Preparation Fees

[Steve_the_EA]

Now that the IRS is making public the drafts of ACA compliance forms, and after looking at them and determining what questions I will be asking clients and what documents I will need to do returns properly I will be completely re-doing my fee structure.

My fees have always been based on "Forms in, forms out" meaning I charge a flat rate for each form I get from the client and each form I generate as part of the return. Some forms are "per item" - I charge for each column used on Form E page 1 and for each K-1 on E page 2 as well as each property on 4797, 4835, etc as well as each item on 4562.

Without disclosing your "price sheet" are there other methods out there that are fair to the practitioner (meaning reflect the work and expertise needed to complete the job) as well as the client? I have been using this method for over 30 years and it has served me well, but after looking at the proposed 1095's and the 8962 I see each of these as $50 forms plus $15 per person (1095B lines 23-28, 8962 lines 12-23).

[JohnH]

I say track your time and bill for it.
Maybe you'll eventually come to a workable average, but this is uncharted territory right now.

[MAMalody]

On a per form charge, Steve, I think you are starting in a great place. I would also encourage tracking of time because if you find the time is out of balance one way or the other you can always adjust the price at that time.

[FEDUKE404]

Everyone has an opinion

I tend to agree with JohnH.

In my former tax life I worked with firms where there was a fee for each piece of paper generated. (I call it the "won't say the firm name" approach.) There would be discussions of "Well, that would save you $x in tax but cost you $y in fees....are you sure you want that?" Even worse - "That $25 worksheet is necessary because some of your Social Security income is taxable."

Then you run into something like whether you do or do not require a Schedule B, merely because of crossing some dollar income threshold.

I would argue there is no "extra work" or "knowledge skills" involved in entering $24.19 from a bank account as opposed to entering $2024.19 from the same bank account. And something like determining taxable Soc Sec benefits is handled entirely by the software. . .

And, except for perhaps the price of a sheet of paper, please explain the extra work you incurred to "generate" said Schedule B. (Is it a "$50 form" or a "$20 form" ??) Ditto for the ink filling in line 20 on a Form 1040.

Clients can, and do, see through such madness.

A reasonable time plus effort (and/or skills involved) approach to fees works well, and also leaves you room for unusual situations. (Such would be figuring out cost basis for a stock sold - having previously gone down the spin-offs/stock splits road - versus a simple buy/sell stock transaction.) How much for "a Schedule D" ??

Others will differ in their opinions, as they frequently have on these boards, but at least you've got my 2¢ worth on the topic!

FE

[JohnH]

That's worth more than $0.02.
(But don't send me a bill)

[MAMalody]

<<<Clients can, and do, see through such madness.>>>

I doubt that. HRB and JH have been charging by form, w-2s, k-1s for years and it seems to work for them. Before I went to my present format, the per form charges I usually used seemed to arrive at a very similar prices as the time based charges. It was, however, significantly easier to give a broad estimate to a potential client based on their last years return. I do agree that sometimes things like basis computations, puts/calls, etc. can be a problem.

[taxea]

HRB not only charges per form they also charge for each line on the form that is used.