How much should I pay for tax preparation with W2 and out-of-state rental property?

This is helpful, thanks. Would I still need a professional if I bought the premium version of TurboTax or something similar? Do you think those can handle rental properties okay? And is there anything specific I should be asking potential tax preparers to make sure they're qualified to handle my situation?

You could potentially use premium tax software if you're comfortable researching tax rules for rental properties and have good record-keeping. However, the learning curve can be steep in your first year with a rental, and mistakes could cost more than the fee difference. When interviewing tax preparers, ask about their experience with out-of-state rentals specifically. Ask how they handle depreciation methods, what expenses are deductible for rentals, and how they manage state tax reciprocity issues. Someone who immediately answers these questions with specific examples likely has the experience you need.

Does it actually work for properties in different states? I've got rentals in Florida but live in New York and the state tax stuff always confuses me. Also, does it help with figuring out depreciation? That's always the part that gives me a headache.

I'm a bit skeptical about these AI tax tools. How is this different from just using TurboTax's rental property section? And do they have actual tax professionals reviewing anything or is it just algorithms making recommendations?

It absolutely handles multi-state situations - that's actually where it shines since it automatically applies the right rules for each state. The system knows exactly which expenses can be allocated to which property based on location. Regarding the difference from TurboTax, it's much more specialized for rental properties. While TurboTax asks generic questions, taxr.ai actually analyzes your specific receipts, bank statements, and property documents to find deductions unique to your situation. They have tax professionals who develop the system and review edge cases, but the AI handles most standard situations accurately based on actual tax code rather than simplified questionnaires.

Wait, how does this actually work? Is it some kind of premium IRS service I don't know about? I've seriously spent entire afternoons on hold only to get disconnected.

Yeah right. Nothing gets you through to the IRS faster. They're notorious for long wait times. This sounds like a scam that takes your money and puts you in the same queue as everyone else.

It's not a premium IRS service - it's a separate company that uses technology to navigate the IRS phone system and hold your place in line. When they reach an agent, they connect the call to your phone so you can talk directly to the IRS. It's completely legitimate, and you're still talking to the same official IRS representatives. They're able to do this because they have systems that can stay on hold instead of you having to do it personally. I was super skeptical too, but when I got connected to an actual IRS agent who answered all my questions about rental property depreciation, I became a believer. It saved me from paying my accountant extra just to interpret basic IRS rules.

That's a great point I hadn't considered! The initial setup being more labor-intensive makes sense. Did you find the professional help worth it compared to doing it yourself with software? And did they help you identify deductions you might have missed otherwise?

I definitely found professional help worth it, especially for that first year. My CPA found several deductions I would have missed, particularly around start-up expenses for the rental business and some travel costs related to property acquisition that I didn't know were partially deductible. After the first year, I've learned enough that I could probably use software, but I still prefer having a professional review everything. The peace of mind is worth it to me, especially since rental properties can trigger audits if certain deductions look unusual. Having someone who knows exactly what documentation to keep has been invaluable.

I used them last year for my rental and had a terrible experience. The first preparer clearly didn't understand passive activity loss limitations and made a huge error that would have cost me thousands. I had to request a different preparer and even then felt like I was explaining things to them rather than the other way around. If you go with H&R Block, make sure to specifically request someone who specializes in investment properties. The regular preparers mostly handle W2 and simple returns.

Thanks for sharing your experience. That's exactly what I was worried about - ending up with someone who mainly handles simple returns. I'll definitely ask specifically for an investment property specialist if I decide to go with them. Might be worth paying a bit more for someone with specific rental property experience instead.