How much time was spent explaining to the client before you started that your fee is for the amount of work involved, not for the number of pages in the final product?  

Looks like a new client.  How much did they pay last year (if self-employed, at least some of it would be deductible)?  Why were they looking for a new preparer this year?  As if I have to ask.  

If this is the worst client you had this year, you had a good year.  

AND what part of the country do you live in? 

Reasonable is in the eye of the beholder.  As Bob mentioned, the first question would be how much did they pay last year?  Sounds like you inherited a problem child.  Did the prior preparer have a big grin when he or she found out they weren't coming back?  I bill by the hour.  If I had that much time into the return I would bill it, but I would do a little of what you are doing as to second guessing if I would bill $300 for a similar return without the extra gymnastics.  If I thought the client was a nice person and just needed to do a little more learning on being prepared, I might ratchet the fee down a little.  If I thought the client was a pain in the neck, and not worth all of the effort, I would bill the $500 and not think twice.  

Your additional post popped up while I was typing.  What did you bill her last year?

You've probably been letting her get away with expecting a little more work at no extra cost, every year since 2020.  That's the problem with Oklahomans, they're too nice.  It's not like Minnesota Mean.  

I won't look at any return for less than $650.

Well, that's good for you, but we all don't live in the same area and have the same level of client sophistication.  There are some folks that won't look at a return for less than $65 and others that won't look at a return for less than $1,000.  Different strokes for different folks.

@IRonMaN What I have found is that I can do three returns for $250 in the time it takes me to do one for $650.  Back when I was looking for post-April 15 work, that also meant three times the likelihood of referrals.  And, have you noticed that some of the $650 clients aren't as nice as the $250 clients?  Not always the case, but sometimes those with complicated returns are also ones with complicated attitudes about how we should do our work and how much we deserve to be paid.  

Bob...I understand what you are saying.  Many customers have attitudes but I don't let anyone get nasty with me.  But may I suggest that my client is paying me for my knowledge rather than how fast I can type tax data into Lacerte while I'm on the clock.  No one is looking over my shoulder with a stopwatch.  Besides, Lacerte software is expensive.

@BRUCERYCH That's the Automotive Technician School of Fee Determination.  If the book says it takes the average mechanic 1.5 hours to do the job, you can charge based on that rather than the 20 minutes it took you because you are good at what you do.  When all is said and done, everyone charges reasonable fees.  Because, unreasonable fees are unethical, right?

But reasonable is also in the eye of the beholder.  Someone's reasonable in Frostbite Falls could be $75 while someone in Los Angeles could be $750 for the same return.  Ethical preparers with a clear conscience will make a good stab at reasonable fees because they like to sleep well at night.  

You could go to the IRS Form instructions for some guidelines. Here is what at the end of the instructions for the 1040

Out-of-pocket costs include any expenses incurred by taxpayers to prepare and submit their tax returns. Examples include tax return preparation and submission fees, postage and photocopying costs, and tax return preparation software costs.

Reported time and cost burdens are national averages and don’t necessarily reflect a “typical” case. Most taxpayers experience lower than average burden, with taxpayer burden varying considerably by taxpayer type.

I had a few clients that refused to e-file.  I charged them extra.  Once I decided to no longer offer non e-file tax preparation...they went elsewhere.  

All of my clients prefer to file paper returns.  If they owe, most of them prefer to send paper checks.  Different strokes for different folks.  I explain to them that I don't believe my professional ethics allow me to agree to unannounced inspections of my files by armed IRS agents.  Also, that their data is not sent to IRS, it's sent to a third party who may be located overseas and in any case has no guarantees against hacking.  I can charge lower fees because I don't need to do all that data entry that EF requires.  But then, I waste a lot of time enjoying all the stories posted here by preparers who lose the battle with the computer.  

How much more of your time is actually required to e-file rather than paper file?  I think it involves less time.  Do you manually prepare your tax returns?  I no longer have #2 pencils with erasers.

