Friday, December 13, 2013

Tax Prep Fees on the Rise

Posted on 4:06 AM by Unknown
Daniel Hood for Accounting Today writes: Tax practitioners will be charging more this year for tax preparation, according to an annual survey by the National Society of Accountants.  Taxpayers can expect to pay an average of $261 for an itemized Form 1040 with Schedule A and a state tax return, the survey found, compared to the $246 reported in last year’s survey.
The fee for non-itemized return will also rise, to $152 for a Form 1040 and state return, against $143 last year.
“The IRS says it takes an average of four hours just to complete and submit a Form 1040,” says NSA executive vice president John Ams. “Add at least another hour if you also have to complete a state return. You have to ask, ‘How much is your time worth?’”
Fee information was collected in a survey of tax preparers conducted by NSA. The tax and accounting firms surveyed are largely owners, principals and partners of local “Main Street” companies who have an average of more than 26 years of experience.
The survey also reported the average fees for preparing other Internal Revenue Service (IRS) tax forms, including:
  • $218 for a Form 1040 Schedule C (business);
  • $590 for a Form 1065 (partnership);
  • $806 for a Form 1120 (corporation);
  • $761 for a Form 1120S (S corporation);
  • $497 for a Form 1041 (fiduciary);
  • $667 for a Form 990 (tax exempt);
  • $63 for a Form 940 (Federal unemployment);
  • $142 for Schedule D (gains and losses);
  • $165 for Schedule E (rental); and,
  • $196 for Schedule F (farm).
Naturally, fees vary by region, firm size, population, and economic strength of an area. According to the NSA, the average tax preparation fees for an itemized Form 1040 with Schedule A and a state tax return in each U.S. census district are:
  • New England (Ct., Maine, Mass., N.H., R.I., Vt.) – $251; Middle Atlantic (N.J., N.Y., Pa.) – $274;
  • South Atlantic (Del., D.C., Fla., Ga., Md., N.C., S.C., Va,, W.Va.) – $270;
  • East South Central (Ala., Ky., Miss., Tenn.) – $294;
  • West South Central (Ark., La., Okla., Texas) – $242;
  • East North Central (Ill. Ind., Mich., Ohio, Wis.) – $238;
  • West North Central (Iowa, Kan., Minn., Mo., Neb., N.D., S.D.) – $208;
  • Mountain (Ariz., Colo., Idaho, Mont., Nev., N.M., Utah, Wyo.) – $245; and,
  • Pacific (Alaska, Calif., Hawaii, Ore., Wash.) – $303.

9 Comments

My fees will radically rise for new clients this year. Can't continue to do Sched C for $200. Will be at least $250 for that and if more complicated $300. Sched E I'm way too generous on...will have to reconsider.......can't believe the average is only $165. Don't their tenants ever ask them to DO anything??? Sure as hell ain't doin' no Sched E for $165 out here!
Posted by: andystaxes | December 12, 2013 7:58 PM
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To Jeanieb1:
Doing the IRS work? Millage logs. Oh geez, and they already have the W-2 info so why bother putting that in. And the Mortgage Interest deduction? Are you actually laboring to put that in? And the Child Care Credit which the Tax software package does automatically, or as you still using the No. 2 pencil?
And the Birth of a child? Having to put in the name and SSN. Heck, why even see the client? Just have them send you a check.
The rest of us actually like working for the client and doing out best for them. And if that includes getting accurate information, so be it. We don't mind actually earning our money.
Posted by: tego@verizon.net | December 12, 2013 5:51 PM
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Returning clients can be done in less than an hour with a state return, but always allow an hour since we have to do the work of the IRS staff and self audit EITC, child tax credit, mileage logs, etc. Due diligence is one of the reasons fees have to go up, additional prep and completion time, more forms. But ours hasn't gone up enough according to this. Posting in office will stop some client banter on rates.
Posted by: Jeanieb1 | December 12, 2013 4:06 PM
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I think you have to look at the entire return, not just the time you take to enter the data. Meeting with the client, asking questions (due diligence), reviewing the data, researching unusual items that arise, entering the data, getting back to the client with questions, double checking all of the data entered, reviewing the finished product with the client, printing the return and putting it together for the client, e-filing the return, and then checking the e-file status. All of those things begin to add up. Especially even on top of that if you factor in the client questions of "what if I....?" or "can I....?".
Also is overhead...hardware, software, paper products, CPE costs, staffing, etc.
My feeling is, if I am just pumping out tax returns in total time of less than one hour per return, I am not serving my client. I value the relationship I have with the client & the only way to know if you are truly filing an accurate & honest return is to spend time with that client.
Now, how to do that & still give them a price within what they see as reasonable is sometimes a challenge. I would like to put this article in a frame in my office so they can see that value. :)
Posted by: aledford99 | December 12, 2013 3:10 PM
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A lady that has worked for us during tax season for the past three years can knock out about 4 returns per hour. We review all of her work, which takes about another hour. I think we need to raise our fees though.
Posted by: topbeancounter | December 12, 2013 2:14 PM
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Ed,
I could be wrong, but I think the CRA is referring to an individual doing their own return. I can see this easily taking four hours for the average individual, not using software. The question, posed to the individual, how much is your time worth.
Given that you prepare returns, what do you think about the fees listed here?
PJK
Posted by: jkindred | December 12, 2013 12:52 PM
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If I can't do 90% of my returns in lees that an hour (returning clients) much less I should get out of the business. But this showed me i am not charging enough.
Posted by: wsmtax | December 12, 2013 12:47 PM
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Four hours to do a 1040, with a schedule A, and state? I have a few that take two, most are under an hour.
Posted by: Ed W | December 12, 2013 12:11 PM
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Sounds about right...interesting how fees vary across the country...
Posted by: rbonilla | December 12, 2013 12:08 PM
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