January 2022 — Note for new and returning clients. The price estimates below include an increase of about 15-25% from last January (2021). These estimates do not include the additional cost to prepare and file the two new Portland-area personal income taxes for 2021 — the Metro Supportive Housing Services tax and the Multnomah Preschool for All tax. I’m expecting those filings to add $80 (single) or $100 (joint) to the overall tax preparation cost, for any clients subject to those taxes (income over $125k single, or $200k joint). Please also note the 0.15%-of-total-income “floor” for households with total income over $250k, per below.
From start to finish, there are many parts of the process that may take more or less time than expected — including collecting documents, tracking down missing items, preparing and reviewing the tax return, summarizing and contextualizing the results, answering questions, and filing with the IRS/OR.
For this reason, I can’t provide a firm “quote” to prospective or current clients. But I can usually provide a ballpark estimate for my tax preparation fee, when requested, and this page is intended to provide some context for those estimates.
The price guidelines/ranges below take into account: my target billing rate of $240/hr; plus per-return expenses associated with software fees (about $20 per return); plus annual adjustments up/down according to the number of non-billable hours I’ve had to put in, primarily associated with things like tax law changes and federal/state/local procedural changes — things that can be incredibly time-consuming for me, even though they’re entirely behind-the-scenes.
There are a few significant exceptions to these price guidelines, which I mention at the bottom of this page.
Most tax returns are more complicated than clients think they’re going to be, so when looking at these guidelines, it’s always safest to assume you’ll be on the higher end of the various price ranges.
“Simple” tax returns are typically in the $300-$400 range. Roughly 20% of the returns that I prepare fall into this range. These are straightforward returns that commonly involve one or more of the following:
- Basic itemized deductions (home mortgage interest, property taxes, and charitable contributions)
- Childcare expenses
- College tuition expenses
- Simple investment income (interest and dividends)
- Retirement income from pensions, IRAs, and social security
- IRA and 401k contributions that don’t require any corrective action
Tax returns with a minor twist (still straightforward, but not “simple”) typically end up in the $400-$500 range. Roughly 30% of the returns that I prepare fall into this range. These are returns that commonly involve one (not more than one) of the following:
- Self-employment income (revenue under $50k, no employees, no significant assets, no inventory, clean/organized “Profit & Loss” statement)
- Rental income from a single rental property (long-term rentals only, not short-term), not owner-occupied, and not the first year that the rental is being reported
- Buying or selling a main home
- Married couples filing jointly for the first time
- Investment income subject to “Net investment income tax” (Form 8960)
- Capital gain income from sales of “non-covered” securities (Form 8949)
- More than one or two brokerage 1099s
- Cryptocurrency trading that is reported to you on a 1099 or standardized gain/loss statement
- Straightforward sales of employee stock — RSU, ESPP, ISO, NQSO, etc — that require no basis adjustments
- Simple income from another state (in addition to Oregon), with no double-taxation issues
- Simple K-1 income
- IRA contributions that require corrective action due to various limitations
- Significant under-withholding (typically due to W-4 problems) or other unexpected results that require analysis and explanation
- Interest on underpayment of estimated tax (aka “estimated tax penalty”)
- Basic income and deductions from “pass-through” entities such as partnerships or trusts, as reported to you on a K-1
- Claiming a foreign tax credit (only when Form 1116 is required)
- Specific to tax years 2020 and 2021: problems reconciling stimulus payments and advance child tax credit payments
More complicated tax returns will be at least $500, and often considerably more. Roughly 50% of the returns that I prepare fall into this category, including about 5% that are over $1,000. My ability to provide simple guidelines breaks down here; it’s certainly not “a la carte”, and complexity increases non-linearly with each additional item from the list below or the list above. Not only that, but any single item from the list below can vary widely in complexity and cost; e.g., some returns with self-employment income over $50k will cost around $500, others will cost over $1,000.
If your return involves any of the following, you should expect to be in the $500+ category:
- More than one item from the $400-$500 list (above)
- Self-employment income over $50k, or with employees, inventory, significant physical (depreciable) assets placed in service, or significant bookkeeping adjustments
- Multiple rental properties
- Owner-occupied rental property, requiring an allocation between personal and rental use
- Short-term rentals or vacation rentals
- Buying or selling a rental property, or conversion of a residence to a rental property
- Home offices, for individuals who own their homes and aren’t using the “simplified method” for deducting business-use-of-home expenses
- Sales of employee stock — RSU, ESPP, ISO, NQSO, etc — that require basis adjustments in order to avoid double-taxation
- Cryptocurrency trading that is not reported to you on a 1099 or standardized gain/loss statement
- Married-filing-separately (pricing for the two returns combined, not each)
- Multiple state tax returns, with coordination to avoid double state taxation of the same income
- Income or loss from pass-through entities, as reported to you on a K-1, that requires tracking of basis (e.g. Form 7203) or passive losses (e.g Form 8582)
- Claiming a “Qualified Business Income” deduction or tax rate reduction via Form 8995 (federal) and/or Schedule PTE (Oregon)
- Claiming a foreign earned income exclusion (Form 2555) or reporting foreign financial assets (Form 8938)
- Errors in source documents (W-2, K-1, etc) that require investigation and correction
And there are a few other situations that are worth mentioning specifically, though they apply to only a small number of returns:
- For higher income households ($250k and above), I set a tax preparation fee “floor” at 0.15% of the total income shown on the tax return. As an example: if you have a total income of $350k, you can expect your tax preparation fee to be not less than $525, even if your return is otherwise “simple”. (The risk associated with a higher income return necessitates a higher fee than a return of the same complexity at a lower income level.)
- Certain other returns are subject to what I’ll call a “risk premium“, which is a 10-30% increase to the typical tax preparation fee for: returns that involve very unusual tax situations; returns that claim unusually large deductions/losses; returns that may be missing important pieces of backup documentation; returns that I know will disagree with the IRS’s own internal database; and so on. This impacts only a small percentage of the returns I prepare – maybe 5-7%.
- A set of two married-filing-separate tax returns (one filing for each spouse) is typically not less than $500 total, and could be much more depending on the level of “optimization” that’s required – e.g. figuring out how to claim dependents in the way that provides the greatest tax benefit. Generally speaking, a set of two married-filing-separate returns is more complicated than two single returns, and far more complicated than one joint return.
- Amended tax returns vary widely in price, depending on the amount of work that needs to be done. Some amendments are very simple and can be handled in an hour or less; others take much longer. Typically, it’s considerably less work to amend a return than it is to file the original return, and the fee is (correspondingly) lower.