Fees are calculated based on the amount of professional time spent
For consulting & many other tasks, this will be simply charged at the hourly billing rate. For tax return preparation, a hybrid billing system is used, since this process requires a number of short periods of work done at various intervals, and it is therefore not practical to precisely track the time. This system consists of using base fees and then increasing them for various additional factors. Direct time billing will also be used for some tasks within the preparation process, particularly those that are more consulting in nature or are not straightforward.
Our goal is to keep our fees as reasonable as possible while still being fairly compensated for our time and expertise. For example, a tax return takes longer than originally anticipated, the fee will increase. It will not increase, however, because of small or incidental additional time.
Since fees are based on time, simple tax returns with few issues will generally be assessed a low fee, while complex returns, or ones that require addressing a lot of questions, a more in depth review of issues, or having to revisit and review the return multiple times (such as when a draft must be prepared before the deadline, but significant data is added later in the year) will result in a higher fee.
The fee can vary each year based on the changes in your tax situation. Sometimes these changes won’t be immediately apparent to the client. One year could be more or less than the previous year. However, if you were a client last year and your tax information is very similar, then you can expect your fee to be close to or the same as last year's.
When is the Fee Due
The fee is due and payable at the time we have finished the final draft of the tax return and have sent the “Return Ready” email. Payment should be made within a week of receiving the email. If you decide to discontinue using our services before the tax return is completed, or if you elect not to use the completed return, fees for work performed will still be due.
Tax Return Preparation Fees
The base fees for tax return preparation cover the usual time required to receive & send information, one to three exchanges regarding open items, preparation of the return, 15 minutes of review (forfeited if not used), and electronic filing or instructions for paper filing. Because of efficiencies in our preparation procedures, basic returns do not take a lot of time. For example, the base fee for a U.S. resident return with itemized deductions and one state only assumes an hour of professional time at $350 for the whole process. Of course, the base fee for those without itemized deductions will be lower. Fees for additional forms & other incremental charges will be added to the base fee.
If issues arise or consulting is needed, direct time billing comes into play which can sometimes increase the fee substantially. For example, open items can sometimes be very time consuming. While a few exchanges of moderate length are included in the base fee, more than that require billing for extra time.
Base Fees
U.S. Resident Returns:
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Form 1040 without itemized deductions, and one full year resident state: $100 - $200
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Form 1040 with itemized deductions, and one full year resident state: $350
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Foreign Bank Report: starting at $100, increases based on number of accounts and number of FBAR needed.
U.S. Nonresident Returns:
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Form 1040NR and one state: $375
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ITIN Application: $450 (half price if we prepared your tax return)
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Dual Status Return (first year in U.S.): $500 and up
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Dual Status Return (last year in U.S.): $600 and up (may be a bit lower if especially simple)
U.S. Company & Entity Tax Returns:
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Corporation (Form 1120 or 1120S), Partnership or multiple member LLC (Form 1065), or Trust Return (Form 1041), and one state: starting at $500 for basic return with clean, well-organized information. The fee could be significantly higher depending on complexity.
Additional Forms
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Schedule B: fees based on number of accounts and time spent calculating federal and/or state tax exempt interest and dividends
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Schedule C: starting at $150, based on number of expenses and complexity of entries
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Schedule D: fees based on number and complexity of trades or other sales
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Schedule E: $150 per property, more if we have to review your HUD statement or if other complexity
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Schedule K-1: $50 – $250, based on complexity
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Form 8938: fees based on number of accounts
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Extra states: $75 each
Other Factors
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Multiple revisits to the tax return. Time to do this can really add up, since it requires reviewing and/or familiarizing myself with your situation again each time, especially if there are long gaps of time in between. For example, more than a few email exchanges to obtain information or clarification, and preparing a return using estimated figures that are later revised
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Long delays between information being requested and received
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Complexity requiring research, additional communication, consulting, etc.
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Extra data entry from multiple Forms W-2 and 1099
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Part year or Nonresident income allocations
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Application for ITIN
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Tax treaty issues
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If new client, a lot of carryovers to enter from your prior year tax return including depreciation, passive losses, net operating losses, etc.
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Various other factors
Sometimes a tax return is more complex and more time consuming than a client is aware. For example, if you moved out of the state and had multiple income sources of income and expenses, we have to make numerous calculations to allocate your income correctly which can take a lot of time.
