What Is the Average Cost for Someone to Do Your Taxes?

Tax preparation costs are fees charged by professionals or software for preparing and filing your income tax returns with the IRS and state tax authorities. These fees cover calculating your tax liability, identifying applicable deductions and credits, and submitting necessary forms. Costs vary significantly based on your financial situation and tax complexity.

Understanding Average Tax Preparation Costs

For a straightforward return, such as an individual Form 1040 with only W-2 income and the standard deduction, the average cost typically falls between $200 and $300, including a state return. This basic filing covers common scenarios without complex investments or business activities.

Returns with itemized deductions, reported on Schedule A (Form 1040), generally incur higher fees. The average cost for a Form 1040 with itemized deductions and a state return is around $323. This accounts for the additional time and expertise needed to categorize and report deductions like mortgage interest, state and local taxes (SALT), and charitable contributions.

For taxpayers with investment income, such as capital gains or dividends, costs also rise. Reporting these on forms like Schedule D adds to the overall fee. Individuals with self-employment or small business income, reported on Schedule C, face higher preparation costs, averaging around $192 for Schedule C alone. Businesses filing more complex forms, like Form 1120 for corporations, can expect average costs closer to $913.

Returns requiring additional forms for specific situations, such as rental property income (Schedule E), foreign income (Form 2555), or trust income (Form 1041), will also increase the preparation fee. For instance, preparing a Schedule E for rental income averages about $145. Complex returns can range from $300 to $800 or higher, depending on the number of intricate forms and schedules.

Key Factors Influencing Pricing

A return with multiple income sources, various deductions, or a combination of tax credits requires more time and expertise to prepare accurately. For example, individuals with self-employment income must track all business revenues and expenses to complete Schedule C, which adds to the preparer’s work.

State tax returns also contribute to the overall cost. If you reside in a state with an income tax, or have income sourced from multiple states, the preparer must complete additional state-specific forms, increasing the fee. Each state has its own tax laws and forms, adding layers of work beyond the federal return.

The organization and completeness of a client’s financial records directly impact preparation time and cost. Preparers may charge more if they spend significant time sorting through disorganized receipts, bank statements, or other financial documents. Providing clear, categorized records can help minimize these additional charges.

Fees for services beyond basic preparation also influence pricing. Tax planning, which involves strategies to minimize future tax liabilities, is an additional service with its own fees. Audit support, where the preparer represents you during an IRS audit, and prior-year amendments for correcting previously filed returns, are separate services incurring additional costs. Geographic location also plays a role, with tax preparation costs generally higher in major metropolitan areas due to increased operational expenses.

Different Tax Preparation Service Options

Individuals have several tax preparation options, each with varying cost structures. Do-it-yourself (DIY) tax software, such as TurboTax or H&R Block Online, is generally the lowest cost option. Prices typically range from free for simple returns up to $100 or more for complex situations. These platforms guide users through the filing process with prompts and calculations.

Online tax preparation services connect users with remote preparers, offering a middle-ground cost option. These services provide professional assistance without an in-person visit, often priced between DIY software and traditional in-person services. They offer convenience and more personalized guidance than self-service software.

Local or independent tax preparers, including Certified Public Accountants (CPAs) and Enrolled Agents (EAs), typically command higher fees due to their specialized expertise and personalized service. CPAs often charge hourly rates from $150 to $400, or flat fees depending on return complexity. These professionals offer in-depth advice and can handle highly complex tax situations.

National tax preparation chains, such as H&R Block or Jackson Hewitt, operate storefronts and offer standardized pricing for various services. Their costs usually fall within the mid-to-high range, balancing accessibility and professional support. They often have tiered pricing based on the forms required for your return.

Choosing a Tax Preparer

When selecting a tax preparer, obtain a detailed fee estimate upfront. You should ask for a clear breakdown of all charges and understand what services are included in the quoted price. This transparency ensures there are no unexpected fees after the work is completed.

Understanding the scope of services covered by the fee is also important. Clarify whether the quoted price includes federal and state returns, e-filing, or potential audit support. Some preparers may charge extra for specific forms, such as Schedule C for business income, or for amendments to previously filed returns.

Checking the preparer’s qualifications and experience is a practical consideration. Look for credentials such as a Certified Public Accountant (CPA) or Enrolled Agent (EA), which indicate professional competence and adherence to ethical standards. Ensure their experience aligns with your specific tax situation, such as expertise in small business taxes or investment income.

Finally, assess the preparer’s communication style and accessibility. Consider how they will communicate with you regarding your tax documents and any questions you may have. Knowing their availability for follow-up questions throughout the year can also be a helpful factor.