So, what's my tax prep fee this year?

To our clients:

To all of you who have signed your engagement letters with our new electronic system - thank you! We hope this has streamlined the process of getting these necessary agreements and provided some clarity and transparency in working with Sherwood Tax.

We have had inquiries about the fees for 2020 returns, and have some general guidelines we wanted to share. 

Assuming your return is similar to last year, you should expect your preparation fee to be similar. As most firms, we do have annual cost increases (generally around 5%) that are necessary to keep up with the overall cost of our services. 

In 2020 many clients’ financial situation changed; they became gig workers, they refinanced their home or became unemployed, so please keep in mind that when evaluating your tax preparation fee.

We want our clients to be aware that our costs have increased significantly in the last 2-3 years, due to the following factors:

  • The complexity of preparing tax returns, for both businesses and individuals, has increased dramatically in the last 2-3 years. There has been major tax legislation in each of the last 3 years that has impacted the time and research it takes to prepare the returns. Examples of these changes include

    • The Tax Cuts and Jobs Act (TCJA) of 2017 - introducing QBI and completely reformatting the layout of the Form 1040.

    • Changes to the itemized and standard deduction rules

    • In addition to keeping up with tax legislation, our staff has also been required to become familiar with the legislation of the CARES Act and other Covid-related relief packages in order to assist our clients to obtain funding and apply for forgiveness. 

    • Reporting of stimulus/economic impact payments received

    • Above-the-line deduction for charitable contributions

    • All of these complexities mean that our staff attend training courses to make sure we have a full understanding of the new laws and how they impact our clients. This education also helps us to plan with our clients and offer tax-saving strategies as well.Additionally, educating each client adds time to the return processing.  We help clients by explaining things such as why you could deduct a home office previously but now, it is not allowed, and assisting with paycheck tax withholding. 

  • Tax software and other administrative cost increases - our software has increased by about 20% in the last 2 years. 

  • Our wonderful staff - we value our staff at Sherwood Tax and we want to make sure they are compensated well, have good benefits, and are able to take time off throughout the year. We have added employee benefits to the team to make sure they feel valued and can bring their best selves to work in order to better serve our clients. 

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At Sherwood Tax we pride ourselves on being transparent with our fees. There is an industry secret in accounting - our fee is directly impacted by the level of organization of our clients! If your records are in good order, and we don’t have to spend a lot of time hunting down information, this keeps our costs low. If we have to keep checking/following up/emailing reminders, that makes our costs go up. If we have to do a year’s worth of bookkeeping during our busiest time, there will be a premium associated with that. 

For our small business clients, we offer packages that include bookkeeping, tax consulting, accounting systems consulting and year-round advice.  This is ideal for clients who don’t like receiving a large bill once a year for tax compliance, and who want more consistent communication with us throughout the year.  If you are interested in setting up a package, please contact your client manager (or email cpa@sherwoodtax.com) and we will get a proposal to you!

Breakaway Advising