⚠️ These complexity level definitions are subject to change as services evolve.
🩶 Level 0 — OCR Returns
Best for: Simple individual returns OR
Typical scenarios include:
W-2s
1099-INT/DIVs
etc
In plain terms:
Great for filling out basic forms on the way to completing a larger, more complex return
🟢 Level 1 — Essential Returns
Best for: Most individual returns with common income and deductions.
Typical scenarios include:
Standard 1040 with wages and itemized deductions
Mortgage interest, property taxes, and charitable donations
A few stock sales or basic investment activity
One Schedule C (small business) or Schedule E (rental)
HSA/MSA, child care, or education credits
In plain terms:
If your client has a straightforward tax situation — one business or rental, and a few standard deductions — this is almost always Level 1 (Essential).
🟡 Level 2 — Advanced Returns
Best for: Clients with multiple income types, activities, or states.
Typical scenarios include:
Multi-state or part-year resident filings
Several K-1s (1065, 1041, 1120S) or K-3s
Rentals, self-employment, or small business income (QBI)
Complex 1099-B investment activity
Stock options or carryovers
In plain terms:
If your client owns rentals, runs a small business, or has several K-1s, this is Level 2 (Advanced) — returns with “a lot going on” that need extra review.
🔴 Level 3 — Ultra-Complex Returns
Best for: High-net-worth or international clients needing specialized review.
Typical scenarios include:
Multiple entities, trusts, or holding structures
Foreign income, FBAR, or international filings
Alternative Minimum Tax (AMT) or complex carryovers
Non-resident returns or multi-country interactions
In plain terms:
If your client has many entities, international income, or complex cross-border reporting — it’s Level 3 (Ultra-Complex).