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
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.