Thoughts on selecting a U.S. Tax Preparer – Suitability vs. cost

Tis the season (or almost) for those who plan to file U.S. Tax returns. Some of you have a tax preparer and some do not. U.S. Tax Prep is a site that is devoted to the problem of finding a competent and reasonable priced (is it possible to find both those things in one person) preparer. Those who either don’t have a preparer or aren’t happy with their preparer might start there.

Here are some thoughts:

If you have a Chevrolet situation you don’t want a Cadillac preparer. With few exceptions, lawyers should not be used as tax preparers. They are simply too expensive. Here are parts of two emails that I have received in the last two days.

First – Bordering on criminal:

Is it possible to sue a lawyer if the total income was around 50K, nearly all exempt under FEIE, who charged $4,000 to prepare returns for a single year (and apparently FBARs)?  Lady has virtually no financial wealth, all in her house. She worked for her husband’s business. He is a non-resdient alien for US tax purposes.  Now multiply this extortion by 5 years.

Second – Likely very overpriced:

I was referred to a dual American-Canadian lawyer and CPA who works in ______ and has legal affiliations in the U.S. I have not filed IRS returns for years because most years I earn no money and very little if I work. I am a dual citizen. In order to bring me into compliance with the U.S. tax laws, he is charging $6,700. Is this exorbitant for a simple case and for 3 to 4 years of filing? I don’t have the money; almost all my income comes from my husband’s pensions. He is a Canadian citizen.

It seems clear to me that neither of these people should be paying for the services of a lawyer. Their situations are simple. Keep them that way.

Minimum Cost – Simple Situations – and the Brad Smiths of the world

A very interesting post and comments which appeared on the MapleSandbox blog is referenced in the following tweet:

The post describes the situation of one Brad Smith as follows:

I decided to pursue this question and asked Mr. Brad Smith, who might or might not be a composite character, to follow up with Mahany on this inexpensive $300 tax service. Brad is a 27 year old single Canadian resident and Canadian citizen living in Toronto who just discovered that he is a U.S citizen. Mr. Smith insists on entering into IRS tax compliance in order to pay, as he says, his “fair share”. He is unwilling to file returns on his own and refuses to renounce his new-found U.S. citizenship.

I selected Brad as he has a very simple tax situation: very low self-employment income ($19,000 annual), a single share of a Canadian mutual company (value $100), and $200 in a Canadian tax free savings account (TFSA).

Both the post and the comments are fascinating. It looks as though the costs to do simple U.S. tax returns are starting at about $1000. Maybe, it’s worth learning to do them yourself!

 

 

 

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