Complicated tax season.

[Idaho45guy]

I've always been lower middle class with a boring 401k and no other investments. I always filed with TurboTax and got a return of around $1500. Cost me $30 or so and was about an hour process on the computer.

This year, I'm going to have to hire an accountant. My father passed and I inherited his estate along with some investments. I also created a 501C entity in my father's estate name. I haven't cashed in any investments, and they were all conservative, so gains were pretty modest.

Curious as to what dollar amount a professional accountant is going to charge. I have no idea. There are two different states to file in, my personal returns, plus the estate returns. I'm hoping the cost is under $1000, but have no idea.

I'm scared to death that I'm going to end up owing thousands of dollars and am going to have to sell some guns and a vehicle to pay the government. Has anyone inherited a moderate estate and experienced the tax penalties?

[armoredman]

It depends on the state - in Arizona there is no tax on inheritance. Federally there isn't a tax on inheritance until after over 13 million bucks. Other than that, I have no idea - tax professionals are worth what they charge.

[dverna]

A simple return $100-150

In your case, $400-600.

But if you do not have an accountant now, it may be difficult to find one this close to filing.

[15meter]

When you inherit stocks/bonds you get them at current market value on date of death, "step up value" I believe is the term. You do not go back to original purchase price to establish basis for capital gains tax. If there was a single family home, there should be an exemption, at least on the federal level.

Any cash doesn't have any federal tax on it. Don't have a clue on your state tax.

From your brief description, I would suspect you will owe zero tax.

I went through this in 2020-21-23 after my mother died. I was the executor. Fair amount of investments to distribute, plus 2 pieces of real estate to sell with one parcel that needed to be split. I hired the most reputable accounting firm in the county AND a lawyer.

It was less than fun.

I still have a sister an b-i-l that take my name in vain every chance they get because they are convinced I stole money from them.

Even with the accountant looking over one shoulder and the lawyer over the other.

And the lawyer was our nephew, who most certainly looked out for his mother's interest.

Baby sister and husband hasn't spoken to me since September on 2020.

I kinda like it this way.

If you're executor, keep your head low and let the estate pay for professional help. Especially if there are relatives involved.

As to the original question, I don't think I spent $2500 total across 3 tax seasons to file the taxes.

It was relatively painless, except for dealing with the three sisters.

Oldest sister was convinced she should have been executor being the oldest, youngest was convinced she should have been because she was the "favorite".

I was chosen because I was the closest physically (6 miles), worked with dad on the farm for almost 40 years, we used the same accounting firm, bank and broker. I was chosen strictly because I was a man and the sisters made that perfectly clear, and because I was a man I was incapable of the job.

[MUSTANG]

A simple return $100-150

In your case, $400-600.

But if you do not have an accountant now, it may be difficult to find one this close to filing.

I would immediately start looking for a Tax Professional as dverna recommends; but I would also lookout filing a Tax Extension also. This will give a "Tax Professional" a longer window to assist you; last the ~ 15 April Federal Tax Filing date.


Extension Forms
https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return

Individuals

Individual tax filers, regardless of income, can use IRS Free File to electronically request an automatic tax-filing extension
Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
Special rules may apply if you are:

Serving in a combat zone or a qualified hazardous duty area
Living outside the United States
Qualify for tax relief in disaster situations
Business and Corporations

Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns
Form 1138, Extension of Time for Payment of Taxes by a Corporation Expecting a Net Operating Loss Carryback
Other Forms

Form 2350, Application for Extension of Time to File U.S. Income Tax Return (For U.S. Citizens and Resident Aliens Abroad Who Expect To Qualify for Special Tax Treatment)
Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes
Form 5558, Application for Extension of Time to File Certain Employee Plan Returns
Form 8809, Application for Extension of Time to File Information Returns
Form 8868, Application for Extension of Time To File an Exempt Organization Return
Form 8892, Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax

[tigweldit]

Accountants are worth the money. Get a good one. There is a diference.

[MrWolf]

You should be well below the $1,000 amount but it depends on the complexity of the applicable taxing authorities. Talk to a CPA and see what they say. Remember an extension to file is only on the paperwork, not on any taxes owed. I learned the hard way to never speculate on what a person may or may not owe without actually doing the return. Guesstimating on tax position in filing an extension after looking everything over is one thing. I got burned once a long time ago trying to estimate without having all the facts. You could always make sure you have $1 more than your prior year's TOTAL TAX LIABILITY paid in or make sure you make an estimated tax payment to get you there (don't forget to calculate your state tax amount if required). Good luck. I haven't prepared tax returns (other than family) in over 10 years so...

[nvbirdman]

When my parents died my brother handled the estate since he was in the area and I wasn't. We both did everything possible to be fair to each other. When I got my share, I invested it in the stock market and didn't touch it for fifteen years. I'm very glad I did that.

