HR Block charged 850 for a simple W-2

[Strongsilence-CPA]

New client for me.

in 2023, 22K W-2, one child, single.  EIC and child credits resulted in a refund of 7K. Tax prep was $850 + $39 refund transfer fee.

While his partner, same basic situation, with similar refund was charged $400

There is expertise and we know it when we see it. But is $850 for preparing a simple W-2 about right, exorbitant, or a value?

[BobKamman]

Depends.  Did they bring the kids to the appointment?  

[dkh]

$850.... that's crazy !!!!!!     

In my neck of the woods, the $400 would be exorbitant (other than H&R).

[IRonMaN]

I would have charged the $850 too --------- but I like to sleep at night, and that fee would have disrupted my sleep a bit.  But those are exactly the fees the Intuit likes to see someone else charge so that they can keep pushing their Turdddotaxx full service product.

[abctax55]

NMI.... I have two clients I'm currently working on.

1)  12 (!) emails since Sat a.m. (Sunday doesn't count, it was Super Bowl 😉 to try to get her to find out/provide ONE Form 1099-R that she had last year (and no, it wasn't marked as a total distribution.

She then sends a brokerage statement from LPL - it has dividends and stock sales shown.  LAST page shows interest income of $ 100.  BUT there's no F 1099-INT included ?!?!?!

2) 9 (!) emails in three days to try to get him to comprehend that I need the three brokerage statements.  She sent everything but the kitchen sink, including some bizarre statement of account showing actual gross holdings of the mutual funds that Commonwealth has her invested in.

Multiple emails/phone calls thru-out the year with those 'just a quick question' scenarios.  

So, my point... these clients will be billed, a LOT, for the babysitting required.  THAT won't be reflected/shown by just looking at the final tax returns.   $ 850 sounds high... but there may be 'more to the story'.  

Altho the above facts likely don't apply to HRB - unless it's one of those open all year.

/off my soap box now 🙂

[rbynaker]

IMO the simple W-2 is not the problem (which is probably why the "partner" got a much cheaper rate).  I would charge a minimum of [looks up the current penalty amount] $635 for the DueDoo related to the EIC and CTC.  If there's a partner instead of a spouse that leads to a whole lot more questions that need to be asked, answered, and documented.  Not to mention copies of any documents "relied upon" in determining the credit.

That said, I'm a little more strict in terms of documentation when it comes to due diligence for first year clients.  In subsequent years I can choose not to rely on documentation by asking a question such as "In $earlieryear you were able to provide documentation supporting the fact that the kids lived with you, would you be able to provide similar documentation if audited by the IRS for $thisyear?"

Rick

[Strongsilence-CPA]

Baby sitting charges.  I understand.  Good for you.  You just want them to be organized, and the increased fees are an inducement to get organized.  (Some clients like #1 will gladly pay for this service.)

[Strongsilence-CPA]

to rbynaker:

So I understand, what penalty did you look up? Maybe it was a joke that whooshed over my head.

You would charge $635?

If there's a partner instead of a spouse that leads to a whole lot more questions that need to be asked, answered, and documented.  Not to mention copies of any documents "relied upon" in determining the credit. 

Thanks.  I understand that you provide a service built on your expertise and this is what the value that the client pays for.

And that service is worth it especially to lower income taxpayers.

[abctax55]

@Strongsilence-CPA 

No, he actually said "my friends asked me why I don't just use TurdohhTax".  My response was "you are welcome to come pick up your papers and give it a try".   

Grrrrrrrrrrrrrrrrrrrrrrrr

[abctax55]

Rick,

Excellent observation.   Just 'one' more good reason I don't take on any new clients anymore.  It's been several years since I asked a client to provide any extra documentation.

And my engagement letter plus the questionnaire specific asks  * you have proof, right? for any of those situations.

UNLESS, they are with the fire department, or maybe the kids of long-term clients.   

I often answer to the DD question - "personally known" .

[rbynaker]

This penalty:

https://www.eitc.irs.gov/tax-preparer-toolkit/hot-topics-for-return-preparers/news-and-updates-for-p...

"A penalty under Internal Revenue Code section 6695(g) for each failure to be diligent can be assessed against a paid preparer.

For returns and claims for refund filed in 2025, the penalty is $635 per failure to be diligent."

If it's worth $635 to the IRS for me NOT to be diligent, it must be worth at least that much to the taxpayer for me to be diligent.

[rbynaker]

I've taken CPE from different sources on this and there doesn't seem to be a right answer.  In reality it probably depends on how much sleep the auditor got the night before or if they got stuck in traffic on the way to work in the morning.

I've been told that personal knowledge can NOT be relied upon as part of the tax engagement, which frankly is completely ridiculous.  I *know* these kids live with their parents, I've been to dinner at their houses, birthday parties, etc. but instead of that first-hand knowledge the IRS really just wants to know if you're telling them the same lies that you're telling the school board or the doctor's office. <shrug>

I've also been told that an organizer questionnaire is not sufficient to establish due diligence.  So I go through the same series of ridiculous questions with clients (usually by phone) every year for the purpose of documenting when/where I asked the question and what their response was.

A few years ago I thought about making an interactive tool online for this but I ended up too far down the rabbit hole with things like "how do you prove that you're NOT married?"  If I can't even get past filing status the rest is hopeless.

Rick

[abctax55]

My favorite scenario is the one client/friend/former & current part time employee that the IRS questions me on.

It's the one where I was THERE when the kid was born; in the delivery room taking pictures.

I can understand some of this, but find it utterly ridiculous for clients I've had for decades, that I've seen pregnant, where I've gone the the Friday Night Lights football games (isn't that documentation enough that the kids are in school ???).   Fortunately, I have very few EIC returns.  

I do list that there are F 1099's, QB files, etc to document.

CAGMC 

[Strongsilence-CPA]

to abctax

I do list that there are F 1099's, QB files, etc to document.

This is helpful.

I listed tax documents.  I was tempted to list "text messages" that document the household support test but decided that it wasn't prudent.