Discount for Dependent Children of Clients?

[Yardley CPA]

Just wondering if any of you offer a discount for a client's dependent child? If the client includes tax information for their dependent son or daughter, who may or may not be a student, and asks you to complete their return. If there is only a W-2 and maybe a bit of interest or dividends, do you tend to discount what you charge for that?

[Margaret CPA in OH]

I usually include it at no extra charge at least until they are out of school. The W-2 is typically a part-time job and I like to get them their refunded tax withheld. I have had several of those 'kids' become full paying clients over the years.

When the child has investment income, however, I do charge if there are security transactions and kiddie tax is in play.

[michaelmars]

I am in line with Margaret. don't charge or very nominally. Might bump up the parents return a bit to cover but these returns usually take 5 minutes and it builds good will and gets the kids used to seeing your name. I also give a discount on those I everyone I charge for "graduating, getting married, having a baby, etc" it really builds good will. and doesn't cost me anything but some time.

[Catherine]

I do charge for those returns BUT a very small amount. I don't want anyone getting used to getting services for free, or thinking of my work as not valuable (even for a 2 W-2 and $14 bank interest return). I will usually charge the parents, and show what the return fee would be normally, then my (deep) discount for a multi-return family.

I still sometimes have trouble getting money from the kids once they're on their own - they are used to having mom & dad pay. Which reminds me, I have a $30 bill to re-send to a client's daughter....

[mrichman333]

OK, I have been a big "Under-Charger" and have been trying to change.

I just did the years 2009-2013 for a woman, 09 was a Sch. C, The rest a couple of W-2's. each year. I charged $800

Her son had 4 W-2's I charged $75

Did I do good or bad?

[Jack from Ohio]

How did the client react when you told them the price?

[Lion EA]

It's really case by case. I usually show the full charge and then either discount the child's return, maybe by half or more or charge the parents full (with no or minimal discounts) and then discount the child's down to zero.

Got stuck on one this year. Had done the parents complex return with only a bit of a family/multiple return discount, mom's retirement income-type of return with a family discount, and two college daughters with very deep family discounts even though multiple jobs, multiple states, etc. This year, dad returned to preparing his own (retired) and that of the younger college daughter. I still have mom who pays her own. But, I also still have the oldest daughter, graduated, multiple states, investments, and used to daddy paying and used to a really, really cheap price. I gave her less of a discount this year since I don't have her whole family, especially since I lost the pricey return that helped cover the whole family. But, as Catherine, I need to email her the invoice again.

[RitaB]

I generally charge $25 for a dependent with a couple of W-2's. I charge the parents a little less than the non-storefront preparers in this town and a lot less than the storefronts, so I don't feel much like giving away my work. I've not had any complaints. Yes, I know that some take that as an indication that I should charge more. You do your thing and I'll do mine.

[mrichman333]

How did the client react when you told them the price?

When I told her $800 she said wow, that what the last person charged me for my 08 return.

And she gave me a copy of her 08 file which had the bill in it. This is how it went

Review of information and preparation of extension $110

Review preliminary income tax return and underlying data 220

Preparation of 1040 277.50

Email client and make final revisions for 08 income 110

Process tax return 82.50

Subtotal 690.00

Total charges $800

[Jack from Ohio]

When I told her $800 she said wow, that what the last person charged me for my 08 return.

And she gave me a copy of her 08 file which had the bill in it. This is how it went

Review of information and preparation of extension $110

Review preliminary income tax return and underlying data 220

Preparation of 1040 277.50

Email client and make final revisions for 08 income 110

Process tax return 82.50

Subtotal 690.00

Total charges $800

Then you way undercharged her. My fees would have been higher, even without seeing her previous bills.

"Failure to plan on your part, does not create an emergency situation on mine."

When people bring us multiple years to do, 99.99% of the time, the reason is: "I just did not have time."

I have learned to bite my tongue when that is said to me and simply increase my fees. Last I knew, April 15 happens every year at the same time.

[BulldogTom]

I charge a flat fee of $25 for dependent children. It gets them in the office to meet me and I usually end up with them as clients when they move out on their own. Great way to build future business. But I don't give it away. I do make sure they get used to paying for my services, even though it is a very nominal amount. I had one parent take his kids w2 back because they could efile online for free 2 years ago. I am now doing the return. He figured out his time trying to do the return for the kid was worth more than $25.

Tom

Hollister, CA

[mcb39]

I never charge for student children. The main reason for this is to prevent the child from filing his own return online and stealing the exemption from the parents. I make it very clear that when they are on their own, they will be paying. I just had a client call me yesterday because he filed his daughter's return and she has not gotten her refund yet. Mom was on the phone and finally received the answer that it would be eight to ten weeks because they have just begun opening paper returns. I asked him why he didn't just bring it in with his and his answer was "Dunno!"

