A first-year fee should begin with the service you can safely deliver. Write down the return types you accept, the review each return receives, the client contact included, and what happens when the facts exceed that scope. Then calculate the resources needed to do that work. Pricing belongs inside the full tax practice startup plan, after scope, security, and operating costs are known.

Starting with a competitor’s posted number reverses the order. Their fee may exclude state returns, bookkeeping cleanup, amendments, notice support, or year-round questions. Their software, staffing, and client volume may bear no resemblance to yours.

Define what one fee buys

A “basic return” is not a stable unit until the engagement says what it includes. Define:

  • Federal form and schedules within scope.
  • Number of state and local returns.
  • Client interview and document review.
  • Preparation, diagnostics, and quality review.
  • Electronic signatures and e-file transmission.
  • Rejected-return correction caused by data or transmission issues.
  • Copy delivery and a stated period for preparation questions.
  • Work specifically excluded, such as bookkeeping cleanup or notice representation.

When a client adds a rental, business, second state, digital-asset transaction file, or missing prior-year work, the unit changed. The engagement should require a revised quote before the added work begins.

Calculate an internal cost floor

This worksheet does not produce a market price. It shows whether a proposed fee can support the work:

  1. Fixed overhead per return = annual fixed practice costs divided by a conservative number of paid returns.
  2. Direct cost per return = software, e-file, payment, printing, portal, or reviewer costs caused by that return.
  3. Preparation labor = realistic preparation hours multiplied by the internal labor value.
  4. Service labor = intake, document follow-up, review, delivery, rejection handling, and routine support time multiplied by the same value.
  5. Internal resource cost = the four amounts added together.

Profit, owner taxes, unexpected rework, bad debt, and growth are not included in that resource cost. If the proposed fee is below it, the practice is depending on uncounted labor, unrealistic volume, or weaker service.

A fictional calculation

Assume a solo practice budgets $9,000 of annual fixed costs and conservatively expects 300 paid returns. Fixed overhead is $30 per return. If a particular return uses $18 of direct services, 1.5 hours of preparation, and 0.5 hour of intake, review, and delivery at an internal labor value of $45 per hour, the resource cost is $138.

That $138 is not a recommended customer price. It is the result of fictional assumptions. Change any assumption and the number changes. Its purpose is to expose missing costs before the owner commits to a public fee.

Use a complexity map before a price list

O*NET lists calculating preparation fees according to return complexity and processing time as a core tax-preparer task. A practice can turn that principle into a private scoping checklist:

  • How many taxpayers, dependents, businesses, rentals, states, and transaction sets are involved?
  • Are the records organized, reconcilable, and complete?
  • Does the return require basis, depreciation, inventory, allocation, or prior-year reconstruction?
  • Will another preparer or credentialed reviewer be needed?
  • Is the requested deadline realistic?
  • Does the work fall inside the practice’s written competence boundary?

A return outside the competence boundary does not become acceptable because the client agrees to a higher price. Refer it or obtain qualified review.

Choose a fee model clients can understand

Base fee with disclosed additions

Useful for repeatable individual-return work. Publish or quote a base scope and explain which schedules, states, businesses, or cleanup tasks change it.

Fixed quote after intake

Useful when source documents and complexity vary. A short paid or unpaid scoping step can precede the quote. State how long the quote remains valid and what facts reopen it.

Hourly or phased work

Useful for bookkeeping cleanup, reconstruction, research, amendments, and open-ended projects. Give the client an estimate, approval points, and a written rule for work beyond the estimate.

A practice can use more than one model, but the client should know the method before work begins. Do not hide ordinary required steps in surprise charges.

Keep the fee separate from the refund

The IRS tells taxpayers to avoid preparers who base fees on a percentage of the refund. Refund size is not a sound measure of work. Two equally complex returns can produce different refunds because of withholding and estimated payments. A refund-based fee can also create pressure to claim an unsupported result.

Quote the preparation work independently. The engagement should state the amount or calculation method, payment timing, refund and cancellation terms, added-work approval, and whether notice or amendment support is included.

Review the fee after real work

For each completed return type, record time by stage without putting taxpayer details in the analysis. Compare quoted scope with actual intake, preparation, review, follow-up, and rejection work. Look for patterns:

  • Which documents cause repeated follow-up?
  • Which return types use more review than expected?
  • Which services are being provided without appearing in the engagement?
  • Which clients need a different intake process?
  • Which work should leave the firm’s scope?

Change future quotes from your own cost and service evidence. Keep existing client terms clear and honor signed commitments.

Primary source notes

Federal preparer guidance reviewed July 22, 2026. Pricing examples are fictional and do not state a market rate.

Common questions

What readers ask next

What is the average tax preparation fee?

Published averages use different samples, forms, locations, and service definitions. A national average cannot price your exact return scope, labor, software, review, or local market. Use it only as background after calculating your own costs.

Should a new preparer charge by the form or by the hour?

Either can work. Per-form pricing is easier to explain when scope is predictable; hourly or quoted project pricing can fit cleanup and uncertain work. The method matters less than defining what is included and how added work is approved.

Can a tax preparer charge a percentage of the refund?

The IRS warns taxpayers to avoid preparers who base fees on a percentage of the refund. A fee tied to refund size also rewards an outcome the preparer must calculate objectively. Use a disclosed scope-based method and review current professional rules that apply to you.

Should a beginner be the cheapest option?

No pricing rule requires that. A new preparer should keep the return scope narrow, use review, disclose service limits, and calculate a fee that supports secure and accurate work. Low fees do not cure inadequate training or controls.