to the rest of the preparation - it's always been included in the single preparation fee.

All of that said, our fee was absolutely outrageous for 2012 so I want to go back to doing 2013 on our own. Hmmm...makes me wonder if I need to notify him or something.

[y4m]

Our taxes are actually pretty simple. We are both salaried. DH is a minority partner in his firm, and last year there was a year-end pay out, but I don't expect there will be this year. Now we have a house.

I wish I knew how to figure out whether the extra state was actually necessary. It looks like it's listed as business income that was entirely taxable in Virginia as well.