Pricing an Amended Return

[HV Ken]

Curious - how do you price an amended return? Here's the dilemma:

You get a new client for the previous tax season by uncovering their already filed return is incorrect. Let's say that if you prepared the return from scratch, you would have charged $300. But since all you did was basic data entry off an existing return and change a few incorrect numbers, you only charged the client $150.

Now it is this year and they are your client. You do the return from scratch and charge your $300 fee.

Will their perception be how come you did the return for $150 last year (although it was an amended return) but nothing in my situation changed and now it is $300 for the same return ?

Curious as to your thoughts before I post mine. Thanks for contributing!

[RitaB]

I try to make it clear before amending the prior year that less work is required than doing the return from scratch. (If that is the case.)

I actually have one here that took longer to amend than to do it correctly to begin with. I charged $100 which is the same fee I charged for the 2010 return. I don't know what her mechanic's secretary charged to mess it up. Yes, the previous preparer is her mechanic's secretary. I know.

I think they use the same hairdresser, too.

[Pacun]

I always charge more for amending than for preparing. I ALSO charge extra for previous years. It is not my fault that they are not in compliance or not doing the right thing from the beggining.

[schirallicpa]

I would bill it in full, and then deduct a "courtesy adjustment" on the face of the invoice. Then make sure I point out to them that this return would have normally been $300, however, in light of the fact that much of the work was already done correctly , and I am amending only a specific portion, I am only charging $150.

If the amendment is because of my mistake, I eat it. If it is their mistake, they are billed. If it's because they get a corrected 1099 late in the season and its not really anybody's fault, I try to discount more, but a least bill my basic flat rate.

[RitaB]

If the amendment is because of my mistake, I eat it. If it is their mistake, they are billed. If it's because they get a corrected 1099 late in the season and its not really anybody's fault, I try to discount more, but a least bill my basic flat rate.

Agree with this. Good points.

I will add that if it's the 3rd year in a row that a person gets a W-2 after filing, I tend to get a little aggravated and charge so that their memory gets better or their desperation to file early dies a painful death.

[BulldogTom]

Our policy is $75 to amend plus the cost of preparing the return. Returning clients that we prepared and they come up with more info is $75. If we made the mistake, it is free.

For a new client that brings me their return from another preparer and it needs an amendment, I will guage the likelyhood of them becoming a continuing client and what they will bring to the table in the future and price from there, but a minimum of $75.

Tom

Lodi, CA

[kcjenkins]

If it's because they get a corrected 1099 late in the season and its not really anybody's fault, I try to discount more, but a least bill my basic flat rate.

Well, that is not really true, since the t/p is supposed to keep his own records of income, and not just rely on the 1099s he gets. In fact, a corrected 1099 to increase income always makes me wonder if the client is only reporting what he gets 1099s for, rather than keeping records and reporting all his actual income, regardless of whether he got a 1099 for it or not? If the change is significant, I'm going to be asking my client more questions about how he keeps up with his income, that's for sure.