Tax Preparation Prices and Fees

[ETax847]

Just read this article and was completely blown away.

Being a CPA, in a big market city, I think I set my fees way to low based on the following.

http://taxes.about.com/od/findataxpreparer/a/prices.htm

Average Prices for Tax Preparation Fees

The National Society of Accountants in their 2013 fee study reports the following average prices charged by their members:

• Average for 1040 with Schedule A and state return: $261
• Average for 1040 with state return with no itemized deductions: $152

Average Prices at Franchised Tax Offices

• H&R Block: $198 per return (average, 2013 data)
• Liberty Tax Service: $180 per return (average, 2013 data)

[kcjenkins]

What city?

[Guest Taxed]

I can tell you right now that I could not charge $261 for a 1040 with Sch A. My competition is not the CPA shop or Liberty tax. It is the next fellow down the street who is just like me, doing part-time out of his home office.

[MsTabbyKats]

I can tell you right now that I could not charge $261 for a 1040 with Sch A. My competition is not the CPA shop or Liberty tax. It is the next fellow down the street who is just like me, doing part-time out of his home office.

You know, I feel the same as you.

However, as my husband always points out (he thinks my prices are way too low...and that I should charge as much as those with real overhead)....my clients get very personalized attention. I don't think "the big guys" can do that....I don't think you even get the same preparer at "the big guys" every year. The personalized service should command bigger fees, if anything.

I don't know about you....but "my people" contact me year round about "life changes" (new job, new baby etc). I can't imagine calling H&R just to tell them "my wife had a baby!"

I've already decided to charge more this year (another thread). What's the worst than can happen....less work but the same income. And with "all these risks", who needs the potential headaches without the additional compensation.

[Guest Taxed]

My clients are welcome to call me all year round. As a matter of fact I tell them that before they do something that may impact their taxes (getting divorced, buying a property etc.) to call me. I rather deal with it before they make a big boo boo down the road.

I have at least 3 other fellows that I know of within a 10 mile radius that do taxes out of their home. This is a small town and word gets around. For the most part I do not lose clients to chain stores. What I lose I usually make up within a season or two by way of referrals. I am now doing the 3rd. generation of a few clients.

For my more complex tax returns (rentals, Sch C, Sch D), I show them what I have to do to get it as accurate as possible and that takes time so it will cost a bit more than your average 1040 with Sch A.

[Richcpaman]

I have no idea what the guy down the street charges to prepare a return.

And I really do not care.

I have an idea what HRB/Liberty/chians charge, and in many respects, it is, and can be, much higher than my fees. But they are doing work I don't want to do, so it doesn't matter.

My fees are too low, no matter what, becasue *I* want to make more money. And play more golf...

But those fees listed in the first post would be below my averages. The low end for me would be at least $300-325 for a 1040/SchA/MD return.

If you are selling a commodity, then you ARE sensitive to what others charge, because your product is no different from the chains/others. I do not sell a commodity. I sell myself, and my knowledge, and that is worth alot more than any of the chains.

I happen to be a CPA, and started working for a CPA firm 20 some years ago, then I went to work with a Non-CPA firm, and have been stuck with lower pricing becasue of that... But it has not stopped me from raising my rates since.

But if you are in this business, and in it for real, then get your EA, or your new RRTP when it comes back, (and it will!) and charge accordingly.

The clients that leave because of cost? In 20 some years of doing this? Not that many in the first place, but most of them? Were gonna go anyway. And are not missed.

And don't be afraid, and think that your clientele isn't that economically priviledged, and they can't "afford" it. THAT is not your problem.

Rich

[Guest Taxed]

The next big opportunity to increase rates for tax prep for the entire industry will be the 2015 season. I think ACA will drive business our way :)

[MAMalody]

The next big opportunity to increase rates for tax prep for the entire industry will be the 2015 season. I think ACA will drive business our way :)

Is this another unintended negative consequence of ACA?

[Guest Taxed]

Is this another unintended negative consequence of ACA?

Positive from tax preparer's perspective

[MAMalody]

Not from mine.

[Guest Taxed]

You don't like the opportunity to earn a few extra bucks, thanks to Obama?

[JRS]

You don't like the opportunity to earn a few extra bucks, thanks to Obama?

No.

[Jack from Ohio]

We have several years of job security. It is a bittersweet situation. I would prefer it not be at the expense of millions of citizens as Obamacare implodes.