Tax Preparation Fee Includes:
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Preparation of your tax return
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Review of completed tax return up to 15 minutes
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Filing a tax extension, if needed
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Quick questions on tax topics by email year-round. Generally, “quick” means something we can answer in 5 minutes or less
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Correction of any errors made by us
NOT Included in the Tax Preparation Fee:
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Time consuming corrections made after tax return completion, that are the result of inaccurate or incomplete information provided by the client.
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Assistance with inquiries, examinations or audits of any kind by any tax authority, that are not the result of our error. However, we will review your notice at no charge and answer any quick questions you have about it. If you require consulting or more involved advice, additional fees will be billable at hourly rate.
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Initial consultation. We've found this is rarely necessary as it is generally enough though to explain anything unusual on the questionnaire or in your accompanying email. In addition, most issues get resolved through communication during the tax preparation process. If, however, you would like to consult with us beforehand, additional fees will be billable at hourly rate.
Fee Estimate
We hope the preceding information is sufficient that you won't need an upfront fee estimate, but if you really do need to have a more concrete idea of our fee before we start work on your return, please gather all of your tax information, fill out a questionnaire and then email or fax us your tax documents. In your email, please write in bold letters "NEED FEE ESTIMATE" and we will get back to you with an estimate before working on your tax return. Please be aware that this takes us extra time, so it may take several days or so to get back to you. If you ask for a fee estimate during the two weeks of April, we will likely have to file an extension for you and get back to you after the deadline has passed. Keep in mind that while we try to estimate your fee as closely as to the final fee will be, sometimes we've missed something, or incomplete information was provided, or other facts and circumstances arise while working on the actual tax return to cause an increase in the fee. we often discover this early on in the preparation process, and in such case, we will let you know if the fee estimate will increase. Occasionally the fee will less than the estimate, but only if the work involved was less than we had anticipated.
Issues with Fee or Results
After the tax return has been completed, we will send you a "return ready" email providing both our fee and the result of the tax return. If you have a question about the fee, please let us know and we will provide a calculation. If you have concerns about the results (refund or tax due), rest assured there will be enough time and opportunity to address and resolve them during the review process, which will take place immediately after you have paid the fee and we have sent you your tax return draft. Having your return in hand to refer to will make it possible for us to explain things more easily and you will be able to see more clearly what is going on in your tax situation. Always keep in mind that your return is never final until you have given your signature authorization on the e-file forms or the tax return itself, so changes can still be made if necessary. You have hired us because of our tax expertise, so it is best to give us the benefit of the doubt and be aware that there is likely something that you don’t understand at play. In the unlikely event that there is an error on our part, we will correct it. The following are some specific situations that arise from time to time:
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Client believes the refund should be higher or tax due should be lower
In almost all cases, the tax return is correct based on the information provided. The amount of refund or tax balance due reflects any over-payment or underpayment during the tax year and is often not consistent from year to year. Changes that could change your tax outcome from the prior year including tax law changes, an increase of income for which you did not have sufficient withholding, a higher tax bracket, change of job, multiple jobs, you got married and divorced, and you had additional income from dividends or capital gains, retirement distributions, etc. Alternative minimum tax can also greatly change an expected outcome. While we always look for every legal tax benefit you are entitled to, if you are still unhappy about the final result, you can choose not to use the tax return that we prepared for you. Be aware though that the fee for our services would still be due in this case.
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Client or another preparer came up with larger refund or lower tax bill
The accuracy of the tax return is much more important than having the lowest tax liability possible. Questionable deductions or tax positions can end up being a large burden later on if the IRS examines you because of them. Often irregularities are discovered by the IRS matching program. So, it is important to know why and how this different result was achieved. In any case, if you elect not to use the tax return that we prepared for whatever reason, payment of our fee is still due.
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Client has a large tax balance due and cannot afford to pay
It is important that you review the return carefully to make sure that there is nothing that you forgot to provide. The return is never final until it's been filed with your signature authorization. If you do not presently have the funds to pay your tax balance due, you have two options: (1) file your tax return and set up an installment plan, or (2) file your tax return but only make a partial payment or no payment at all, and let the IRS or state will bill you for the remaining balance. These options help you to avoid the failure to file penalty, which is a hefty 5% per month of the balance due if filed after the tax deadline (including extension), but the late payment penalty and interest would still apply. If you don't file, your tax bill could end up being much higher.
Other Services
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Tax Audit Representation ($300 per hour)
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Tax Consulting ($300 per hour)
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Tax planning or projections ($300 per hour)
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Bookkeeping & Payroll (Monthly fixed rate, more or less depends on volume of work)
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New Business Formation (One-time fixed rate)