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How much would you charge?


ILLMAS

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For a 1041 that took about 28 hours (over 10 months) to prepare?  6 hours was for research, emailing back and forth with client, client attorney, consult with my ATX friends and other accountants etc... and the 22 hours to organize clients spreadsheets and to prepare/assemble the tax return. 

Thanks

 

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How much does a car cost?

The answer depends on the description of the car - new car, used car, manufacturer make, model, year, options included, 2 door, 4 door, etc.

How much was the value of the assets? That should impact on the fee charged. How much would you charge a client for that billable time under normal conditions? What issues had to get resolved in completing the return - multiple sets of similar information, or highly technical  tax issues involving discretion or decision making on specific special conditions that would/could cause IRS or state audit disputes?

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1 minute ago, Evan S. Golar said:

How much does a car cost?

The answer depends on the description of the car - new car, used car, manufacturer make, model, year, options included, 2 door, 4 door, etc.

How much was the value of the assets? That should impact on the fee charged. How much would you charge a client for that billable time under normal conditions? What issues had to get resolved in completing the return - multiple sets of similar information, or highly technical  tax issues involving discretion or decision making on specific special conditions that would/could cause IRS or state audit disputes?

Great post, thanks.

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Do you have an hourly fee?  If not figure it based on what you charge for complex returns/hours you spend on complex returns.  I'd probably not charge for any research I needed for my own general knowledge that can be used on other 1041s or other returns/questions in my practice.  (Show everything on the bill, but then apply a discount.)  But, I would charge for research specific to only that 1041.  Also, know in your own mind what your minimum is, the amount below which you never want to see that client again.  Hand the client the bill and act like you expect payment.  If they balk, you can offer to increase the discount because they're a continuing client or organized or nice or have multiple family returns or it's Wednesday or whatever.  If you have to go below your minimum, fire the client as soon as the check clears.

If this is a one-time client anyway (estate, no other family as clients) I start with NO discounts at all.

If you gave him a quote, don't be afraid to go above it if the work increased from what he originally outlined.  Explain what changed to increase the time and work.  (If you're not done yet, stop to call him to explain what's changed and what your new quote is.)

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You can't really charge for the research unless there were odd items on the return that you needed substantial authority for treating them the way you did.  I would charge $2500-$3k, depending on how many K-1 packages I had to prepare and how hard it was to get info from the client.  Was this a trust or an estate?  I have never had anyone balk at my fee for either one, since they seem to know that this requires specialized knowledge and care.  I usually give them a ballpark with caveats first and then let them know if it's going to be considerably more.  I've had times when an estate has already distributed its funds and left exactly what I quoted in the account.  I usually let it go but once I didn't and the heirs paid me out of pocket.  Most are just glad to be done with it.

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I think it depends on the asset values. $3-4k is very likely. If a lot of money is in play, $5k is likely.

 

Have a new client who's husband died in 2016 and the previous firm did a 706 tax return to declare that his estate passed to her tax free even though his assets were about 1/2 the estate threshold. They charged her $4,500. I showed it to the estate attorney I work with and he just laughed and declared it genius. They gave her this huge packet and it includes a copy of his will, his trust agreement, instructions for the 706 and tax forms that are completely irrelevant with nothing on them. They charged her this to show that she didn't owe taxes on the assets she inherited from her husband.

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1 minute ago, Roberts said:

I think it depends on the asset values. $3-4k is very likely. If a lot of money is in play, $5k is likely.

 

Have a new client who's husband died in 2016 and the previous firm did a 706 tax return to declare that his estate passed to her tax free even though his assets were about 1/2 the estate threshold. They charged her $4,500. I showed it to the estate attorney I work with and he just laughed and declared it genius. They gave her this huge packet and it includes a copy of his will, his trust agreement, instructions for the 706 and tax forms that are completely irrelevant with nothing on them. They charged her this to show that she didn't owe taxes on the assets she inherited from her husband.

Perhaps they did the estate return to ensure that she was able to use the rest of his estate exclusion along with hers when her estate is settled (portability).  I have heard that some firms do this as protection in case the surviving spouse gets rich and needs the extra exclusion.

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4 minutes ago, Gail in Virginia said:

Perhaps they did the estate return to ensure that she was able to use the rest of his estate exclusion along with hers when her estate is settled (portability).  I have heard that some firms do this as protection in case the surviving spouse gets rich and needs the extra exclusion.

Possibly except she's 83 years old and they won't ever come even remotely close because of the trusts. Their entire net worth outside of the trust is maybe $1.5 million and $500k of that is in an IRA. They have about $6 million in their trusts between the two.

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I don't know how people can face themselves in the mirror in the morning after ripping off an old woman like that.  Sure, I've filed 706's for a slew of reasons (starting SOL if nothing else, at times).  So charging her for some work, fine.  But $4,500 for nothing but copies of papers she already had, plus blank tax forms?  Sometimes I wish public flogging would come back into vogue.

As for your comments, @Lion EA - YES we have to charge more.  Plus tell them that we charge for all the questions they are not asking their lawyers - only after telling them we are NOT lawyers, we don't play lawyers on television, and we don't give legal advice.  There is frequently a lot of money (and tax) issues caught in legal issues.  I talk to clients about the tax and finance portion and send 'me back to their pricey lawyers for the legal part.

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