Tax Preparation fees: How to price your tax preparation services (2024)

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:

• A set fee for each tax form or schedule.
• A minimum fee plus an amount based on the complexity of the client’s return.
• A fee based on the subjective value of the tax preparation service.
• An hourly rate for time spent preparing the tax return.
• A set fee for each item of data.

Whether you use one of these methods, a combination of methods or some other approach to setting your fees, it’s a good idea to conduct an annual review in advance of tax return season to ensure that you are not shortchanging yourself. Your fee structure should factor in your cost, plus a reasonable profit margin. On the other hand, you’ll want to make sure you are not charging more than the market will bear.

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 2020-2021Income and Fees Survey from the National Society of Accountants (NSA) provides some insight into the fees charged by tax professionals for various tax preparation services.

Tax preparation fees national averages

The NSA study reports the following national averages for Form 1040 income tax returns and a corresponding state return:

• $220 for Form 1040 without itemized deductions.
• $323 for an itemized Form 1040 with Schedule A.
• $903 for Form 1120S – S corporation

Does geography impact how much preparers charge?

The location of your tax practice will have a bearing on the fees you can charge. For example, the NSA study found significant regional differences in the average fee for a Form 1040 with Schedule A and a state return — as well as variations within each region — with the highest fees reported on the east and west coasts. See the Income and Fees Survey for details.

How should tax preparers handle delinquent or disorganized clients?

It is not uncommon for preparers to charge a higher fee to clients who submit their return paperwork at the eleventh hour or who submit a jumbled mess. The NSA study found that 75.1 percent of preparers increase their fees by an average of $145.14 for disorganized or incomplete paperwork to complete a return for a sole proprietor. See the Income and Fees Survey for details.

2021 Intuit Rate Survey

The 2021 Intuit® Rate Survey results are in! If you were one of the almost 900 accounting and bookkeeping professionals who participated in the survey, you have our deepest gratitude!

We are excited to share the initial results with you. Over the next few weeks, we will be sharing the insights we learned in a series of articles that will be published on Firm of the Future. As in past years, the 2021 survey asked a variety of questions related to firm demographics, methods used to bill clients for different types of services, and of course, how much practitioners are charging for these services. This year we also asked specific questions regarding COVID-19 and its impact on your firm’s gross profit margins and average fixed prices, while also touching on how our clients were affected.

How do tax preparers collect fees?

The survey asked practitionershow theybilled their clients for various service offeringsbased on the following definitions:

• Hourly billingbased on the hours worked.
• Value pricingbased on the maximum amount a given client is willing to pay for aservice,typicallyset before the work begins.
• Value billingis usually marking up—or more frequently marking down—the invoice to the client after the work has been performed.
• Fixed fees,with the feeoftendetermined based on estimated hours(or cost)to complete the work.

Intuit Survey average hourly rates

It is important to note that only 48% of survey respondents were willing to provide their average hourly rate. Based on the data available, however, it appears as though we gave ourselves a raise since the last survey was done in 2019. The standard average hourly rates increased by 8.6% from $69 (2019) to $75 (2021).

Survey data also indicates that more practitioners in 2021 (35%) are charging the same hourly rate across the board for all services. This could suggest an effort to streamline billing rates or that services are being bundled.

We also looked atthe averagehourlybilling rates for QuickBooks-related services by both professionaldesignation andProAdvisorcertification status.

Editor’s note: This article was updated with new content on Dec. 7, 2020, and updated with new content on Jan. 27, 2022. This article is also available in Spanish.

2 responses to “How do your tax prep fees stack up?”

1. 

   Good article because it showed average fees being charged. This information will help us to stop shortcoming ourselves. Need to keep up with salary increases.

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     “Shortchanging ourselves” (not shortcoming ourselves)