Feb 23

Tax Preparation Fees. (February-2023)

Here we are again and tax season under way.  So far, I have been upfront with providing clients with an estimate for their tax preparation fees.  And as usual, I have already heard comments of dissatisfaction as to why we are charging so much; wow!; that’s not what I paid last year; I’ll just do them myself; or they just hang up.  I want to know, when you go to the grocery store, do you go up to the manager and provide him with a list of your groceries and evaluate if you’re going to buy them at that store, and do you go to another store and do the same to evaluate where you’re going to buy your groceries.  When you need gas, do you evaluate whether you’re going to pay the price or go without.  There isn’t any negotiating.  So, why does everyone think tax preparation haggling is appropriate. On behalf of all the Enrolled Agents, Certified Public Accountants, and Attorney’s, you need to understand what it takes and why a deserving reasonable fee is appropriate.  Your advisor is a well-educated individual and we use the U.S. Master Tax Guide (the Guide), the Tax Code, and many other resource documents when preparing a tax return.  In 1995, the Guide has 669 pages, in 2003, the Guide has 768 pages, and now the 2023 Guide has 944 pages.  This is due to all annual tax law changes dealing with COVID, retirement distributions, depreciation, itemized deductions changing to possibly the standard deduction, child tax credit, earned income credit, education credits, filing status, divorce issues, head of household filing status, health care premium tax credit, and gift tax, estate, and trust tax returns, corporate returns, partnership returns, bit coin, sell of real estate, capital gain tax, and you wonder why our charge is what it is.  The complexity of the law is at hand, it’s all you have to do is enter the information on a form.  It’s why we enter the information on the form and what line.  You are buying knowledge.  When someone gives you a fee that is substantially lower than ours, you better ask yourself why.  Does this preparer have the knowledge need to prepare my tax return, how many tax returns do they prepare, how many years of experience do they have, will they be able to represent you in audits, how many hours of continuing education do they take annually, will they meet with you to permit you a chance to build your trust and confidence having them become your preparer?  So, when they are upfront and give you their estimated $520 tax preparation fee, remember, you are buying knowledge, you are buying a valuable service, and you are buying trust.  When you ask them a question, the answer may be saving you thousands of dollars or costing you thousands of dollars, if you get the wrong information, it’s your lost, not theirs.  So, be careful, don’t risk a reasonable fee to get the knowledge, value, and trust you are receiving when the event comes about.  Be advised, like everywhere else, inflation is pumping up tax prep costs and it’s worth every penny for the tax preparer’s knowledge, value, and trust.  On a last note, ask your friends, your colleagues, and your parents, for a referral for a tax advisor, meet with them, have your questions ready, and make sure you’re confident they will provide the services you feel comfortable in receiving.  This is a very brief overview.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.