Tax Prep Fees on the Rise-from accounting today

[michaelmars]

Tax Prep Fees on the Rise

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By Daniel hood

Tax practitioners will be charging more this year for tax preparation, according to an annual survey by the National Society of Accountants.

Taxpayers can expect to pay an average of $261 for an itemized Form 1040 with Schedule A and a state tax return, the survey found, compared to the $246 reported in last year’s survey.

The fee for non-itemized return will also rise, to $152 for a Form 1040 and state return, against $143 last year.

“The IRS says it takes an average of four hours just to complete and submit a Form 1040,” says NSA executive vice president John Ams. “Add at least another hour if you also have to complete a state return. You have to ask, ‘How much is your time worth?’”

Fee information was collected in a survey of tax preparers conducted by NSA. The tax and accounting firms surveyed are largely owners, principals and partners of local “Main Street” companies who have an average of more than 26 years of experience.

The survey also reported the average fees for preparing other Internal Revenue Service (IRS) tax forms, including:

• $218 for a Form 1040 Schedule C (business);
• $590 for a Form 1065 (partnership);
• $806 for a Form 1120 (corporation);
• $761 for a Form 1120S (S corporation);
• $497 for a Form 1041 (fiduciary);
• $667 for a Form 990 (tax exempt);
• $63 for a Form 940 (Federal unemployment);
• $142 for Schedule D (gains and losses);
• $165 for Schedule E (rental); and,
• $196 for Schedule F (farm).

Naturally, fees vary by region, firm size, population, and economic strength of an area. According to the NSA, the average tax preparation fees for an itemized Form 1040 with Schedule A and a state tax return in each U.S. census district are:

• New England (Ct., Maine, Mass., N.H., R.I., Vt.) – $251; Middle Atlantic (N.J., N.Y., Pa.) – $274;
• South Atlantic (Del., D.C., Fla., Ga., Md., N.C., S.C., Va,, W.Va.) – $270;
• East South Central (Ala., Ky., Miss., Tenn.) – $294;
• West South Central (Ark., La., Okla., Texas) – $242;
• East North Central (Ill. Ind., Mich., Ohio, Wis.) – $238;
• West North Central (Iowa, Kan., Minn., Mo., Neb., N.D., S.D.) – $208;
• Mountain (Ariz., Colo., Idaho, Mont., Nev., N.M., Utah, Wyo.) – $245; and,
• Pacific (Alaska, Calif., Hawaii, Ore., Wash.) – $303.

[Guest Taxed]

Thanks Michael. I am getting ready to send my organizers next week. I may send those that are too low a copy of this (hint hint)!

[ETax847]

Wow, I always thought my fees were low and this confirms it. Thanks for sharing

[MsTabbyKats]

My fees are way too low. That's gonna change. I've always been kind of "Same as last year unless there's a significant change."

This time I'm going to quote an increased fee....and get a confirmation that it's OK....before I enter the first number.

I know I get a lot of referrals based on my low rates. I really don't care when the people are "just getting by"....but, I do care when people make "a lot" and are cheap.

I always had $85 for a quickie (W-2, Standard Deduction...). My new "quickie" is $100.

[jshtax]

They should be rising as more responsibility is being put on the shoulders of the preparer.

[jshtax]

Blame it on circular 230

[MsTabbyKats]

Last year I lost a few non-resident aliens because I increased my "idiotically low fee" to one that was only "ridiculously low"......and it felt great!

[Guest Taxed]

What do they typically caharge for 1040NR in NYC at a chain store?

[MsTabbyKats]

What do they typically caharge for 1040NR in NYC at a chain store?

I have no idea...but a lot more than my $125. I raised it to $175 (Tax Act doesn't have the software...I had to use fill-in forms.) and they ran........

My non-resident aliens live all over the country....not NYC.

They really don't make much...which is why I did it for so little. But...then I got tons of "their friends"....and it became just too much.

Once one kept trying to bargain....and I got so fed up I told him..."I'm not a bazaar!"

[Guest Taxed]

I think you were doing social service @ $125 for a 1040NR. Even $175 would be a good price for NYC rates. I still have a client who moved to NYC from MA and he still has me prepare his return because NYC preparers quoted him almost double of what I charge.

[MsTabbyKats]

I think you were doing social service @ $125 for a 1040NR. Even $175 would be a good price for NYC rates. I still have a client who moved to NYC from MA and he still has me prepare his return because NYC preparers quoted him almost double of what I charge.

And keep in mind....these are all paper returns....so I had to mail them out to the taxpayer for "signing & submission".

The hardest part is that each state treats Non-Residents differently....and different visas may get different state treatment.

NY is easy...it's just like the fed. But, for other states...I always call that state tax dept. to advise.

The only new ones I accept is if the income is entirely treaty excluded.

If not...they have to itemize....and they NEVER have expenses. And then they start arguing that "my wife is my dependent"...and other such stuff....and I have to explain that this is not "Whatever Country" and 99% of the time the wife/kids don't count.

Very few people do non-resident aliens...because to do them correctly can be very time consuming and emotionally draining.

So....do you see why I has happy to be put in a position where I could "justify to myself" to discontinue this service!

[Guest Taxed]

Just like we have niche practices like Clergy tax, I am sure there are preparers who do 1040NR all day long?? Perhaps they advertise in the ethnic magazines and media.