Paper filing requires you to make additional paper copies, which costs you more in supplies in addition to additional postage fees for you and your client. Then you need to staple those little W2's to the return (make sure you use the correct copy of the W-2), file form 8948, prepare vouchers to make payments (Personally I don't care how they wish to pay).

Then, your counting on the USPS...you know the entity that loses $12 billion dollars a year.  Armed IRS agents? (Isn't Biden gone?).  I never heard of unannounced 8879 inspections happening but mail does get lost.  

When I last checked, Bob is 96 years old and most of his clients are his age or older - they have been paper filing since dirt and you aren't going to change his stance.  I much prefer to e-file but to be honest, when I paper filed I never had a single return rejected, I never had to shag after people to give me their 8879 and I never had to worry if my internet went down on April 15th.  Paper filing works for Bob, so if he prefers it, let him do his thing.  He isn't hurting any of us by doing so.

This is what IRS currently says.  However, the agreement that e-filers must sign states that IRS can change the rules without notice at any time:

IRS e-file Monitoring Visitations
The IRS monitors Providers through review of IRS records and during visits to Providers’ offices and other locations where Providers perform IRS e-file activities. During monitoring visits, the IRS may investigate
complaints and ensure compliance with IRS e-file rules. Monitoring may include, but is not limited to the following:
■ Reviewing the quality of IRS e-file submissions for rejects and other defects
■ Checking adherence to signature requirements on returns
■ Scrutinizing advertising material
■ Review records
■ Observing office and security procedures
■ Checking Tax Compliance on the Firm, Principals and Responsible Officials and pursuing non-compliance

@IRonMaN Please, I demand that you retract your insinuation that I "file" returns.  I can't do that, since I have more than 10 clients.  (Or is the number down to 3 now?)  All I do is "prepare" returns.  

And yes, I'm younger than many of my elderly clients and mostly trying to outlive them because they insist I am not allowed to retire.  With a 98% return rate (not counting the ones who died, some of whom turn into 1041s anyway), I was surprised this year how faithful my flock is.  

@BobKamman - I'm just happy that you were upset about the "filing" comment instead of the "96 years old" comment. 😜

But that got me thinking.  Has anybody ever come across anything where the IRS actually went after any preparers for preparing paper returns after they crossed the line in the sand of 10 returns?

@IRonMaN  I think they would have to go to federal court for an injunction.  And the courts are busy these days, what with all the 85-year-old French widows who need to be deported after marrying their GI sweetheart late in life.  When you have only 677 judges, spread across 91 districts, government attorneys know it's not wise to bother them with minor problems.  

To add some details about my practice:  I have face-to-face meetings with about a third of my clients, and I do most of the data entry while we are chatting about grandkids.  The rest of my clients drop off, mail or email their stuff, and my assistant does the data entry.  I review it and print the final, which she then copies and assembles.  (Fun fact:  It doesn't matter which W-2 you attach to which return, although we try to do it right, and to remember which states don't want them anyway.)  Returns are then picked up by clients, or mailed to them.  Some of my clients I haven't seen in years, and I'm thinking of inviting them for a free visit later this year.  I have had three very competent and personable assistants in the last 35 years, and that makes all the difference.  It's difficult to find someone who wants full-time work part of the year, and part-time work the rest of the year.  But they exist.  

I used to meet with the majority of my clients, now I meet with the minority.  Most of the ones that do meet don't really need to, but they feel more comfortable doing so.  I don't believe in the assembly line approach to dealing with my clients where chit chat is not allowed.  Most of the ones I do meet with just involves looking through their stuff to make sure I have everything I need.  They maybe have an easy question or two and the rest of their appointment is made up talking the usual stuff - grandkids, health news, hunting or fishing, and a little politics mixed in now and then.  I like my clients to feel welcome instead of just feeling like a number.  And of course, everyone has to leave with a smile on their face. 😀

nmms,

I'm new to posting and responding on PTO, but good grief, $500 is a good deal for your client.  

Enjoyed reading all the comments.  

$500 is cheap.  It sure is a good deal for clients.