Preparation Rate

[MGC94]

What would be a fair rate

If someone files MFJ

2 dependents (child care and 1098t)

4 rental properties

1 sold rental property

3 W2s

1099-R early distribution 

[BobKamman]

In Manhattan, New York, or Manhattan, Kansas?

I sense that a client is complaining about your fee.  An ethics professor once quoted a sole practitioner he asked about how he determined fees.  The answer was, "charge three times what it's worth and if the client complains, cut the bill in half."

There is the "charge by the form" school, and the "charge by the time" school.  I am in the second category.  Depending on how well organized the client's documents are, this looks like two to three hours of work. Well, except for that guy in Ohio, who could do it in 20 minutes.  A Ford dealer will charge you $200 or more for maintenance and repair on your F-150.  You're worth at least that much.  

[ljr]

what do you mean by fair? to you or the client? two very different things I guess based on you asking the question. I agree it sounds like the client is balking. How do you normally bill? if it was only 1 rental what would your fee be? then multiply it by the amount of work to do 4 plus the sale of the rental.

I'm in NYC and know what my fee would be for this return. If client doesn't like the fee, then they are welcome to find someone who would do it for less. If they are a long time client, I might be willing to "adjust" a little. Bill for your time and experience - don't shortchange yourself for the amount of time this would or could take you. 

[qbteachmt]

There's also Manhattan, MT.

[Accountant-Man]

I have a mantra: no matter what I charge, the client will find someone who charges LESS and someone who charges MORE.

You say $200, they know someone for $150. You say $350, someone else charges $400.

I charged by time for my employees and myself, with rates from $75 an hour up to $300. If the fee I quoted, let's say $300, is higher than the accumulated time charges we spent, then the extra dollars are like a premium for my experience. We were efficient in our time.

Preparer one hour at $75 an hour plus Reviewer half hour at $100 an hour plus My half hour at $300 an hour equals $275. So $300 is efficient. If the charges came to $325 but fee was $300, I lose efficiency unless I can upcharge for additional services.

Many years ago I tried out PS's charge per form, and the amounts were quite similar to my time charges. Add more for Sch C, Sch D, Sch E, 4797, etc.

ps I don't pay them $75 or $100 an hour, more likely $18-34 an hour, so I don't earn $300. I earn $300 less $18 less $17 equals $265 for my half hour of work. $530 an hour! It's called leveraging.

[George4Tacks]

The Swiss Army Knife for tax preparers is Tax Tools. One of it's nifty little tools is a Tax Fee Schedule calculator that uses IRS numbers for what a newbie grunt might spend in time to Read, Understand and Follow all of the rules and regulations to do the return correctly (Some of you may have watched Old Yankee Workshop.) Here are a few number for this return:

Form       Record Keeping     Learning           Prep/Assembly

1040        2:46                        3:58                   6:51

E              3:00                        1:13                   2:01

4797       35:23                        8:20                   9:17

So for the 4 rentals the total would be 87 hours and 52 minutes - How much should that cost this rather sophisticate taxpayer? 

You might also take into account your fee based on what does it cost you for overhead, supplies, software, education, and time spent with this couple. 

[PATAX]

@ljr Well said, including about the rental properties. Approximately 99% of taxpayers do not know how to properly complete Schedule E rental property, including the depreciation. The 1% that does know are current or former tax accountants.

[TaxGuyBill]

Is this a new client?  One thing to look at is how organized they are.

If they come in and hand you a W-10 for daycare, a printout of the financial account from the college, an itemized list of expenses for each separate rental along with an accurate depreciation schedule, a log of hours performed and vehicle mileage for the rentals, the purchase and selling paperwork of the sold rental and an explanation of why they withdrew their retirement early, it could be a fairly easy return.

On the flip side, if you need to inform them of a huge list of things that you need, repeatedly ask them a million questions, figure out prior depreciation, correct prior depreciation with Form 3115, etc., it could be a very time consuming and expensive tax return.

[BobKamman]

[Strongsilence-CPA]

The fair rate is the value of your services.  What is the value of your services?

