Preparation Rate

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.  

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. 

There's also Manhattan, MT.

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.

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. 

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.

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

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

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.

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.