[Carolbeck]

I generally charge $25 for a dependent with a couple of W-2's. I charge the parents a little less than the non-storefront preparers in this town and a lot less than the storefronts, so I don't feel much like giving away my work. I've not had any complaints. Yes, I know that some take that as an indication that I should charge more. You do your thing and I'll do mine.

This is exactly how I handle these. Sometimes a little more sometimes a little less. I usually show the Fee on the parent's Invoice with a discount down to $25 to cover the costs.

Though this year I had one that just irked me. High Income couple that due to her Student Loans requires her to file MFS so that eventually her loans will be paid in full as she is a teacher with her Masters Degree. There is a special program that allows the elimination of debt if she files MFS because it is based on just her Income.

So that means actually 3 Returns, as I have to show them what MFJ would be like and what each files as MFS. Then I have to explain every line as to why it is better to file this way, what the tax savings are, etc, etc. What a struggle this year just getting paid the $100 I charged for all 3 returns. They asked to file just the wife's to get the refund on hers, and wait to file his (Always owes) and pay me when they get their refund. Then they thought I could do his 16 yr old son's return "If I was not going to charge them anything for it". This would have been a $56 refund.

It just irked me me with their attitude, Together they make 4 times what our family makes. So I just told them that I could not prepare the return as I was not a "Paid Preparer" and suggested they pick up some forms at the Library.

[Jack from Ohio]

This is exactly how I handle these. Sometimes a little more sometimes a little less. I usually show the Fee on the parent's Invoice with a discount down to $25 to cover the costs.

Though this year I had one that just irked me. High Income couple that due to her Student Loans requires her to file MFS so that eventually her loans will be paid in full as she is a teacher with her Masters Degree. There is a special program that allows the elimination of debt if she files MFS because it is based on just her Income.

So that means actually 3 Returns, as I have to show them what MFJ would be like and what each files as MFS. Then I have to explain every line as to why it is better to file this way, what the tax savings are, etc, etc. What a struggle this year just getting paid the $100 I charged for all 3 returns. They asked to file just the wife's to get the refund on hers, and wait to file his (Always owes) and pay me when they get their refund. Then they thought I could do his 16 yr old son's return "If I was not going to charge them anything for it". This would have been a $56 refund.

It just irked me me with their attitude, Together they make 4 times what our family makes. So I just told them that I could not prepare the return as I was not a "Paid Preparer" and suggested they pick up some forms at the Library.

You are WAY underpricing that client!!

[Terry O]

I always charged $10 per child return , and adjusted it if there were more than a couple of W-2's, additional state or self employment. It was worth the minimal amount just to make sure the kid di not do it by themselves and accidentially claim themselves. We all know how much fun that is!!!!

[HV Ken]

We offer a deep discount on dependent children's returns. A recent client interaction is going to have me change how we present our fee to the parents. Usually when I show a discount, I show the full price and the discount. But for dependent's returns, we just show the deeply discounted rate. This year, when the dependent child's return was now a real return and the fee was the normal fee with a more nominal family discount, we got an earful as to why the fee went up so much. Not sure why we handled dependent return pricing differently, but this is going to change going forward!

[HV Ken]

I always charged $10 per child return , and adjusted it if there were more than a couple of W-2's, additional state or self employment. It was worth the minimal amount just to make sure the kid di not do it by themselves and accidentially claim themselves. We all know how much fun that is!!!!

I like when the kid runs with their W-2 to HRB and claims themselves and then the parent's return filed later with AOC is rejected. We then get to file an additional 2 amended returns! Ca ching!!

[Jack from Ohio]

We offer a deep discount on dependent children's returns. A recent client interaction is going to have me change how we present our fee to the parents. Usually when I show a discount, I show the full price and the discount. But for dependent's returns, we just show the deeply discounted rate. This year, when the dependent child's return was now a real return and the fee was the normal fee with a more nominal family discount, we got an earful as to why the fee went up so much. Not sure why we handled dependent return pricing differently, but this is going to change going forward!

I have implemented the same process. I don't charge for students of my clients as an incentive for the kid to stay in school. Starting with 2013, each return for a student showed my full charge price, then a "Student of a Client" discount for the full amount. I want them to know what they are receiving so they won't be able to say... "Why is your fee so high?" when they are no longer students.

[kcjenkins]

That's what I always did, and it worked not only to educate the child, but also to make the parent/client appreciate the benefit they were getting bu not having to pay for the child's return. I always stressed to the parent the need to keep the kid from messing up THEIR return.