[schutzen-jager]

every state is different - closed estates for both my wife's brother + father - i used a lawyer with the understanding that anything that does need an attorney he would instruct us how to do it - worked out well - we did a lot of leg work contacting insurance companies. va, + etc. legal fees were less than $1,000.00 + under lawyers recommendation used a cpa for deceased's federal + state tax filings, his fee was slightly over $100.00 - estate was almost $1,000,000.00 the heirs had no federal or state inheritance taxes - lawyer well worth it - also if deceased is a vet, union member, or fireman lawyer pointed out several death benefits we were not aware of - all filings + estate closing took apx 7 months in one case + 11 in the other -

[JonB_in_Glencoe]

Before I retired, I was self-employed for a decade. My accountant charged me $500 annually to do my taxes (typically my return was about 30 pages), but through the years, He answered lots of questions and gave thorough suggestions for no extra charge, he'd just say that's part of the relationship.

[popper]

When parents passed my brother was the executor. He got a lawyer as probate had to be filed. Most was in trusts so probate was pretty simple, taxes paid from trust. The 'rule' is, if taxes haven't been paid (on cashed out assets only), you owe them. Physical assets have the value WHEN you get them.

[Winger Ed.]

Good luck with all that.

Getting rich is fairly easy compared to STAYING rich.:bigsmyl2:

[Handloader109]

Yes, if under state and federal limits, no issue with taxes. You should not owe anything. But depending upon investments, you will owe on those making money. I.e. Stocks and bonds.
But you do get stepped up value as when YOU inherented them.

Sent from my SM-S908U using Tapatalk

[Silvercreek Farmer]

If you have inherited traditional (never previously taxed) IRA’s, RMDs (Required Minimum Distributions) may be required and taxable. $500 in CPA fees wouldn’t seem too excessive to me, $1000 would be a bit rich.

[HWooldridge]

I had a similar situation with my mom, who passed in 2020. We hired an accountant at a quoted fee of $600, but it wound up being almost double when everything was done. With that said, we didn’t have any problems. Suffice to say we only used the firm once and went back to filing our own taxes the next year.

[abunaitoo]

Just got mines done at HR block.
Person I've known for years and years.
She did it last year.
Cost $400, but got enough back to pay for them.
So it's a wash.
Next year will probably be different now that I getting SS.

[dverna]

My fiance worked for H&R Block years ago. I would not use them.

[MrWolf]

My fiance worked for H&R Block years ago. I would not use them.

Basically trained house wives that they claim are experts. Pay the price of a good CPA, well worth it. Next year you will have something to go by if you decide to tackle it yourself.

[Idaho45guy]

Thanks for the great advice! I am calling the accountant that handled my father's taxes for years.

[Idz]

using Turbotax my retirement, inheritance, and rental business taxes come out to about 150 pages with all the worksheets and forms. Taxes in the USA are a mess. I think the only way to fix that is to require every Congress critter to personally do their own taxes without software or assistance. And then audit them and prosecute them for any errors they make. I bet we'd have a rational system within a year.

[BrassMagnet]

using Turbotax my retirement, inheritance, and rental business taxes come out to about 150 pages with all the worksheets and forms. Taxes in the USA are a mess. I think the only way to fix that is to require every Congress critter to personally do their own taxes without software or assistance. And then audit them and prosecute them for any errors they make. I bet we'd have a rational system within a year.

You are the Man with a Superior Plan!

[elmacgyver0]

I think dverna is in the right ballpark, figure on a thousand and go home happy.

[imashooter2]

We first hired an accountant when we started renting my wife’s ancestral home. He charges us a fee per form every year and then "discounts” it. Last year’s filing was a touch over $300. In the 15 or so years we have used him, we have received demand letters from the IRS claiming errors twice. In each case our guy prepared documentation and composed a letter for us to send back supporting our position. In both cases the IRS determined we were correct. There was no charge for this documentation and frankly, avoiding audits and dealing with the IRS would be worth paying extra if he did charge us.

[15meter]

Thanks for the great advice! I am calling the accountant that handled my father's taxes for years.

Probably the smartest thing you can do, he will be familiar with the details and should have retained prior years tax forms to refer to.

Continuity raises fewer red flags with the IRS, particularly if the accountant has a track record of no screw ups filing other people's forms.

[jaysouth]

I was a licensed CPA several decades ago in several Middle Atlantic states doing tax and audit work. I would not prepare a current day tax return if my life depended on it. Hire a CPA and pay them for their expertise.

[Rapier]

Our filings look more like a book, we file multiple entities, plus our individual returns. We have had a CPA firm for 40+ years. Only time we paid over $1,000 for a filing was with an audit that got complicated and drug out because the Agent's father was killed in Opal. The agent's father's estate and funeral arrangements caused the audit to start and stop several times.

A CPA and would not fool with those folks any other way. Once done by the CPA, it is done and done.