2018 Tax Professional Fee Study

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1 2018 Tax Professional Fee Study When it comes to tax preparation fees, how do you compare to your competition? We have gathered and analyzed the data from our 2018 Tax Professional Fee Survey. Inside, you will find a compilation of the most critical details relating to what you charge for your professional services. When data was available and significantly different from 2018 results, 2016 data was included. The information provided in this study gives you a a distinct advantage over those tax professionals in your area who are not NATP members. Knowledge is power and knowing what your peers charge gives you the power to be competitive with your pricing and still earn what you re worth. The survey was administered electronically to a 50% stratified random sample of NATP s membership population as well as a random sample of nonmembers. (n = 29,419 ). A total of 2,258 participants completed the survey for an overall response rate of 8% and a member response rate of 15%.

2 Respondent & Business Profile Designations (more than one could be checked) Years in Tax Business Less than one year equaled zero NATP Tax Professional Fee Study

3 Respondent & Business Profile Total Number of Employees Tax Office employees consist of administrative staff and tax preparers. In 2018, 63% of employees consisted of tax preparers. Number of Total Employees that are Preparers Employment Role 2018 NATP Tax Professional Fee Study 3

4 Respondent & Business Profile Client Community Size Tax Client Target Market Percent of Revenue Derived from Tax Prep NATP Tax Professional Fee Study

5 Respondent & Business Profile Services Offered: Percent of Gross Revenue Overall Gross Revenue Amending previous tax returns 3.57% Calculating proper W-4 witholdings 0.67% Estimated tax projections 1.76% Filing a paper return 1.96% Reviewing returns done by someone else 1.33% Tax consulting 3.70% Tax examination protection 0.61% Tax examination representation 2.61% Tax planning 3.02% Tax preparation 70.08% Tax reform consulting 0.93% Other 9.75% Types of Tax Consulting Offered Gross Revenue Earned 2018 NATP Tax Professional Fee Study 5

6 Respondent & Business Profile Business Plan Respondents were asked to indicate their level of agreement with the following statements. Looking to Expand Services If Yes, Services Being Considered NATP Tax Professional Fee Study

7 Respondent & Business Profile Services Being Considered, by Designation AFSP CPA EA No Designation Amending previous tax returns 49% 39% 40% 54% Calculating proper W-4 withholdings 25% 26% 20% 31% Estimated tax projections 36% 36% 33% 30% Filing a paper return 17% 11% 11% 24% Reviewing returns done by someone else 44% 37% 34% 47% Tax consulting 49% 63% 53% 53% Tax examination/representation 47% 44% 58% 49% Tax planning 48% 63% 48% 49% Tax preparation 50% 50% 46% 51% Other 21% 24% 26% 11% Average Number of Tax Returns Prepared by Your Office 2018 NATP Tax Professional Fee Study 7

8 Respondent & Business Profile Preparation Trend Change in the number of tax returns prepared over the last two years Expected impact each of the following factored into the decrease in number of returns prepared NATP Tax Professional Fee Study

9 Respondent & Business Profile Projected Impact of Tax Law Changes on Business Other impacts noted were tax planning, payroll, and client questions. Projected Impact of Tax Law Changes on Business, by Designation Revenue Representing clients Services offered Complexity of tax returns Other AFSP Increase 25% 18% 24% 37% 16% Stay the same 52% 66% 72% 42% 76% Decrease 23% 15% 5% 21% 8% CPA Increase 32% 15% 23% 68% 14% Stay the same 50% 73% 73% 5% 80% Decrease 18% 12% 4% 27% 6% EA Increase 29% 21% 26% 40% 20% Stay the same 45% 71% 71% 37% 73% Decrease 26% 8% 3% 23% 7% No Designation Increase 5% 3% 5% 8% 4% Stay the same 11% 15% 14% 9% 24% Decrease 3% 2% 1% 4% 1% 2018 NATP Tax Professional Fee Study 9

10 Fee Structure: 1040 Individual Returns Method for Pricing 1040 Tax Prep Services Overall average charge for Individual return regardless of method $ Average set dollar rate per hour $ Set Dollar Rate per Hour 1040 return (without schedules) (Average per hour rate of $ was multiplied by average total hours. Total is identified below.) Schedule A Schedule C Schedule D Schedule E Schedule EIC/ EITC Form 8962 $127 $127 $223 $163 $190 $126 $126 Set Dollar Rate per Hour by Client Community Size Form 1040 Schedule A Schedule C Schedule D Schedule E Less than 10,000 people $106 $106 $191 $127 $159 $106 10,001 to 50,000 people $117 $117 $188 $152 $152 $117 50,001 or more people $136 $136 $231 $177 $218 $136 Schedule EIC/ EITC NATP Tax Professional Fee Study

11 Fee Structure: 1040 Individual Returns Minimum fee plus cost based on complexity of return 2018 New client $174 Returning client $162 Minimum Fee by Client Community Size Individual Returns New client Returning client Less than 10,000 people $139 $127 10,001 to 50,000 people $167 $155 50,001 or more people $188 $175 Set Fee per Form and Schedule (Average) Form 1040 (without schedules) Schedule A Schedule C Schedule D Schedule E Schedule EIC/EITC 2016 $114 $60 $101 $60 $81 $86 N/A 2018 $115 $49 $87 $40 $59 $38 $28 Form 8962 Set Fee per Form by Client Community Size Less than 10,000 people 10,001 to 50,000 people 50,001 or more people Form 1040 Schedule A Schedule C Schedule D Schedule E $98 $42 $83 $34 $53 $37 $116 $47 $83 $37 $58 $37 $120 $50 $89 $42 $61 $39 Schedule EIC/EITC 2018 NATP Tax Professional Fee Study 11

