Fee Schedule

[Yardley CPA]

This post coattails on JJStephens post entitled “Tis the Season (aka Here We Go Again).  Is anyone willing to provide their approximate fee schedule?  Are your fees based solely on forms used or is it based on time spent?  I have a day job and prepare returns at night and on weekends for approximately 100 clients.  My base fee is anywhere between $125 and $150 (depending on how I feel that day and if I like the client ) for Federal 1040 and one State.  That fee covers W2, normal interest and dividends and Schedule A (I guess you could call it a more basic return).   If I start adding forms my price will increase accordingly but I do not have a set fee per form.  It depends on how much time I spend on it.  Prepping a Schedule C may add $25 or significantly more depending on the amount of work that's involved.  Stock sales would also increase the fee.  If there are only a few sales it would probably stay right inside that $125 to $150 range and not add any additional charges.  If there are more sales, my price would go up.  I also offer a new client discount.  So my invoice states the price of my service:

 

Preparation of Federal and New Jersey Personal Income Tax Return   $  150

New Client Discount                                                                                $   -25

Total                                                                                                         $  125

 

In my initial meeting, phone conversation or email exchange (there are many clients I have not met face to face who have been with me for many years) I indicate that my price is dictated by the amount of time and work involved in preparing their return.  After looking at the information they provide (including a copy of the prior year return), I give them a general idea on what it should cost.  I do not indicate there will be a “New Client Discount”.  I think they are pleased to see a small credit on their invoice and it may result in some goodwill and also prepares them for what the fee may be next season.                    

 

I believe that the majority of my clients value my services greatly.  Those who leave due to a price issue are not those who want to establish a long-term relationship.  And that's their right but I don't lose sleep over those clients.  Ultimately, as a preparer we have to recognize the significant amount of knowledge and value we bring to the table and our returns should be priced accordingly.   

Edited April 17, 2015 by Yardley CPA

[Lion EA]

I don't offer a New Client Discount.  However, I do find I under-quote to a prospective client more often than I want (working on that) so for that situation, I show the full price and use New Client Discount to bring them down to my quote.  Or Referred by a Good Client or Extension Discount or whatever fits.

 

I do offer Loyal Client Discounts to continuing clients to keep their fees from jumping too much at a time.  I also offer Referral Discounts after their referral becomes a client and pays.  And, Family Discounts to the dependents or even extended family if the situation warrants.  Or, Extension Discount if a client extends for my benefit.  In other words, I'm more likely to discount for a continuing client and more likely to charge full price to new clients.

 

My invoices start out with the forms filed, might add time-consuming line items such as Bookkeeping, Research, Revisions, Consultation, whatever fits, and then might include a discount if that feels too high.  An example might be a really well-organized Schedule C with categories totaled for me vs. the shopping bag that probably gets an added line for Bookkeeping.  I have a couple of clients that after I pointed out their Bookkeeping fees got better organized and lowered their prices.

Edited April 17, 2015 by Lion EA

[BulldogTom]

My fee starts at $85 for a 1040/540 e-filed.  Every form I add increases the price.  That includes every W2, Every 1099, every Schedule, every stock trade, and Every K-1.  I show my clients my price list with all the forms entered.  My average fee is about $142.  We did about 150 returns last year.  That is down from about 200 before we had to move from Lodi.

 

I feel like each client should be treated the same.  So if they have a rental, then there is a charge for that form.  How efficient I am that day with my entry should not matter.  You pay the same for your rental as the next guy.

 

Then only place I screw around with that charge is a Schedule C.  If I have to basically do the books for them before I can prepare the form, I will add some more to my fee.  If it is a very simple business and the books are in order and I have a few line items to put in, I will discount it.

 

I price my services as a value preparer, because I have a day job that pays the bills and I am looking for this business to be my retirement occupation in 10 years more or less.  I would like to get to 300 clients by that time and then I will start moving my price structure up quite a bit.  I will not be positioning my practice in the "value" category at that time, but positioning it as a full service, year round preparation and representation firm and I will price accordingly.  I will also be positioning it for a sale when I move to full retirement.  But that is a long way off.

