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- Tax professionals use several pricing models, including per-form, hourly, fixed-fee, value-based, and bundled pricing.<\/li>\n\n\n\n
- Fee reviews can help firms account for higher costs, changing client needs, and added service complexity.<\/li>\n\n\n\n
- Disorganized or late client information can create extra work and may justify higher fees.<\/li>\n\n\n\n
- Bundled services can help spread client work across the year.<\/li>\n\n\n\n
- Pricing should support both profitability and a clear client experience.<\/li>\n<\/ul>\n\n\n\n
Tax professionals use a variety of different methods to set prices, including per-item, per-form, or per-hour rates. For example, a practitioner might charge any of the following:<\/p>\n\n\n\n
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- A set fee for each tax form or schedule.<\/li>\n\n\n\n
- A minimum fee, plus an amount based on the complexity of the client\u2019s return.<\/li>\n\n\n\n
- A fee based on the subjective value of the tax preparation service.<\/li>\n\n\n\n
- An hourly rate for time spent preparing the tax return.<\/li>\n\n\n\n
- A set fee for each item of data.<\/li>\n\n\n\n
- A monthly, quarterly, or annual fee that includes tax return preparation, along with other services that could include tax planning and advisory<\/a> work, quarterly estimates, bookkeeping, or payroll.<\/li>\n<\/ul>\n\n\n\n
Whether you use one of these methods, a combination of methods, or some other approach to setting your fees, it\u2019s a good idea to conduct an annual review in advance of tax return season to ensure you are not short-changing yourself and your practice. Your fee structure should factor in your cost, plus a reasonable profit margin. On the other hand, you\u2019ll want to make sure you are not charging more than the market will bear.<\/p>\n\n\n\n
While not definitive, comparative data on what other tax professionals are charging can be a useful guideline for assessing your fee structure. For example, the November 2023 Tax Pro Forms Pricing Study by Intuit Accountants of more than 200 accountants provides some insight into the fees charged by tax professionals for various tax preparation services.<\/p>\n\n\n\n
Tax preparation fees national averages<\/strong><\/h2>\n\n\n\n
The Intuit Accountant study reports the following national averages for Form 1040 income tax returns from those who charge for these forms and scenarios:<\/p>\n\n\n\n
2 W-2s and a state return<\/td> $238<\/td><\/tr> 2 W-2s, a Schedule D, 3 1098s, 1 1099 Composite, the Child Tax Credit, and 2 state returns<\/td> $350<\/td><\/tr> 1 W-2, 8 1099-INT and 1099-DIV forms, 1 1098, a Schedule D, Schedule E, 2 1099-NECs, and 1 state return<\/td> $537<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n When do tax preparers tell their clients how much their return will cost?<\/strong><\/h2>\n\n\n\n
Accountants appear to have pricing power; they often don\u2019t tell their clients exactly how much they\u2019ll owe until the return is completed, likely due in part to the fact that they don\u2019t know how long a return will take or how responsive clients will be to follow up questions until the work is totally done.<\/p>\n\n\n\n
For example, the Intuit study found that the most common approach is for accountants to not give an estimate or minimum price up front, but rather to bill their clients the appropriate amount once the work on the return is done.<\/p>\n\n\n\n
The second most common approach is to give a base or minimum price, and then provide exact pricing once the return is completed. The third most popular approach is to give an estimated range up front, and the fourth is to provide a specific estimate up front.<\/p>\n\n\n\n
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