[IRonMaN]

Similar discussion 2 years ago.  I'm going to wait and think real hard and come up with a great answer when this comes up again in 2026.

Income/Firm transparency - Intuit Accountants Community

[Strongsilence-CPA]

@PATAX 

My guess is that 1/4 of that 99% think they can prepare a Schedule E.  This - for me - is a reminder to get better at communicating my value to clients and communicating why I need to be the one to prepare their tax returns. 

[dascpa]

This was a story from a CPE seminar years ago.

Dad calls up ophthalmologist with an emergency. His son got a splinter in the eye. Doctor has the child come in immediately. Very skillfully he removes the splinter.  Hands the dad a bill for $1,000. Dad freaks out. Says it took you all of two minutes.  How can the bill be $1,000?  Doctor replied, you did not pay me for my time.  You paid me for my knowledge and skill to remove the splinter so your son wouldn't lose an eye.

Another story - if you needed a heart operation. Doctor one charges $2,000 and doctor two charges $20,000.  My guess is you would go with doctor two due to the perception they are a better doctor.

Same with accounting fees and tax prep fees. Time is only the starting point. With time the more inefficient you are, the more money you make. What is the value of the service you provided? And then look at the math and see what your overhead costs are, how many returns, what you need to earn to stay in business. It's not boilerplate fees. It's a process and it's what the market will bear.

[abctax55]

I have a client - one that's well trained after many years - with 25 rentals, in six different states.

His return can be keypunched directly from the organizer due to the training I've given him.  

His bill is less than it would be for a client that wasn't organized.

I've been know to actually add a line item to the invoice for disorganized clients; most of 'em have moved on as it's not behavior I tolerate.  And those that haven't pay a premium for me puttin' up with them.

As others have said, you have to bill what it's 'worth', and only you can determine what that is in your community.

If you are new to this profession, I'll offer a word of advice.   Don't start with low fees to attract clients - you will regret it.

[IRonMaN]

We aren't new, but the name has been changed --------- kinda like someone entered the witness protection program so nobody will know who they are 😁

[PATAX]

@abctax55 👍many of us have many clients that are not well organized and that's just the way they are. Nature versus nurture, and in their case it is nature. Heidi is more organized than some of them.

[abctax55]

@PATAX 

Not Juno... tho she IS smarter than some folks I know 😉

[PATAX]

@IRonMaN Heidi is in that program. Her real name is Adelheid. A gang of pitbulls tried to attack Heidi and her pack. But Heidi wasn't having any of it. Now she has to be in that program.

[IRonMaN]

I’m not a fan of pitbulls and I’m guessing that is one thing Heidi and I have in common

[PATAX]

@IRonMaN 👍They are very aggressive, short-tempered, and violent towards other dogs and people. Keep Scout away from them.

[IRonMaN]

@PATAX - I had to reread your post.  For a second there I thought you were referring to Bob 😜

[PATAX]

@IRonMaN 🤣🤣🤣

[abctax55]

@PATAX 

I've always felt that way about Pitties, too.  Until recently when I've gotten to know a 13 y/old one, about 55 pounds.  She's a sweetheart - the only Pit Bull I've ever been comfortable petting.  I will 'never' own one tho.   I suspect they can sense my apprehension.

[PATAX]

@abctax55 Well said and I agree with you. I'm sure there are some pitbulls out there that are great dogs because they have responsible owners and were brought up right. But unfortunately there were some that were abused and mistreated by cruel clowns. People who abuse dogs are no good.

[George4Tacks]

My first grandpuppy was a lovely pit bull that wanted to be a lap dog. Like my of that generation of my "descendants", like all but one of this set from 2013 have gone onto redder fire hydrants.

Happily the grandpuppie's person still have the same wonderful smile! 

[PATAX]

@George4Tacks 👍👍👍Beautiful picture. The dog by the Christmas Tree, with the red outfit on that is part German Shepherd, looks like Heidi, who is also mixed, her mother being half Border Collie. In terms of longevity, health, etc, mixed breeds on average live longer and are less prone to get genetic diseases/illnesses. They should have mixed breeds on the dog shows, but the creme de la cremors will not have it. 🐕🐕🐕☝☝☝