Janitor Bob Posted February 25, 2009 Report Share Posted February 25, 2009 Last year my Clients (Ohio residents, MFJ) had one W-2 each and your usual Sch A deductions (mortgage, taxes, etc). They were repeat clients and all of the information just rolled over from prior year. I charged them $60.00 like I had the prior year for the 1040 and Ohio IT-1040. This is MUCH less than H & R Scmuck, but only $10-$20 less than many individual preparers in this area (Sidney, OH...small town)...So I'm cheap, but not overly so compared to others in my area. Problem This year, everything is the same with the wife, but the husband has 10 W-2s.....8 with the usual OH income and taxes, but one with PA state income and tax withheld, and another with VA state income and tax withheld. He also has a 1099-G unemployment from Indiana (client had a job there and commuted from Ohio, but was laid off). He also has a 70 page notebook with several receipts taped to each page....apparently he travels all over as a W-2 employee for various companies...and has a ton of expenses (food, lodging, mileage, tools, etc). He has not added any of them up and they are not sorted in any order except by date. So it looks like they will have: 1040 (11 W-2s) Sch A 2106...with me catagorizing and adding up hundreds of receipts OH State return IN State return....Non-resident VA State return....Non-resident PA State return...Non-resident Could you folks please tell me what you would charge for this? I am calling him tomorrow to give him the "heads up" on the large fee increase, but I am not sure what is fair to charge him. Please keep in mind what I charged him the year before for the much easier return. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 25, 2009 Report Share Posted February 25, 2009 How much longer in time will it take you compared to the last couple of years? Maybe 4-5 times as much? I'll take a stab at it. Could you charge in the $300+ range and still get paid? At a minimum, you have 4 times as many state returns, each with their own set of rules. And the client will probably balk at the fee, but you still have to summarize the business expenses in that notebook. Like you said, it's still less that HRB would charge. Quote Link to comment Share on other sites More sharing options...
ed_accountant Posted February 25, 2009 Report Share Posted February 25, 2009 You should count the hours you spend on it and possibly break down your fee on a hourly basis. For example if a simple return usually takes an hour and you charge $60, then tell your client this return took four hours x this rate = my fee due to the additional state returns and all the time involved........ ... This works for me and it also helps me quote returns since I can state my hourly rate and tel the client your return could take 2 to 4 hours... Good luck Janitor Bob Quote Link to comment Share on other sites More sharing options...
RitaB Posted February 25, 2009 Report Share Posted February 25, 2009 JB - I know this sounds easier to do than it is, but I would disregard the prior year's fee and just figure what I'd charge if he were a new client. Surely he realizes that this return is completely different, and you can't be expected to charge the same fee. Quote Link to comment Share on other sites More sharing options...
TAXBILLY Posted February 25, 2009 Report Share Posted February 25, 2009 I would give him the option to caregorize his receipts because this is valuable time that you probably would undercharge him. I would teach him exactly how you want it done. If he insists that you do it, then estimate the time at an hourly rate and add an additional hour. Do not do the work until you give him the estimate. He may then go somewhere else but that is his prerogative. Don't cheapen your rate because you feel you must help him. taxbilly Quote Link to comment Share on other sites More sharing options...
GLJEANNE Posted February 25, 2009 Report Share Posted February 25, 2009 I usually charge $50 per extra state, to cover extra time and the PPR fees. But I'm in an urban area, so maybe you'd want to go less. I wouldn't tag on too much more for the extra W2s, going by your scale maybe another $10. But the 2106, if he won't organize it himself, I'd go hourly - and my tax season hourly rate is close to double what I charge my accounting clients. I use this method for folks that have tons of stock trades too. Once you decide, don't let talk you down! I've made that mistake a couple times, and I think they value us less afterwards. Quote Link to comment Share on other sites More sharing options...
Daune/CA Posted February 25, 2009 Report Share Posted February 25, 2009 I usually charge $50 per extra state, to cover extra time and the PPR fees. But I'm in an urban area, so maybe you'd want to go less. I wouldn't tag on too much more for the extra W2s, going by your scale maybe another $10. But the 2106, if he won't organize it himself, I'd go hourly - and my tax season hourly rate is close to double what I charge my accounting clients. I use this method for folks that have tons of stock trades too. Once you decide, don't let talk you down! I've made that mistake a couple times, and I think they value us less afterwards. I have always gone with an hourly fee, I just think it is fairer than by the form. Being in CA and I was in an urban area then, and I am an EA, my hourly fee was higher for new clients than for existing ones. Eventually, I had to raise both. Base your hourly fee on your area. And I agree wholeheartedly with GLJEANNE, do not allow them to talk you down, they lose confidence in you then. I have told several over the years that is what I am worth, take it or leave it, and all stayed with me. Daune/CA Quote Link to comment Share on other sites More sharing options...
