How Much Do People Charge to Do Taxes?

The cost of professional tax preparation varies considerably for individuals and businesses. This common inquiry lacks a singular, fixed answer because numerous variables influence the final price. Understanding these factors can help taxpayers anticipate expenses and make informed decisions about their tax filing needs.

Key Factors Influencing Tax Preparation Costs

The complexity of a tax return significantly impacts its preparation cost. Returns involving itemized deductions, such as mortgage interest, medical expenses, or charitable contributions, generally incur higher fees than those claiming the standard deduction. Diverse income streams like investment income, capital gains or losses, and dividends also increase complexity.

Self-employment income, reported on Schedule C, or rental property income, detailed on Schedule E, adds substantial layers to a return, leading to increased preparation time and cost. Reporting foreign income or assets, or needing to file returns in multiple states, also elevates the complexity and associated fees. Each additional form or schedule beyond the basic Form 1040 contributes to the overall expense.

The quality of financial records also determines the fee. Well-organized and complete documentation can reduce the time a preparer needs to compile the return, potentially lowering costs. Conversely, disorganized or incomplete records may result in higher fees due to the extra effort required to sort through information. Seeking last-minute tax preparation services close to the filing deadline may lead to additional surcharges.

Types of Tax Preparation Services and Their Pricing

Various options exist for tax preparation, each with distinct pricing models. Do-it-yourself (DIY) tax software offers tiered pricing, ranging from free for simple returns to higher costs for complex situations involving itemized deductions, investments, or self-employment. While these options can be cost-effective, they require users to have tax knowledge and dedicate personal time.

Walk-in tax preparation services, provided by national chains, structure their fees with a base charge for the federal return, plus additional costs for state returns or specific forms. These services are accessible and provide upfront pricing. Enrolled Agents (EAs) are federally licensed tax practitioners authorized to represent taxpayers before the IRS. They offer mid-range pricing, with average fees for moderately complex returns falling between $400 and $600.

Certified Public Accountants (CPAs) are state-licensed professionals with a broader scope of expertise in accounting and taxation. Their fees are higher, ranging from $400 to $600 for moderately complex returns and $800 to $1,500 or more for highly complex scenarios, including small business filings. CPAs may charge hourly rates, which can be $150 to $400 per hour, or flat fees depending on the services provided. Tax attorneys specialize in complex legal tax matters and disputes, and their services command the highest fees, ranging from $200 to $550 per hour or flat fees for specific services, such as $2,000 to $10,000 for IRS audit representation.

Understanding What Your Fee Covers

A standard tax preparation fee includes the preparation of the federal tax return, Form 1040. This also covers the completion of necessary accompanying schedules, such as Schedule A for itemized deductions, Schedule B for interest and dividends, Schedule C for business income, Schedule D for capital gains and losses, and Schedule E for rental income. Electronic filing (e-filing) of the federal return and a basic review for accuracy are also part of the service.

However, several services incur additional charges. Preparing state tax returns is a separate fee for each state required. Other common add-ons include assistance with local tax filings, audit assistance or representation before tax authorities, and comprehensive tax planning or advisory services. Fees may also apply for preparing amended returns (Form 1040-X) for prior years, ranging from $200 to $1,500 depending on complexity, or for resolving IRS or state tax notices. Taxpayers should request an itemized statement to understand the specific services and charges included in their total fee.

How to Obtain a Tax Preparation Quote

To receive an accurate estimate for tax preparation services, gather all relevant financial documents beforehand. This includes income statements like W-2s and 1099s, investment statements, and summaries of business income and expenses. A copy of your prior year’s tax return provides the preparer with valuable context for your financial situation.

When contacting potential preparers, ask specific questions about their fee structure. Ask about the base fee for federal returns, any charges per form or schedule, and the cost for preparing state returns. Clarify if e-filing is included and their policy regarding audit support or handling IRS correspondence. Also understand payment terms and acceptable methods.

Obtain quotes from two to three different tax preparers or services to compare pricing and the scope of services offered for a similar tax situation. Reputable preparers provide an engagement letter or service agreement outlining the agreed-upon services and associated fees before beginning any work. Be cautious of any preparer who guarantees a specific refund amount or bases their fee on a percentage of your refund; these are red flags. A preparer who refuses to sign your tax return should be avoided.