 

Tom

Newark, CA

[Catherine]

I charge $105 for the 1040 and $50 for MA; $75 each for non-resident or part-year state returns.  Sch A adds $50, B adds $30, Sch D I charge $50 plus $3 per item (so one sale of one mutual fund costs $3; the client with 400 trades pays $1200) but then discount the $50; that charge is basically there because it's the fee for sale of residence (that pays me for slogging through the scribbled lists of "improvements" and crossing off the repairs and maintenance, then slogging through the HUD-1 to get corrections to RE tax).

 

Sch C is the most variable.  Base fee is $100 - but the elderly lady who does a bit of translating and has almost no expenses can get a $90 discount off that.  The guy with the shoebox pays the full $100 plus bookkeeping time at $75/hour.  The clients for whom I do the bookkeeping don't get charged extra for that (they pay those fees monthly) and I should have populate-ready info.  

 

Lots of the smaller forms get charged, as well (usually $15 per).

 

I give tons of discounts (folks love to see discounts; I get thank you notes for the discounts sometimes).  Senior discount 10%; active military 20%; $25 for a referred client who has paid; super-deep discounts (down to $30 or sometimes $0) for the kids' returns where I do the parents. 

[mrichman333]

1040EZ 50, though if it is the college kid of a client who bring the one or two W-2's to me I'll often knock it down to 25. 

1040A $75

1040 with A, and EIC Child tax credit... $125 this year or at least I tried, but usually $100

Sch. D depends on the number of transactions.

Sch C depends.  Some people get a 1099MISC with $ in box 7 and that's all $25, A business with COG Sold Dep....  $300 - $375 with the 1040 as abouve

 

All the above include NJ state return and usually a NY return as well.

[mrichman333]

My soft spot is for Veterans, I have a couple WWII vets, that have SS and a pension, I don't charge them.  Disabled vets the same, unless they have considerable financial means, then I charge a minimum.

I also have a soft spot for the elderly on fixed income and will do a 1040, Sch A minimal interest, dividend for $50

[Catherine]

I have some "elderly on fixed income" who every year net double or triple my gross.  They "only" get the 10% senior discount.

[Yardley CPA]

I also throw in discounts depending on the event such as births, graduations, new home, etc.  I agree that clients always like to see a credit on their invoice and as I mentioned, I do believe it generates goodwill.  

[Jack from Ohio]

I have some "elderly on fixed income" who every year net double or triple my gross.  They "only" get the 10% senior discount.

"Fixed income" only means that their income does not change for the whole year even if they do nothing.  It is not reason for me to "feel sorry" for them.  I grow weary of the retired folks using that term to garner sympathy.  I wish I could have a steady stream of income that would not change, then if I needed more, I can do part time "something."

 

"Lack of retirement planning on your part does not create the need for me to donate to you on my part."

[TAG]

I strive for $150 / hr. And adjust it for varying circumstances as addressed above.

[Gail in Virginia]

Our pricing model is almost exactly the same as Tom's, right down to the price that our returns start at.  We do offer children's returns at about half the price of what we would charge if the return did not come in with the parent.  I do that mainly to encourage them to let us file the child's return so we can be sure they don't claim themselves. 

[MDEA]

My fees start @$110 for base return $160 for Schedule A or C $ 185 for both. If it contains EITC $160 to $$210 depending on how much EITC. Bank products are extra. Dependents are $45.00 or less.

[BulldogTom]

<< If it contains EITC $160 to $$210 depending on how much EITC. >>

 

It is a Circular 230 violation to price an original return off of the amount of the refund.

 

Tom

Newark, CA

[Catherine]

 

<< If it contains EITC $160 to $$210 depending on how much EITC. >>

 

It is a Circular 230 violation to price an original return off of the amount of the refund.

 

Tom

Newark, CA

 

 

Very true.

 

But not for pricing a return based on the complexity of the return.  

 

Perhaps MDEA is guilty of nothing more than slightly sloppy speech (and aren't we all, at times?), actually meaning depending on how complex that EITC return is.  I certainly have seen some (W-2 income, no kids) that were WAY simpler to deal with than others (SE income, kids, and more).  The simpler ones did not cost as much as the more complex.

 

So, MDEA, Bulldog Tom makes a good point and perhaps you need to do some thinking about some aspects of your pricing structure.  Or not.

[Jack from Ohio]

 

<< If it contains EITC $160 to $$210 depending on how much EITC. >>

 

It is a Circular 230 violation to price an original return off of the amount of the refund.

