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

Professional tax preparation services offer a valuable resource for individuals navigating complex tax regulations. While seeking professional assistance often stems from a desire for accuracy and efficiency, a common initial question revolves around the associated costs. Understanding the factors that influence these fees helps taxpayers make informed decisions about their filing needs. This article provides clarity on the typical expenses involved in engaging a tax professional.

Key Factors Influencing Tax Preparation Costs

The cost of professional tax preparation is not fixed; it is shaped by several interconnected factors. The primary determinant is the complexity of the tax return itself. A return requiring numerous forms and schedules, such as those involving self-employment income (Schedule C), rental property income (Schedule E), or significant investment activity (Schedule D), incurs higher fees than a straightforward return based solely on W-2 income. Each additional financial element or transaction adds to the preparer’s time and expertise required.

Geographic location also plays a significant role in pricing. Tax preparation services in areas with a higher cost of living, such as major metropolitan centers, command higher fees compared to those in less expensive regions. This reflects varying operational costs for businesses across different locales. The specific type of professional selected, whether an individual practitioner or a larger firm, further influences pricing, with larger firms often having higher overheads reflected in their rates.

Timing impacts the cost. Engaging a tax professional closer to the tax deadline, particularly in the final weeks leading up to April 15, results in higher fees due to increased demand and potential rush charges. Conversely, providing documents well in advance of the deadline often leads to more favorable pricing. The organization of a client’s financial documents also affects the preparer’s time investment; well-organized records reduce the time spent sorting and categorizing, potentially lowering the final cost.

Typical Costs Based on Tax Return Complexity

The average cost of tax preparation services directly correlates with the complexity of an individual’s financial situation.

Simple Tax Returns

For a simple tax return, involving only W-2 income and the standard deduction, the average fee ranges from $200 to $300. This includes the preparation of Form 1040 and any necessary state income tax returns. Such returns do not involve itemized deductions or other income sources.

Moderate Tax Returns

Moderate returns, which include itemized deductions (Schedule A), common tax credits (such as the Child Tax Credit or education credits), and basic investment income, incur higher fees. The average cost for these returns falls between $300 and $600. For instance, a Form 1040 with Schedule A and a state income tax return averaged $323. The inclusion of additional schedules, like Schedule D for capital gains and losses or Schedule E for rental income, increases the overall fee.

Complex Tax Returns

Complex returns, encompassing elements like self-employment income (requiring Schedule C), multiple rental properties, significant or diverse investment activities, foreign income, or partnership income reported on K-1s, command the highest fees. These returns range from $800 to $1,500 or more, depending on the number and intricacy of the forms required. For example, individuals whose returns necessitated Schedules A, C, D, and E paid an average total fee of $778. Business entity returns, such as those for corporations (Form 1120 or 1120-S) or partnerships (Form 1065), start at $700 and often exceed $1,000, reflecting the extensive detail and specialized knowledge needed for their preparation.

Types of Tax Preparation Services

Various types of professionals and programs offer tax preparation services, each with distinct qualifications and service scopes.

Certified Public Accountants (CPAs)

CPAs are licensed professionals with a broad range of expertise beyond tax preparation, encompassing accounting, auditing, and financial planning. They undergo rigorous education and examination requirements, including 150 hours of higher education and passing the Uniform CPA Exam, and are licensed by state boards of accountancy. CPAs are sought by individuals and businesses with complex financial situations due to their comprehensive knowledge.

Enrolled Agents (EAs)

EAs are federally authorized tax practitioners who specialize exclusively in taxation and are licensed directly by the IRS. Their expertise lies in tax law, and they possess unlimited rights to represent taxpayers before the IRS in matters such as audits, appeals, and collections. While CPAs offer broader financial services, EAs are highly knowledgeable in tax-specific issues, making them a suitable choice for intricate tax matters.

Commercial Tax Preparation Firms

Commercial tax preparation firms, such as national chains, provide accessible services for a wide range of taxpayers. These firms cater to individuals with less complex returns, offering convenience and standardized pricing structures. Their preparers have varying levels of certification, with some holding professional credentials while others focus on basic return preparation.

Free Tax Preparation Programs

For individuals with low to moderate incomes, the Volunteer Income Tax Assistance (VITA) program offers free basic tax return preparation. This program serves individuals who make $64,000 or less, persons with disabilities, and limited English-speaking taxpayers. Similarly, the Tax Counseling for the Elderly (TCE) program provides free tax help, specifically for those aged 60 or older, with a focus on pensions and retirement-related issues. Both VITA and TCE sites are staffed by IRS-certified volunteers who complete annual tax law training and adhere to strict ethical guidelines.

Understanding What Fees Cover

When engaging a professional for tax preparation, the fees cover a defined set of services, ensuring the accurate and timely filing of tax returns. The standard fee includes the preparation of both federal and applicable state income tax returns. This encompasses all necessary forms and schedules relevant to the client’s financial information for the current tax year.

Electronic filing, or e-filing, is included in the overall cost, providing a secure and efficient method for submitting returns to the Internal Revenue Service (IRS) and state tax authorities. Professionals also provide basic tax advice or consultation pertaining to the current tax year’s filing. This involves discussions on potential deductions, credits, or filing strategies directly impacting the return being prepared.

A professional’s fee includes assistance with minor inquiries from the IRS or state tax agencies related to the prepared return. This support covers responding to routine notices or clarification requests. However, more extensive services, such as comprehensive tax planning for future years, representation during an IRS audit, or the preparation of amended tax returns for prior years, incur additional fees. These services require significant additional time and specialized expertise beyond the scope of a standard tax preparation engagement.