How to choose which tax clients to accept late in the season: capacity and deadline math
Short answer: accept the set of engagements whose combined fee, less direct costs, is highest and that you can still finish by their filing or extension deadlines with the hours you really have. Hours before a deadline are the scarce thing, so a well-paid return can be a bad choice if it takes the hours two better ones needed.
A worked queue
Ten late-season engagements, one preparer giving the queue 6 hours of real work per business day. Fees run from $275 for a W-2-only 1040 to $1,400 for a multistate C-corp return that takes 16 hours; each row has the business day it must be done by (the filing or extension deadline). The numbers are illustrative, not typical fees.
Accepting requests in the order they arrived fits 4 clients and earns $2,990 net: it takes engagements in arrival order until the larger, better-paying ones no longer fit.
Biggest fee first fits 3 clients and earns $3,360: it takes the $1,400 C-corp return and the $1,300 trust return, then adds the amended-return project and has no hours left for anything else.
Best net per hour first fits 7 clients and earns $3,278: many small wins that crowd out the two big engagements that pay more together.
The best set accepts 5 clients (41 hours) and earns $3,555 net, or $86.71 an hour. That is $195 more than the best simple rule.
Five clients are turned down. The Schedule C 1040 would earn a place at a fee of about $485 (it pays $425), the partnership return at about $810, the C-corp return at about $1,470, the W-2-only 1040 at about $347 and the late-filer catch-up at about $425. Those are the fees to quote those clients instead of the fee on offer.
What to feed it
Hours: the whole engagement, from document intake through preparation, research, review and client questions. Track a few finished returns to calibrate this.
Hours per day: what you can truly give the queue after existing clients, notices, admin and the unexpected.
Direct cost: per-return software or e-file fees, a reviewer's pay, filing fees you absorb. Not your own time.
Due day: business days from today to the filing or extension deadline you are working to, where 1 means the end of today. An extension only moves a deadline if it is filed on time, and it does not extend time to pay.
Check your competence for each return type, your credentials and PTIN or EA authority, due-diligence requirements, Circular 230 and professional standards, and your engagement-letter terms first: some require you to take or decline clients for reasons the arithmetic cannot see, and work you can do competently, with proper due diligence, comes before any optimum. Do not paste taxpayer names or identification numbers; use engagement labels.
Questions
How do I decide which late-season tax clients to accept?
Compare whole queues, not single clients: a set is deliverable when, for every due day, the hours of the engagements due by then fit in the hours you have by then. Of all deliverable sets, the best is the one with the highest total fee less direct cost. The picker finds it exactly for up to 16 engagements.
Is taking the biggest fee first a good rule?
Not reliably. A big engagement often takes the hours two good ones needed before the same deadline. On the worked queue it earns $3,360 against $3,555 for the best set.
What should a client pay to be worth taking?
The picker prints, for each client it turns down, the fee at which the best set would include it. That is the number to quote that client, or the number to quote the next time the same kind of late-season return arrives.