Help me price this 1041

Some background:

Client is a "retail" client of several years. Just family 1040 taxes, kids in college, some DIV and Interest income, occasional EZ schedule D. Very easy. Nice, easy going family.

They have a "legacy rate" of about $400 - which does not officially include off-season support.

(This also does not include the adding of receipts of any kind. Clients must fill out our worksheets or provide summed up expenses for itemized deductions.)

I don't mind the low-ish price, it's a bread and butter retail 1040 client. A fine way to make a living.

1041:

This year the parent's trust gives a K1 to the taxpayer's trust, which is not a revocable living trust and for the first time requires it's own tax return. There is one item on the K1 which is about $1000 of income in box 14 with code B. The statement says "Passive income, Various".

I'm not sure yet if the taxpayers trust distributes this income to beneficiaries and requires K1s, or of the trust pays it own tax on it - but that should be easy to figure out.

Normally I charge $600 for a simple trust tax return because they usually have stock trades, a sale of a property, or one or two rental properties again, no bookkeeping or looking at statements of any kind at this rate).

But this one is more simple than that and I like the clients.

Do you charge the $600 here? Do you discount it to $400 because it is basically a shell of a 1041 with one simple item?

What do you do with these simple returns?

Simple returns for great clients get discounted. I make sure to note it on the invoice.

Charge the $600 and see if they ask about it?
Most people generally have no idea what goes in to preparing a tax return.
Your rate is your rate. They are getting the legacy rate on the 1040 already.
Similar to your other business lines of service, your rates are made up of the time it takes you now, but also the years of experience and knowledge that got you to the point that you can do it quickly and easily now.

$400 is too cheap. It is my current minimum and I am bumping it up to at least $600 for even the most basic of 1040s and 1041s. That said, I think my cheapest 1041 has been $450 for a friend, and it was only filed for statute of limitations purposes with zero activity.

Second lowest was $500 for final year of an estate that had very modest interest income and extremely clean records. Otherwise, I am always at $1k+ or more because I personally find them a bit of a PITA and riskier than 1040s, 1120S, etc.

If a client asked about 1041 pricing, I would just tell them the cost of software is driving the price. We do 30 or so 1041’s to absorb the cost of the 1041 software compared to 900 1040’s to cover the cost.

So even a 1041 with one 1099 Div has to be charged a premium. We use ProFx which is not cheap

Why play the discount game? We do not track time but some clients like seeing a discount on the bill so we make up a total charge number and then a discount number. It means nothing. But you would be doing the same if you bumped the 1041 price up just to discount it.

I would just keep in mind that bill you are struggling with, some other firm is billing twice that and not batting an eyelash. So even your $600 is fair to the clients

I would start by pricing the 1040 and 1041 as if they were a brand new client. You may find your 1041 fee for a brand new client would be over $600, even for a simple 1041. Then take the 1041 price and decide how much you want to discount it. On the invoice show the gross "arms-length" amount with a good client discount to come to your net fee. I think that presentation sets the tone and avoids future confrontation on the fee. Otherwise, the client may feel $400-600 is too much. If they realize you could be working for someone else for $800-1,000 for the same work, I think they'll be a lot more humbled and grateful.

I totally agree with this:

Otherwise, I am always at $1k+ or more because I personally find them...riskier than 1040s, 1120S, etc.

Even a simple 1041 isn't like a simple 1040. At least, not to me yet. Anyone can do a simple 1040 without too much risk. Not everyone should do a simple 1041.

Not everyone should do a simple 1041.

Myself included.

I have taken courses and passed the exam, but I have very little "mentored" experience with them.

I'm taking a very involved course right now - and keeping my nose in it all off season.

It's a real dilemma for me as many clients have simple 1041 tax return needs and a client can reasonably expect that I can handle these peripheral needs.

But this one I can handle, and based on the responses, I think I'm going with $750 with a $200 discount.