[michaelmars]

for me, the type of client that is only filing for obamacare is not the sort of returns I want to do. If these people weren't filing before or did them themselves then they just won't be economically beneficial for my practice. This year I am setting my minimum fees at $350 for an individual and I may increase that once I get into tax season and see what is involved with this years changes. My engagement letter is going from 3 to 4 pages with added disclosures for obamacare and credit card vs. other income deposits for my business returns. I am also going to state that all returns and statements going to banks, etc will have to go through the client unless they comply with the written authorization rules. This is an area where I think we all get lax.

[Guest Taxed]

>> I am also going to state that all returns and statements going to banks, etc will have to go through the client unless they comply with the written authorization rules. This is an area where I think we all get lax.

I agree. I think I am going to take that position as well going forward.

[MAMalody]

You don't like the opportunity to earn a few extra bucks, thanks to Obama?

No.

[easytax]

for me, the type of client that is only filing for obamacare is not the sort of returns I want to do. If these people weren't filing before or did them themselves then they just won't be economically beneficial for my practice. This year I am setting my minimum fees at $350 for an individual and I may increase that once I get into tax season and see what is involved with this years changes. My engagement letter is going from 3 to 4 pages with added disclosures for obamacare and credit card vs. other income deposits for my business returns. I am also going to state that all returns and statements going to banks, etc will have to go through the client unless they comply with the written authorization rules. This is an area where I think we all get lax.

>> I am also going to state that all returns and statements going to banks, etc will have to go through the client unless they comply with the written authorization rules. This is an area where I think we all get lax.

I agree. I think I am going to take that position as well going forward.

Just want to make sure I'm not missing something. I use ATX (1040 office) and they have some disclosure forms about me contacting clients for other than tax matters, etc. As I read them, once the client signs off, I can contact them as I deem fit, share information, etc. --- would this not preclude "other" authorization rules as mentioned above or are we in fact basically saying the same thing?

I have in the past "used verbal" OK from client to give other parties information BUT will not in the future as even a small "slip" could bring penalties in todays IRS.

Thanks for input.

[JohnH]

Send everything to the client, password protected, etc.

Let them forward it on to the bank, broker, whomever.

If the third party can't trust that process, they're probably not going to approve the loan, grant, etc anyhow.

If you NEVER send anything to a third party, you don't need to protect yourself with disclosures & permissions.

[Guest Taxed]

If a tax preparer want to disclose any taxpayer info. they better make sure they comply with:

Rev Proc 2008-35

This revenue procedure provides guidance to tax return preparers regarding the format and content of consents to disclose and consents to use tax return information with respect to taxpayers filing a return in the Form 1040 series,e.g., Form 1040, Form 1040NR, Form 1040A, or Form 1040EZ, under section 301.7216-3 of the Regulations on Procedure and Administration (26 CFR Part 301). This revenue procedure also provides specific requirements for electronic signatures when a taxpayer executes an electronic consent to the disclosure or use of the taxpayer’s tax return information. This revenue procedure modifies and supersedes Revenue Procedure 2008-12, 2008-5 I.R.B.368, to provide guidance pursuant to section 301.7216-3T((4)(ii).

[Mr. Pencil]

As I read them, once the client signs off, I can contact them as I deem fit, share information, etc.

No, no, no! I don't what ATX offers, but I'm sure it is not legal protection. Why do we even still have this question? The accounting industry settled it years ago.

The IRS is not the problem. It doesn't cost the government anything, so they are not going to be interested unless there are multiple complaints, and even then in the most egregious case it wouldn't be more than a censure. The problem is civil liability. And that is personal--your own house and bank accounts--even if you operate as an LLC or corporation because you can never escape responsibility for your own actions.

First, the third party might be injured if they rely on your statement. Suppose you tell or imply to a lender the client is self-employed. You do NOT know that. All you know is that last year the taxpayer filed Scheduled C based on unaudited self-prepared records (or less). Just about anything on the return could well be wrong.

Or suppose the lender turns down the loan. Now your client is damaged, and he might not agree that he gave you permission to disclose, even if it was in writing. Did he specify exactly WHAT to disclose, or to whom, or when? Questions like that can be very expensive.

[Guest Taxed]

Ever since the re-financing rush eased up I have not been bothered by lenders and brokers. But now I am expecting another rush in February/March as the FAFSA deadline approaches.

[Bart]

You don't like the opportunity to earn a few extra bucks, thanks to Obama?

No