[taxxcpa]

A fair price for a return with one W-2, no itemized deductions and no state tax return would be about $ 50, but I have a minimum fee of $ 100 because I have to allow for the time waiting for them to come in, ask a few questions to make sure that is all, then have the risk that a month later they will discover they forgot that broker's statement or that K-1 or something else.

If you could whip out one such return right after another every ten minutes, with no later problems, it might pay to do them for $50.

[Guest Taxed]

We have a tax preparer who goes to the Church basement after Sunday service and cranks out returns till 5 pm. I believe he charges $50 for a standard return. He uses Turbotax and will not e-file. Some of his ex clients came over to me because they had rental or Sch A.

[jshtax]

Our fees go from 350 up to a 4-5 thousand depending on amount of forms.

[SaraEA]

Except for dependents, we have a minimum charge of $100 (one W-2 and maybe some bank interest). With Sch A minimum is about $200, and with Sch E $275. We have increased fees for clients with Sch D in recent years because the 8949 is time consuming. We do very few EITC returns but increased those fees by $25 to cover the added due diligence questions and preparer risk. Our problem is clients who have been with the owner for decades, long before he started the current business. He's never raised their fees more than $5 or $10 every few years, so now they way underpay for the amount of time their returns take. Most of them bring in good referrals so that helped compensate for the low fees. Now, however, we have more clients than we can handle and are trying hard not to take anyone new. We're even firing some PITA clients. We too have a few dozen clients whose return costs are in the five digits and some in the six digits. Some of these take no time at all because we've been doing them so long we have a routine. Others get only more complicated each year and take days to complete so you'll never get your desired hourly rate.

One situation that crept up is when you do a child's return for free, or no more than $50. (I'm talking about a couple W2s from an after-school job, not kiddie tax returns.) Eventually that child grows up and graduates from college and starts a high-paying job in a different state of course. Mom and Dad still bring his or her tax docs in and still expect to pay the same fee.

[Guest Taxed]

>>> Mom and Dad still bring his or her tax docs in and still expect to pay the same fee.

This tax season I had to fire a kid (now a 26 yr old lady) because she makes over $80K as a Pharmacist, owns her own home, but her parents still want me to charge her $25 that she paid when she was in college!

[easytax]

>>> Mom and Dad still bring his or her tax docs in and still expect to pay the same fee.

This tax season I had to fire a kid (now a 26 yr old lady) because she makes over $80K as a Pharmacist, owns her own home, but her parents still want me to charge her $25 that she paid when she was in college!

Had similar with the kids of several clients ---- Moved onus off me (keeps parents happy too --- so they don't get "miffed" and try someone else) by bringing into the tax conversation that -- hey, you're out of school, working , doing your own thing now, making better money, etc.; which they agreed to ----

and then just saying, something like "yup, your really an adult now, so when would you like to go into adult mode with real life fees, it moves you from the "kid - (because of tying into your parents, etc. -- I DO MENTION that fact)" fee to approximately X dollars which is real adult world or actually a bit less, as we've been doing this for a bunch of years, etc.? I can do this year as kid fee and we can move you to adult side next year or would you like to move up now? Either way is OK with me"

Takes pressure off if they REALLY hadn't thought about it and saves them "face" if they did but were "using" my generously, etc.

Only had a few - wait till next year as most stepped right up and agreed they were adults now.

I hate to lose ANY clients I've had for more than a year, as originally I did my "weeding" the first year, if we didn't match or I wasn't willing to accept them, etc. Right now, I'm building but that was due to Medical - those that stayed with me, I'll actually "fight" to keep - they stepped up for me. About 7 of these are "kids" I did my "spill" with (parents stayed too).

[Guest Taxed]

To to add insult to injury, my client e-mailed me few weeks ago few questions regarding capital gains, wash sales. I know these people don't have any brokerage account so I said why don't you make an appointment and come see me with your statements so I can answer correctly. Silence !

[Lion EA]

My "kids" can be more expensive than parents with multiple states. If parents are willing to pay, I keep their rates down if parents' returns are expensive. If parents aren't paying and "kid" is, I charge full freight with maybe a loyal client discount.

[CathysTaxes]

I have one client who always questions why his two daughters' returns costs more than his. Both daughters have UTMA accounts, and live at home. The older daughter is not responsible, so everytime she's short money to pay for her auto insurance, she withdraws money from this account (as her mother is making monthly payments to it) resulting in wash sales, and capital gains/losses. The 1099-Bs never had cost basis (except now that their broker transferred all of their money to different funds, cost basis now has to be provided). Their broker wouldn't figure out the basis, so I had to do it. Plus the daughters (and the parents) for some stupid reason can't call to get this info, so I'm the one who ends up on hold. Both daughters are over 19, they are not in school, and client doesn't understand why he can't claim them.

[taxxcpa]

I had a client that wanted to claim his son and his son had a higher income than the parent.

[Guest Taxed]

Most people think that if they provide their adult children a bed to sleep in their house, they can claim them as a dependent like they used to when they were minors! I have a quick chart that I give them when they want to challenge me on the rules.

[Mr. Pencil]

Most people think that if they provide their adult children a bed to sleep in their house, they can claim them as a dependent like they used to when they were minors! I have a quick chart that I give them when they want to challenge me on the rules.

Do you also tell them it was the Republicans whose anti-family policies took away the exemptions, when they controlled Congress and the White House in 2004-2005?

[Hillenburg]

Do you also tell them it was the Republicans whose anti-family policies took away the exemptions, when they controlled Congress and the White House in 2004-2005?

Sure they did. The Republican's kids are out of the parent's house working for a living.