What Is the Average Price to Do Taxes?

The cost of tax preparation varies significantly, reflecting the unique financial situations of individuals and businesses. Understanding the factors that influence these fees, the different types of services available, and what is typically included in a preparer’s charge can help taxpayers make informed decisions.

Key Factors Determining Tax Preparation Costs

The complexity of a tax return is a primary determinant of its preparation cost. A straightforward individual tax return, like a Form 1040 with a standard deduction and W-2 income, generally incurs the lowest fees. More intricate financial situations increase the time and expertise required, leading to higher costs.

Various income streams introduce additional complexity. For instance, self-employment income (Schedule C), investment income (Schedule D), or rental property income (Schedule E) necessitate more detailed calculations and form preparation, contributing to a higher overall fee.

The number and intricacy of deductions and credits claimed also influence pricing. Itemizing deductions requires compiling and verifying various expenses, which is more time-consuming than taking the standard deduction. Claiming various tax credits or dealing with foreign income considerations can add layers of complexity. Geographic location can also play a role, with preparers in metropolitan areas typically charging more due to higher living costs and demand.

The need for multiple state filings significantly impacts the total cost. If an individual lives in one state but earns income in another, or moves during the tax year, they may be required to file returns in several states, with each additional state return often incurring a separate charge. Disorganized or incomplete financial documents can also lead to higher fees, as preparers may charge extra for the additional time needed to sort and process information.

Understanding Different Tax Preparation Services and Their Pricing

Several avenues exist for tax preparation, each with distinct pricing models and service levels. Do-it-yourself (DIY) tax software offers a cost-effective solution for many taxpayers. Basic versions of these software programs can be free for simple federal returns, especially those with only W-2 income and standard deductions. However, prices can increase if additional forms, such as those for investments or self-employment, or state tax filings are required. DIY software typically ranges from $20 to $100, depending on the features and complexity supported.

Non-CPA tax preparers, often found at storefront tax services, offer professional assistance at a moderate price point. These preparers may be suitable for individuals with relatively straightforward tax situations. While they provide more hands-on help than DIY software, they may not have the same level of expertise or credentials as Certified Public Accountants or Enrolled Agents. The average cost for a basic tax form preparation, including a standard Form 1040 and state return with no itemized deductions, is around $220.

Certified Public Accountants (CPAs) are licensed professionals who offer a broad range of tax services, including preparation, planning, and audit support. Their fees are generally higher due to their extensive training and expertise. For individual tax returns, CPAs might charge $200-$300 for simple filings, $400-$600 for moderately complex returns with itemized deductions or investment income, and $800-$1,500 or more for complex situations involving small businesses or foreign income. CPAs may charge flat fees for standard services or hourly rates ranging from $150 to $400 for more complex cases or consulting.

Enrolled Agents (EAs) are federally licensed tax practitioners who specialize in taxation and have unlimited practice rights before the IRS, meaning they can represent taxpayers on any tax matter. They undergo rigorous testing on tax law and are required to complete continuing education. While specific average costs for EAs are not as widely published as for CPAs, their pricing is competitive and reflects their specialized knowledge in tax matters.

Components of a Tax Preparation Fee

A tax preparation fee typically covers the foundational aspects of filing an income tax return. This usually includes the preparation of the federal tax return, primarily Form 1040. Many services also bundle the preparation of a single state tax return into their base fee, though this can vary. Electronic filing (e-filing) of both federal and state returns is a standard inclusion.

Beyond these basic services, various items can incur additional charges due to their added complexity and the extra time they demand from the preparer. For instance, preparing a Schedule C for self-employment income or a Schedule F for farming income typically adds to the cost. Similarly, a Schedule D for reporting capital gains and losses from investments, or a Schedule E for rental property income, also adds to the cost. The average additional cost for a Schedule C can be around $192, while a Schedule D might add $118, and a Schedule E about $145.

Handling multiple state filings is almost always an additional charge, with fees often ranging from $30 to $100 per additional state, depending on its complexity. Amended returns, filed using Form 1040-X to correct previously submitted tax information, are also typically billed separately. These can cost anywhere from $50 to $300, particularly if the original return was not prepared by the current tax professional. Some preparers also offer audit support services, which may incur additional costs.