Preparers unsure of how to adjust their fees before next season can find a number of guides around the Internet, from current discussions by other preparers to fee guides from associations and recent reports on fees by the big chains.
Though fees vary greatly by region of the country, the sources can provide good places for preparers to start their calculations and adjustments.
Fees are a hot topic on the LinkedIn discussion groups for the Association of Registered Tax Return Preparers and the National Association of Tax Professionals. Typical current fees mentioned include $60 to $75 for short forms, $125 to $200 for long forms (up to $249 to include a Schedule A), $150 to $450 for Schedule Cs, and $500 to $800 for partnership/corporation returns.
Some preparers charge hourly for partnership/corporate returns or to deal with “a disorganized bag” of yearly documents, and Schedules D and E “tend to be higher just due to the amount of work needed.” One preparer noted that when they were with a large firm, the fee averaged $395 for a standard long form and Schedule A and more than $1,000 for the business returns.
Most preparers say they raise prices year by year, form by form (“The general rule is that if 10 percent of your clients are not complaining about your prices, you are not charging enough,” said one preparer.). Another preparer raises fees about 5 percent each year; another estimated that his firm raises fees for about three-quarters of its clients every year by 1 to 3 percent “before taking into account changes in the complexity of the individual returns,” and that price changes depend often on location how a firm wants to “shape” its client base. (“You may decide that doing $350 returns suits your business goals more than doing a higher volume of $150 returns, and so could choose to price up the lower-priced returns to make it worth your while and to weed out those who are highly price sensitive.”)
New, additional requirements for Schedule Ds, 8949s and the Earned Income Credit, for example, often justify fee increases, say preparers, as do new educational requirements for preparers (the latter balanced, however, said one preparer, but the growing prevalence of taxpayers doing their returns themselves using software -- a trend that makes it more important than ever for preparers to build relationships with clients who cannot do their own returns, such as S corps and other businesses).
Another preparer, in New York City, noted pronounced price undercutting from smaller tax-prep chains nearby.
Surveys and guides
The National Association of Tax Professionals and the National Society of Accountants offer fee guides for members.
Last year, a biennial survey of nearly 8,000 tax preparers conducted by the NSA showed the average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return was $233. The average cost to prepare a Form 1040 and state return without itemized deductions was $128.
Guides from recent years can help preparers calculate fees and increases for next season. Among the other NSA survey findings of average fees from a year ago:
- $236 for a Schedule C;
- $524 for a 1065;
- $695 for an 1120;
- $660 for an 1120S;
- $396 for a 1041;
- $2,044 for a 706;
- $566 for a 990; and,
- $61 for a 940.
Sixty-two percent of accounting firms surveyed by the NSA did not require payment until returns were completed and clients satisfied. Others required a portion of the fee up front or payments throughout the return process, and about a third accepted credit cards.
10 Comments
@Patrick J Hurley-- I agree 100% with your assertion that true professionals (EAs, CPAs, Attorneys) with experience should not "low-ball" fees just to get more names on the client roster (and hurt those of us who charge reasonable fees). However, your post indicates that, like me, you provide year-round service (newsletters, e-mails, and IRS representation) unlike the $50 per return "January-April" moonlighters who are nowhere to be found after April 15 if a client has an issue (which they likely will with an inexperienced person preparing tax returns). Many taxpayers do not understand the relatively high cost of the knowledge that goes in to a quality tax return (the cost of our required CPE hours as well as additional seminars, publications, courses, etc. that we participate in for the benefit of our clients). The actual paper (or electronic) tax return is, in my opinion, almost a byproduct of the knowledge, planning, and advice we provide our clients to obtain the highest after-tax benefit for them. Your Schedule D fees seem reasonable with the Form 8948 requirement; but I would think you would have some resistance from heavy traders if they are paying $4 per line item. Do you ever use the Form 8453 and mail a copy of the brokerage statement after e-filing to save data entry time and keep fees down? Your 1099 Fees also seem like an area for client pushback, especially from mid size companies with many Forms 1099. Have you intentionally raised your fees to weed out the overly price sensitive clients? I started that process a few years ago and became very aggressive with it last year. I can work the same amount of hours or less, earn more, and deal with pleasant clients who understand the value of my services. Also, are you located in a large city where the cost of living is high? I am in a fairly large city in the midwest, so your fees seem slightly higher than the market would bear here (mainly Schedule D and 1099s); but certainly not unreasonable. Thank you for your insight. Hopefully it will give true professionals some things to consider and benefit us all when we start charging clients what our services are worth and educate them of the value we provide in the process.
Posted by: DanAllenCPA | March 8, 2013 5:48 AM
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It is true that the area of town and your clientel will limit your fees. Raising them is difficult if you have been charging lower fees for several years. Also, the RAL's attracted clients who didn't mind higher fees as long as they got their refunds quicker. Now, with RAL's gone the way of the dodo, they don't want to pay higher fees since they can not get it any quicker than anywhere else. It's a dilemma that has no easy solution.
