Cost and Process

---

This section is to provide a couple examples of what could cause your tax preparation bill to either be more than OR LOWER than the estimated cost you may have calculated. 

As explained in the engagement letter, billing is by the hour at a rate of $250 per hour. This means the amount of time spent preparing your return is tracked and used to determine the final bill. The first year someone uses a firm or moves tax preparers is normally the most expensive as there is more setup and administrative time involved. The second and third years offer the hope that the bill can be reduced because of already being setup as a client. Familiarity leads to efficiency, quicker preparation times, and a reduced bill for you. 

The efficiency and quicker preparation times as the years accumulate of working together do assume that your tax situation stays mostly the same. Where frustration and confusion can happen from a client perspective is when something happens in your life to create a new tax situation that appears minor to you but adds a significant amount of time to properly report the new situation. Another frustration can happen when tax law changes also increase the amount of time required to properly report your tax situation. An example of what appears to be a minor change to you but a large increase in tax preparation time is starting a business. You may not have much income in the beginning and feel like there's really not much there for your tax preparer to have to do, but in reality, adding a Schedule C self-employed business can add anywhere from thirty minutes to three hours or more to your preparation time. An understanding of the business has to be gained, certain questions on the Schedule C have to be asked and answered, your level of organization as far as providing your income and expenses affects the time spent preparing the return, and many self-employed individuals co-mingle or combine personal expenses with business expenses which creates even more questions that must be answered. A new business also creates new deductions that might need to be addressed, such as the qualified business income deduction or self-employed health insurance deduction. Your tax bill might have been $250 the year before you started the business but increases to $400 or $600 when you were expecting it to still be $250 since your business didn't do much the first year. This frustration could potentially be avoided by providing you the option of using the estimate calculator and also having clients re-qualify every year. 

The estimate calculator feature on the website also assumes that you have the most common general scenario associated with that tax form or tax situation. The estimate assumes the W-2 from your employer is as detailed and complex as most other employer W-2s. What the estimate calculation cannot predict is when there is an employer W-2 that is not like most other W-2s. Instead of the two minutes it takes to enter and review the typical employer W-2, and which the estimate assumed you had, it actually takes ten minutes. The estimate calculator may have told you it would cost $250 for your return but you find a bill for $277. The extra $27 is due to the additional eight minutes the estimate calculator could not have predicted you would need due to the not-so-average W-2 from your employer. The main point is that an estimate cannot predict every tax situation. With hourly billing, you are trusting that you will be billed for the actual time spent and not be billed an artificially inflated time. The estimate calculator CANNOT be anything more than a budgeting tool. 

On the flip side of the hourly billing process, there are scenarios where the time spent can be LOWER THAN what the estimate said it might be. One scenario that could happen is that when calculating the estimate, you say you have one brokerage statement with interest, dividends, and stock sales. The estimate calculator assumes this type of tax form or statement takes fifteen minutes to report on average. Once your tax information is received and preparation starts on your return, it may be that the brokerage statement only reports ordinary dividends and nothing else. This kind of brokerage statement would only take two minutes to enter rather than fifteen. If you had calculated an estimate of $250 and everything else involved with the return was as expected, you would only be billed for $196 due to the thirteen minutes of time difference from the estimate. 

If you use Basic Tax Prep LLC, having a Schedule C business or Schedule E rental property is more than likely to add about $250 to your bill. Again, the bill could be much higher if you have more than one rental and your record keeping is poor, or it could be much lower because you only have one rental and your record keeping is very good. It matters what your records look like and how you present them, which is where the worksheets available on the website can help. Use them to help you organize your records and numbers. 

Documents with sensitive information should be uploaded to your secure portal account from a secure device or computer. Basic Tax Prep LLC is not responsible for sensitive information stolen due to sending the information from an unsecured device, from an unsecured computer, or by a method other than the secure portal. For example, texting or e-mailing a document with a social security number might be convenient but may not be secure. Documents containing sensitive information will only be sent to you through the secure portal or by way of encrypted e-mail.

What are some ways documents can be provided electronically?  

1. Documents mailed or handed to you with sensitive information could be scanned with a private scanner/copier and then uploaded to your secure portal. 
2. Documents mailed or handed to you without any sensitive information could be scanned and uploaded to your secure portal.     
3. Documents mailed or handed to you without any sensitive information could be photographed with your phone, tablet, or other device and uploaded to your secure portal.
4. Documents you obtain electronically from an online account (employer portal, bank, investment account, e-mail, etc.) are ideal because you don't have to scan it in order to upload it to your secure portal. Download the document from the online account and upload it to your secure portal. 

Here are some tips for scanning or otherwise providing electronic copies of documents: 

1. A common error is not sending the back side of a document. Especially with brokerage statements, documents are often double sided and would require you to scan the backside of a page along with the front. 
2. Please make sure to send ALL pages of a document you receive. Some pages might not appear important but sending them anyway can prevent them from having to be requested. Those unimportant pages might also end up having information needed to take a deduction. Brokerage statements are a common example of a situation where helpful information is found in the last remaining pages of the document. 
3. Portrait view is preferred as long as it doesn't make the document too small to be able to be read. 
4. Blurry or out of focus images/documents will need to be requested from you again. Double checking the quality of the image or document before sending it can save a lot of time and headache for everyone.