12 Fee Structure: 1040 Individual Returns Fees for Forms and Schedules, by Region West East Southeast Midwest Great Plains South Central Rocky Mt Northeast Form 1040 (without schedules) $140 $118 $110 $108 $104 $125 $124 $119 Schedule A $59 $53 $51 $40 $42 $52 $58 $49 Schedule C $119 $87 $90 $76 $85 $90 $85 $90 Schedule D $55 $39 $43 $35 $35 $41 $42 $39 Schedule E $78 $63 $63 $51 $57 $54 $65 $62 Schedule EIC/EITC $42 $36 $37 $37 $53 $35 $33 $40 Overall fee for federal forms Fee plus cost based on complexity of return for new clients Fee plus cost based on complexity of return for returning clients $77 $61 $62 $54 $60 $60 $64 $68 $194 $190 $174 $154 $138 $160 $188 $182 $184 $175 $159 $144 $138 $153 $172 $167 Set dollar rate $154 $150 $116 $104 $100 $121 $129 $ NATP Tax Professional Fee Study

13 Fee Structure: 1040 Individual Returns Average Set Fee for Form 1040 (without schedules) by Designation How do you charge for individual state tax preparation services? 2018 NATP Tax Professional Fee Study 13

14 Fee Structure: Business/Fiduciary Returns How do you typically charge for your business/fiduciary returns? Overall average charge for business/fiduciary return regardless of method $ Average set dollar rate per hour for all business/fiduciary returns $ Set Dollar Rate per Hour (Average per hour rate of $ was multiplied by average hours. Total is reflected below.) Form 1041 Form 1065 Form 990 Form 990-EZ Form 1120S Form 1120 $439 $577 $674 $365 $653 $624 Set Dollar Rate per Hour by Client Community Size Form 1041 Form 1065 Form 990 Form 990-EZ Form 1120 Form 1120s Form 8962 Less than 10,000 people 10,001 to 50,000 people 50,001 or more people $272 $442 $498 $215 $566 $532 $106 $439 $546 $692 $439 $559 $612 $117 $469 $626 $688 $329 $673 $688 $ NATP Tax Professional Fee Study

15 Fee Structure: Business/Fiduciary Returns Minimum fee plus cost based on complexity of return 2018 New client $380 Returning client $369 Minimum Fee by Client Community Size Business/Fiduciary Returns New client Returning client Less than 10,000 people $304 $291 10,001 to 50,000 people $361 $352 50,001 or more people $413 $398 Set Fee per Form and Schedule (Average) Form 1041 Form 1065 Form 990 Form 990-EZ Form 1120S Form $297 $388 $349 $220 $446 $ $317 $387 $370 $227 $451 $496 Set Fee per Form by Client Community Size Less than 10,000 people 10,001 to 50,000 people 50,001 or more people Form 1041 Form 1065 Form 990 Form 990-EZ Form 1120 Form 1120s Form 8962 $237 $375 $295 $185 $460 $405 $27 $311 $379 $356 $222 $489 $447 $26 $345 $400 $406 $247 $508 $462 $ NATP Tax Professional Fee Study 15

16 Fee Structure: Business/Fiduciary Returns Fees for Forms and Schedules, by Region West East Southeast Midwest Great Plains South Central Rocky Mt Form 8962 $34 $29 $28 $27 $41 $22 $28 $28 Form 1041 $454 $312 $275 $285 $345 $353 $321 $298 Form 1065 $551 $390 $351 $341 $419 $415 $368 $409 Form 990 $480 $319 $307 $349 $263 $437 $499 $421 Form 990-EZ $325 $200 $236 $212 $110 $239 $228 $212 Form 1120S $601 $482 $379 $413 $434 $461 $390 $527 From 1120 $646 $518 $415 $449 $356 $496 $450 $643 Northeast Overall fee for business/ fiduciary returns Fee plust cost based on complexity of business returns for new clients Fee plus cost based on complexity of returns for business returning clients Set dollar rate for business returns $518 $387 $338 $346 $337 $410 $374 $422 $471 $381 $392 $344 $316 $368 $392 $385 $461 $370 $378 $325 $306 $362 $384 $375 $171 $187 $143 $125 $125 $129 $141 $ NATP Tax Professional Fee Study

17 Fee Structure: Business/Fiduciary Returns How do you charge for business/fiduciary state returns? 2018 NATP Tax Professional Fee Study 17

18 Fee and Payment Information Payment for Services Percent of Revenue from Automatic Payments (such as credit card or bank account on file) 9% Payment Methods Accepted Frequency of Tax Preparation Fee Increases NATP Tax Professional Fee Study

19 Fee and Payment Information Discounts Offered I do not offer any of the discounts Free consultation for prospective clients Family or friends of a tax preparer Family or dependents of client % 13% 64% 59% 59% 45% 64% 49% Amount paid for referral $36.98 Percentage of gross revenue for other billed services I do not charge separate fees for the tax services listed below % Students 53% 39% Senior citizens 45% 3% New clients 27% 14% Returning customer 20% 0% Advertised coupon 20% 9% Discount for a past service error 42% 29% Filing before a specific date 5% 4% Charities or non-profits 17% 12% Pro bono work 32% 23% Vocation or affiliation (veteran, clergy, police, etc.) 19% 10% Amending previous tax returns 88% Tax examination/ representation 66% Tax planning 43% Reviewing returns done by someone else 38% Estimated tax projections Calculating W-4 withholdings 32% 16% Filing a paper return 18% Tax consulting 54% Other 5% Other 19% 7% 2018 NATP Tax Professional Fee Study 19