Posted by: olivertax | December 3, 2012 12:07 PM
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I am an Enrolled Agent with many years of experience. I do not understand why tax professionsals charge such small fees. If you give a good service, they will pay. My clients receive 4 newsletters per year and monthly e-mails covering many topics. They receive a year-end organizer that must be completed and all questions answered. If they do not complete the organizer, a fee of $125 is charged, but I normally do not enforse it, but I get excellent compliance.
My fees are different. I charge a minimum of $150 per return, and this includes children tax return A typical return with itemize deductions are $275 and if they have a Schedule C, Rental, it goes up by $100 for each schedule and any client that has AGI of $100,00, I include AMT Schedule for additional $125. Every schudule has a fee attached including listing Schedule D transactions at $4 each from a brokerage statement. My hourly fee for consultation is $240 per hour and representation for audit is $320 per hour.
I have over 800 individual returns and average over $750 per 1040. Partnerships have a minimum fee of $500 and corportions begin at $700. Because Form 1099's are being enforced with the questions being asked, I prepare and charge a fee of $20 for each 1099 and that includes Form 1096 and mail them out. My total practice base is approximately 1,125 clinets and I do no bookkeeping.
I also accept all credit cards. Each year I increase my business from client referrals and I have no difficulty in raising fees. If you believe in yourself and your clients believe and trust you, they will stay with you and pay your fee.
Patrick J Hurley
Posted by: equinetax | November 28, 2012 11:20 AM
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I am an Enrolled Agent with many years of experience. I do not understand why tax professionsals charge such small fees. If you give a good service, they will pay. My clients receive 4 newsletters per year and monthly e-mails covering many topics. They receive a year-end organizer that must be completed and all questions answered. If they do not complete the organizer, a fee of $125 is charged, but I normally do not enforse it, but I get excellent compliance.
My fees are different. I charge a minimum of $150 per return, and this includes children tax return A typical return with itemize deductions are $275 and if they have a Schedule C, Rental, it goes up by $100 for each schedule and any client that has AGI of $100,00, I include AMT Schedule for additional $125. Every schudule has a fee attached including listing Schedule D transactions at $4 each from a brokerage statement. My hourly fee for consultation is $240 per hour and representation for audit is $320 per hour.
I have over 800 individual returns and average over $750 per 1040. Partnerships have a minimum fee of $500 and corportions begin at $700. Because Form 1099's are being enforced with the questions being asked, I prepare and charge a fee of $20 for each 1099 and that includes Form 1096 and mail them out. My total practice base is approximately 1,125 clinets and I do no bookkeeping.
I also accept all credit cards. Each year I increase my business from client referrals and I have no difficulty in raising fees. If you believe in yourself and your clients believe and trust you, they will stay with you and pay your fee.
Patrick J Hurley
Posted by: equinetax | November 28, 2012 11:20 AM
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This is a great site. I have never sat down and paid close attention to it. As tax professionals we owe to ourselves to take some time out weekly to review data such as this.
This will help me adjust my fees this season. As some of you have stated I underpriced myself because of the area that I am in and because I am surrounded by so many of the bigger competiition that is offering so many specials and small companies cannot compete. Example every yr one of my comp offers drawings for a free vehicles with tax prep services. Then I have to deal with the competitors that are still using last check stubs to prepare returns. And feedback on some suggestions would greatly help. I also prepare returns for my clients that have teenagers working and I also prepare the FASFA for them as a free service
Posted by: banksandbanks | November 27, 2012 5:38 PM
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David, if I sub all my tax prep work out to you and I can still make a decent living!
Posted by: AEWalk1 | November 27, 2012 12:11 PM
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You are worth only as much as you personally beleive. With the requirements of continuing education, file retention, professional liability, staffing, quality, I don't see how you can prepare a return for that amount.
Posted by: Wfhjr0 | November 27, 2012 10:00 AM
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My return fees are probably a little low for my area, but like you say it depends. Simple tax return with w-2 $100, 1040 with a schedule A $225, Schedule C $275, 1120 & 1120S $550, 990 $200. One thing I do for clients with dependents that need to file a simple tax return is to do those dependents for free. It increases customer loyalty and when those dependents are on their own the become loyal paying customers as well.
Posted by: RNeilson | November 22, 2012 12:35 PM
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David, you are undermining your value and the work you do. Charge more. Taxpayers that use the box software pay more than that to do it themselves.
Posted by: andrea r | November 21, 2012 7:05 PM
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My firm's fees are likely the lowest around. It worked well for getting started but sometimes I wonder if we made the right move. We charge $35 for Federal, State, and E-file for a basic return with one or two W-2's. Our average family return was $57. We are probably not charging enough at www.cpadave.com.
Posted by: davidciasto | November 21, 2012 3:03 PM
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