I received a notice recently from the National Society of Tax Professionals providing the average fee charged by tax preparers. My fees are much lower. The headline fee in this flyer, which I am linking to here, indicates that for a basic 1040 return with a Schedule A, the average tax preparer charges $243.00, including the State return. I charge $110.00. By the way, every fee I quote includes State returns. For some of my clients, my fee, includes more than one State return. This is something to be careful of. Some services, for example, will advertise a “free” 1040A, but then charge for the State return and for all attachments that may be necessary for the 1040 form. I noted with particular interest that the $110.00 that I charge is less than half of the average. I mention that because last year I ran a special for anybody transferring from H&R Block, Liberty Tax Service or from any CPA, promising to do their taxes for 50% of what their previous tax preparer charged or my fee, whichever was less. My fee was consistently less than 50% of theirs. This year I am running the same special and adding Jackson Hewitt to the list. I have gone to the websites for these companies, and have noted with interest that they do not advertise their rates. However, my experience has been that these companies are generally at or above the average that is reflected in this notice. As such, it is easy for me to make the 50% offer as that is almost always, and so far has been always, more than my fee anyway.
That I am charging so little may require a bit of explanation. After all, I am an attorney. I should be at the highest end of the fee schedule. However, I took over the tax practice of a very successful tax preparer in my building. He was not an attorney, CPA or an enrolled agent, but merely a tax preparer. He was charging the rates that are in line with what tax preparers in my neighborhood charges. There are a lot of tax preparers in my neighborhood of varying degrees of skill, competency and integrity. When I took over for him, I agreed that for at least the first year, I would charge the exact same rates he was charging. I still have not changed them. I am basically happy with the way things are going on the tax side and have no real interest in rocking the boat. I am in the process of adding on some value added service, mostly for business clients, which are more in the nature of law and accounting and less in the nature of simple tax preparation. These services were never part of his fee structure.
Although H&R Block, Jackson Hewitt and Liberty Tax Services do not seem to be willing to post their rates, I am pleased to post mine (all fees include the State return(s) and e-Filing):
- For a basic individual tax return, no spouse, no dependents, no itemized deductions, no investments, no business, we just take your W-2 Forms and spit out a Federal and State return, that is $70.00.
- If it is a joint tax return or where there are dependents, but there are no special schedules (and I do not consider the Earned Income Credit, the Additional Child Tax Credit, the Daycare Credit, the American Opportunity Tax Credit, or reporting interest and dividends to be a special schedule) the fee is $90.00.
- If in addition to either of the above, there are itemized deductions, such as for a house, that is the $110.00 that is discussed above.
- If it is an owner occupied two or three family home, then it is $130.00.
- Each additional residential investment property is $100.00.
These are the rates that a vast majority of my clients pay. Business rates are a little more complicated, but they are going to be less than half of what a CPA charges. I am sure that they are less than half of what a tax attorney charges, but I do not see many of those to compare. Generally speaking, people who need the services of a tax attorney, need to stay with that attorney. There are very few attorneys, such as myself, who also act as basic tax preparers. In fact, I was in a conversation with a group of tax attorneys a couple years ago and the topic was the new Internal Revenue Service requirements regarding documenting the Earned Income Credit. The discussion did not last very long, because most of them said that none of their tax returns involved the Earned Income Credit. Maybe one third of mine do.