Randall Posted February 25, 2009 Report Share Posted February 25, 2009 I thought I was cheap. I'm easy. I'd tell them it'll be more but I'm usually easy on these things. As others suggest, if they can organize the info for you, that'll help. I try to warn clients if there's a significant change, my fee will be higher. But going from $60 to $300 will be a shock to their system. You have to gauge it yourself. Quote Link to comment Share on other sites More sharing options...
David1980 Posted February 25, 2009 Report Share Posted February 25, 2009 I thought I was cheap. I'm easy. I'd tell them it'll be more but I'm usually easy on these things. As others suggest, if they can organize the info for you, that'll help. I try to warn clients if there's a significant change, my fee will be higher. But going from $60 to $300 will be a shock to their system. You have to gauge it yourself. It will be a shock. At the same time it'll also be a shock how much extra paper they get for the return. Going from 1 state to 4 states with the credits for taxes paid, a simple Schedule A to a Schedule A with a 2106 more complex than most Schedule C's. You wouldn't be outraged that the car dealer who sold you a corolla for $13k wants over twice as much for a fully loaded accord. I hope? It's a different product they're buying with all those extras. For the original return I probably would have done it for about $150 w/state. I consider myself cheap too, so would attribute that to different locality. To add 3 more states I'd add $150 so I'm now at $300. For the 2106, probably bill hourly for the tallying and totalling of their receipts, it likely would end up being another $100 or if it's more than an hour of work it could grow, I could see $200. So I'm now at $400-$500, and would feel just fine doing it at that price. Since my original return price was $150 and Janitor Bob charged $60 I'm charging 2.5 times as much. 400 / 2.5 = $160 500 / 2.5 = $200 So in Janitor Bob pay I'm charging $160 - $200 for the return. Of course if that $60 fed & state w/SCH A return was a discounted for friends return it would change all the numbers up against the normal price. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 25, 2009 Report Share Posted February 25, 2009 Charge whatever YOU think is fair to YOU, JB. But remember, if you then back down, he will never trust you the same way, because he will then think your fee is just 'what the market will bear, plus a bit'. And remember also, those extra forms are either 1) required or 2) save him tax dollars. So they are worth him paying for them. Never be embarrassed to charge a fair fee. You are selling not just your time, but also your knowledge. Quote Link to comment Share on other sites More sharing options...
RitaB Posted February 25, 2009 Report Share Posted February 25, 2009 JB - I just had my youth pastor pick up his return. It was completely different than last year - he got ordained and had a baby. (Well, his wife had the baby, but I digress.) Last year the return was $60, this year $150. He said, "Hey that's a bargain, I know it was a lot of work." This is the attitude that makes us go out of our way to do a good job for people. It does not seem to me that you are unreasonable in your fees. If your guy does not appreciate you, I suspect you're better off without him. I agree that you should give him the opportunity to summarize his records himself, and give him whatever instruction he needs (this time) to do the bookkeeping himself. There are people out there who think we have to have all the receipts; he might be happy to do it himself. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted February 25, 2009 Report Share Posted February 25, 2009 JB - smart@$$ answer is - how much does the client have in the bank. Real answer - State NR's are normally more complicated, so I charge a lot for them. I am in CA and I can get away with more than you seem to be able to charge (that return would have cost about $110 the year before in my office and still about 50-75 less than HRB). The return you are working on would be about 350 if I did it with good bookkeeping records, more if I had to sort all that crap out. You are a good professional and are worth every penny to the client. Don't sell yourself short. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
Catherine Posted February 25, 2009 Report Share Posted February 25, 2009 JB - I just had my youth pastor pick up his return. It was completely different than last year - he got ordained and had a baby. (Well, his wife had the baby, but I digress.) Last year the return was $60, this year $150. He said, "Hey that's a bargain, I know it was a lot of work." This is the attitude that makes us go out of our way to do a good job for people. It does not seem to me that you are unreasonable in your fees. If your guy does not appreciate you, I suspect you're better off without him. I agree that you should give him the opportunity to summarize his records himself, and give him whatever instruction he needs (this time) to do the bookkeeping himself. There are people out there who think we have to have all the receipts; he might be happy to do it himself. The only things I'll add are that, over the years, the ONLY people who have cheated me by not paying -- have been the ones with the sob story to whom I gave a price break. And some of them had been long-time clients (note use of the past tense). These days, I tell folks that my fees are negotiable -- but only UPwards. And that, when there are tons of line items (W-2's, stock sales) over what you would "normally" expect, I charge $1 per additional item. That would add $10 (roughly) for the extra W-2's. But three additional _states_?!?! That's some money to make it worth while. Not totalling expenses? Hourly, and estimate generously. That way if it comes in $20 less than the estimate provided, they've gotten a bargain. But $20 more invokes other emotions. Catherine Quote Link to comment Share on other sites More sharing options...
