How Much Does Professional Tax Preparation Cost?

Engaging a professional to prepare and file income taxes is a common decision for many Americans. People seek these services to handle complex financial situations, maximize refunds, or save the time and stress of navigating IRS regulations. The primary benefit is the assurance that a specialist will report all income correctly and apply all eligible deductions and credits, which is valuable for those with multiple income sources or significant life events.

Average Tax Preparation Fees by Preparer Type

The cost of professional tax preparation varies significantly based on the type of provider chosen. For those handling their own return, DIY tax software offers a spectrum of options. Many platforms provide free versions for simple returns, while paid tiers for more complex situations involving investments or self-employment can range from $50 to over $200, with additional fees for state filings.

National tax preparation chains are a common choice for in-person assistance and typically charge based on the forms required. A basic federal return (Form 1040) with a standard deduction might cost around $220, while a return that requires itemizing deductions on Schedule A could average closer to $323.

Many turn to independent tax preparers, such as local accounting firms or Enrolled Agents (EAs), who are federally licensed tax practitioners. These professionals often handle moderately complex returns and may charge hourly rates between $150 and $400 or offer flat-fee packages. Their expertise is valuable for small business owners or individuals with varied investment portfolios.

Certified Public Accountants (CPAs) are best suited for complex situations like business ownership or intricate investments. A CPA’s hourly rate typically ranges from $150 to $400, and the average cost for a sole proprietorship filing a Schedule C is between $300 and $700. A standard individual return prepared by a CPA can fall in the $200 to $300 range, with fees increasing based on complexity.

Key Factors That Determine Your Final Price

The price of tax preparation is tied to the complexity of your finances, which dictates the time and expertise required. A primary factor is the nature and number of your income sources. A straightforward return with a single Form W-2 is the least expensive, while freelance income (Schedule C), investment sales (Schedule D), or rental property income (Schedule E) increases the cost.

Your choice of deductions also affects the fee. Opting for the standard deduction is a simple process, but if you itemize deductions on Schedule A to write off expenses like mortgage interest, state taxes, and medical costs, the preparer must perform more detailed work. The average fee for a return with itemized deductions is higher because of this.

Significant life events during the tax year can also affect the cost. Getting married or divorced, having a child, or purchasing a home all have tax implications that require specific handling. For example, new parents may need to navigate the Child Tax Credit, while a home purchase involves deducting mortgage interest and property taxes.

Your state filing requirements can influence the price. Filing a tax return in a single state is standard, but if you earned income in multiple states, each additional state return will add to the final bill. Preparers often charge a separate fee for each state filing, which can range from $50 to $150 depending on that state’s tax laws.

Understanding What is Included in the Fee

The fee for professional tax preparation covers a bundle of services. The core service is the preparation of your federal and any necessary state income tax returns, ensuring all income, deductions, and credits are properly reported.

The fee includes the electronic filing (e-filing) of your return with the IRS and state tax authorities. E-filing is the standard method and often results in faster processing of refunds. After filing, the preparer will provide you with a complete copy of the filed return for your records.

Many professionals offer a degree of year-round support, meaning you can contact them with tax-related questions that may arise outside of tax season. This is helpful when making financial decisions with tax consequences.

Some preparers also include or offer audit support as part of their fee. This can range from responding to basic IRS inquiries to full representation, though full representation is often an add-on service. More comprehensive services from CPAs or EAs may also include proactive tax planning to help optimize your finances for the following year.

Information Needed to Get an Accurate Quote

To receive an accurate price quote from a tax professional, you must provide a clear picture of your financial situation, which often starts with your previous year’s tax return. You will need to gather all documentation related to your income and deductible expenses.

• Personal information for yourself, your spouse, and any dependents, including full names, dates of birth, Social Security numbers or ITINs, and any IRS-issued Identity Protection PIN (IP PIN).
• A complete accounting of your income, supported by all relevant tax forms such as W-2s, 1099-NEC, 1099-MISC, 1099-INT, 1099-DIV, and K-1s.
• Records of expenses you plan to deduct or use for credits, such as Form 1098 for mortgage interest, property tax bills, and receipts for charitable contributions or medical expenses.
• Documentation for childcare expenses or educational costs, such as Form 1098-T.