 

Tom

Newark, CA

 

Tax court very recently ruled that preparing a return is NOT practicing before the IRS.  Therefore, contingency pricing is allowed. 

[Lion EA]

I have my 1040 at $100 with CT at $80 and around $100 for "foreign" states including NY and prices for every form and schedule.  Trying real hard to keep everyone at a total of $500 or more, but have lots and lots of long-time clients that are a whole lot less than that.  Kids at half price or maybe $100 or whatever sounds reasonable to keep the kid here and not doing it him/herself.  However, I have kids that have more states and more schedules than their parents:  live in CT but college and work in VA or where ever and summer job in NYC and SE in CT and investments including a couple of K-1s from grandparents and worked for a couple weeks in NC while at the second home during the holidays and....  I don't care if the parents say the kid has just a W-2 or two; I really have to see it before I can quote.  The real downside to pricing them too low is that they expect that after graduation and earning $90,000 on Wall Street (of course, they expect Daddy to pay for it still, too.)

[MDEA]

The amount of the EITC has no relation to the amount of the refund. The difference is under $1000 or over a $1000.

[BulldogTom]

Tax court very recently ruled that preparing a return is NOT practicing before the IRS.  Therefore, contingency pricing is allowed. 

However, I believe that ruling did not apply to EA's.  They are regulated by and subject to Circular 230 at all times in practice.

 

Tom

Newark, CA

[BulldogTom]

The amount of the EITC has no relation to the amount of the refund. The difference is under $1000 or over a $1000.

Really......that is interesting.....

 

Tom

Newark, CA

[Jack from Ohio]

Tax court very recently ruled that preparing a return is NOT practicing before the IRS.  Therefore, contingency pricing is allowed. 

 

 

However, I believe that ruling did not apply to EA's.  They are regulated by and subject to Circular 230 at all times in practice.

 

Tom

Newark, CA

The ruling made no distinction.  Here is a link to the court decision.

 

http://blog.aicpa.org/2014/10/getting-to-the-bottom-line-about-contingent-fees.html#sthash.IpCB1xvT.dpbs

Edited April 19, 2015 by Jack from Ohio

[Jack from Ohio]

The ruling made no distinction.  Here is a link to the court decision.

 

http://blog.aicpa.org/2014/10/getting-to-the-bottom-line-about-contingent-fees.html#sthash.IpCB1xvT.dpbs

http://scholar.google.com/scholar_case?case=4733398767833132327&q=Ridgely+v.+Lew&hl=en&as_sdt=6,36&as_vis=1

[JohnH]

Tax court very recently ruled that preparing a return is NOT practicing before the IRS. Therefore, contingency pricing is allowed.

IRS either gets confused by their own rules, or perhaps they know the difference but they often bluff. Preparing a return is also not the same thing as filing a return, although the IRS has fooled a multitude of tax preparers into thinking it is. Also, they say "an extension of time to file a return is not an extension of time to pay", but as a practical matter that's exactly what it is. Edited April 19, 2015 by JohnH

[Jack from Ohio]

IRS either gets confused by their own rules, or perhaps they know the difference but they often bluff. Preparing a return is also not the same thing as filing a return, although the IRS has fooled a lot of people into thinking it is. Also, they say "an extension of time to file a return is not an extension of time to pay", but as a practical matter that's exactly what it is.

Read the court ruling.  For the record, IRS charges late payment penalties for any tax due that is paid after April 15.  There is no extension to pay.

[JohnH]

Sure there's an extension of time time to pay. I didn't say it was without cost, but the cost is actually fairly modest, especially for a taxpayer who has to borrow the money. Anyhow, a taxpayer who files the return without full payment is in exactly the same situation as a taxpayer who applies for an extension and then files without fulll payment. The only difference is, the collections clock begins ticking six months sooner. Costs (penalties & interest) are basically the same.

But IRS charges that FTP penalty, which when combined with the interest charge adds up to about 8-1/2 % effective APR. They bluff taxpayerrs and tax preparers with the dreaded "Penalty" word, and common sense goes out the window.

[Richcpaman]

Why wouldn't you charge more for an EITC return?

 

Which return is most likely to get you into trouble?

 

EITC returns.  From dependency issues, to who gets to claim who, to all sorts of other things.

 

When a simple return, with the addition of EITC goes from 4 pages to 16, its time to get paid for that.

 

Rich