bstaxes Posted February 26, 2009 Report Share Posted February 26, 2009 I would charge 250 + adding receipt time. Or make it 350 and give him a discount of 100 because he is a prior client. But explain this is a one time discount, if next year is the same with extra states and non totaled receipts the price is 350. Client add receipts than the price could be less. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 26, 2009 Author Report Share Posted February 26, 2009 JB - smart@$$ answer is - how much does the client have in the bank. Real answer - State NR's are normally more complicated, so I charge a lot for them. I am in CA and I can get away with more than you seem to be able to charge (that return would have cost about $110 the year before in my office and still about 50-75 less than HRB). The return you are working on would be about 350 if I did it with good bookkeeping records, more if I had to sort all that crap out. You are a good professional and are worth every penny to the client. Don't sell yourself short. Tom Lodi, CA I have a few California clients....Had them when they lived in Ohio...retained them when the moved to CA...because I still charge them my lower rate compared to what they found in CA Quote Link to comment Share on other sites More sharing options...
Lion EA Posted February 26, 2009 Report Share Posted February 26, 2009 Probably estimate and charge hourly. Tell him you'll give him a template/sample to do the bookkeeping himself to save X hours or Y $. Or, if you have a good handle on your form charges, estimate using forms. Charge a lot more for other states than your home state. I agree with those that say estimate high. You'll find more when you get into it. And, if you don't, you apply a discount this year. Quote Link to comment Share on other sites More sharing options...
mwrightea Posted February 26, 2009 Report Share Posted February 26, 2009 Never let the fear of losing a client, keep you from charging what your expertise is worth. If a client whines and complains about your fee, let them go somewhere else. Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 27, 2009 Author Report Share Posted February 27, 2009 Never let the fear of losing a client, keep you from charging what your expertise is worth. If a client whines and complains about your fee, let them go somewhere else. I estimated and informed him that I would charge $200.00 (as opposed to the $60.00 last year)....He didn't mind at all and said that he figured it would be more this year. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 27, 2009 Report Share Posted February 27, 2009 Man, you are cheap. You must have a real low overhead, and time on your hands. ;~) Quote Link to comment Share on other sites More sharing options...
Janitor Bob Posted February 27, 2009 Author Report Share Posted February 27, 2009 Man, you are cheap. You must have a real low overhead, and time on your hands. ;~) This is not my full time job....full time job is doing taxes, government reporting, and international shipping for a machinery Manufacturer. I just prepare taxes for individuals (approx 180 returns) out of my home office for some extra income...and because once I started....It's almost impossible to stop. very little overhead....The company I work for uses ATX MAX....so I just use one of the three installs for myself...my costs are only office supplies, insurance, and the occasional new piece of equipment. A price war between bottom-dwellers in my little town about 4 years ago drove the average tax prep fee way down....three years ago, there were some small companies advertising 1040 prep for $25.00 and EZ prep for $10...because they made their money on RAL fees. That hurt preparers like myself who could not (and still can't) charge what I could in other areas. Quote Link to comment Share on other sites More sharing options...
Bart Posted February 27, 2009 Report Share Posted February 27, 2009 This is not my full time job I just prepare taxes for individuals (approx 180 returns) This is my full time job and I don't even do 180 returns. Quote Link to comment Share on other sites More sharing options...
joelgilb Posted February 27, 2009 Report Share Posted February 27, 2009 JB If I had to charge rates that low I would be starving! And I thought I was pretty cheap. Quote Link to comment Share on other sites More sharing options...
Cathy Posted February 28, 2009 Report Share Posted February 28, 2009 The more I charge, the more referrals I get....go figure! Live in a very rural area. Over the years, I have found that tax preparation fees are not the reason clients leave....unless the fees are too low which makes some clients feel uneasy about the knowledge and confidence the preparer has in his/her work. I have several who prepare their own taxes each year but come back to me the next year and I end up filing amended returns to straighten out the mess they caused. Out of state returns are $95 per out of state return this year. There is a lot of extra work that goes with them...plus additional costs for filing copies of the out of state returns with the home state to take the credit paid to the other state(s). My Dad told me years ago that the more I charge people, the more respect I would receive from them. Truer words were never spoken! Quote Link to comment Share on other sites More sharing options...
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