As the April 15th tax filing deadline readily approaches, you may be scrambling trying to gather all of the necessary documents needed to complete your tax return. And once you do have all your paperwork collected, you may be scratching your head, confused as to how you should prepare your tax return.
One way to ensure you properly file your income tax return is by seeking help from a professional tax preparation service. Tax preparation services offer many benefits and may save you time, money, and dreaded headaches. However, tax preparation services aren’t free. The cost of tax preparation services often varies depending on a variety of factors, such as location, complexity of your return, and how many tax forms you need to be completed.
As you sit down and contemplate whether you should do your taxes by hand or with a tax preparation service, take a look at this brief guide on the cost of tax preparation services.
- How much does it cost to file taxes?
- What factors affect how much tax preparation services cost?
- What options do I have for preparing my taxes?
- Why should I use a tax preparation service?
- Key takeaways on the cost of tax preparation services
How much does it cost to file taxes?
According to the National Society of Accountants 2016-17 NSA Income and Fees of Accountants and Tax Preparers in Public Practice Survey Report, the average cost of basic tax preparation services costs $176.
This price includes the cost of a federal tax return with no itemized deductions, as well as a state tax return. However, the cost of tax preparation services varies. Some tax preparation service providers will charge hourly, others will charge by workload, and others may have a fixed price.
It may be difficult finding the exact costs of tax preparation services without reaching out to an accounting firm yourself. However, the same report issued by the NSA surveyed firms across the country to find average tax preparation costs.
The average fees firms charged customers to prepare IRS tax forms go as follows:
- Individuals filing Form 1040 (non-itemized) with a state tax return: $176
- Individuals filing Form 1040 with Schedule A and a state tax return: $273
- Filing Form 940 for federal unemployment: $69
- Farms filing Form 1040 with Schedule F: $180
- Those with rental real estate filing Form 1040 with Schedule E: $135
- Businesses filing Form 1040 with Schedule C: $184
- Corporations filing Form 1120: $826
- S Corporations filing Form 1120S: $809
- Partnerships filing Form 1065: $656
- Fiduciary filing Form 1041: $482
Additionally, the cost of tax preparation services varies greatly on location. The NSA’s biennial survey found the following tax preparation costs for filing an itemized IRS Form 1040 and Schedule A, along with a state tax return, for the various geographic regions in America:
- If you live in any New England state (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont), expect to pay an average of $333.
- If you live in any Pacific state (Alaska, California, Hawaii, Oregon, Washington), expect to pay an average of $329.
- If you live in any Mid Atlantic state (New Jersey, New York, Pennsylvania), expect to pay an average of $290.
- If you live in any West South Central state (Arkansas, Louisiana, Oklahoma, Texas), expect to pay an average of $271.
- If you live in any South Atlantic state (Delaware, Washington, D.C., Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, West Virginia), expect to pay an average of $268.
- If you live in any Mountain state (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming), expect to pay an average of $263.
- If you live in any East North Central state (Illinois, Indiana, Michigan, Ohio, Wisconsin), expect to pay an average of $249.
- If you live in any West North Central state (Iowa, Kansas, Minnesota, Montana, Nebraska, North Dakota, South Dakota), expect to pay an average of $214.
- If you live in any East South Central state (Alabama, Kentucky, Missouri, Tennessee), expect to pay an average of $210.
What factors affect how much tax preparation services cost?
As previously stated, the cost of tax preparation depends on a host of factors. Along with the geographic region in which you live, tax preparers will also have different prices depending on a variety of other factors. These factors include:
- The complexity of your tax return: As you can tell from the NSA report, it costs almost $100 more ($97 to be exact), to file a tax return form with itemized deductions using Schedule A. That’s because preparing a tax return with itemized deductionsrequires more time and effort.
Itemizing your deductions allows you or your business to write off certain eligible expenses to have less taxable income. However, the 2017 Tax Cuts and Jobs Act almost doubled the standard deduction, which may mean you won’t have to file your income tax return with Schedule A.
- Multiple returns: Some taxpayers may only need to file their 1040 Form. However, other taxpayers may have multiple tax returns to file. For example, you may have forgotten to file a previous tax return and the IRS is knocking at your door. If this is the case, your tax preparer will often charge more money because it requires more time.
- Timing: Timing may also affect the price your tax preparer charges you. For example, if you’re filing at the last minute, the tax preparation service you use may charge a rush fee so you don’t miss the deadline.
What options do I have for preparing my taxes?
When it comes to preparing your yearly taxes, there are a few avenues you can take. These avenues include doing your taxes by hand, using an online service, using an online tax preparation service, or going to a tax consultant. Depending on your needs, tax savviness, and budget, one of these options may be right for you:
- Doing taxes by hand: Doing taxes by hand is by far the cheapest option, as you can use the IRS free file to file your income tax return.
One of the downsides, however, is that if you have any questions or need help, you may have to wait for hours to speak to a service representative. You might also end up making an error on your tax return that can potentially lead to an audit.
- Doing taxes online: Another option to help prepare your taxes is using an online tax software. A lot of online tax software is affordable, fast, and user friendly. However, for those with more complicated returns, such as business owners or those claiming certain exemptions, deductions, and credits, an online tax program may become complicated.
- Using an online tax preparation service: A tax preparation service, such as Community Tax, are online tax services with certified tax consultants that can work with you in real-time, as you enjoy the comfort of your own home.
Online tax preparation services can be more expensive than a simple online tax software. However, the extra cost ensures you have an accurate tax return that’s delivered on time.
Online tax preparation services can be more expensive than a simple online tax software. However, the extra cost ensures you have an accurate tax return that’s delivered on time.–>
- Going to a tax consultant: The last tax preparation option you can choose is going to a tax consultant in person. This option provides the most convenient communication, as you work with the consultant face-to-face to complete your tax return. However, if your tax consultant is a tax attorney or a certified public accountant, you may face an expensive bill once your return is completed and filed.
Why should I use a tax preparation service?
If you want peace of mind knowing your taxes were correctly filed, a tax preparation service is the way to go. At Community Tax, our tax preparation services blend together online tax software with real-life tax certified professionals to provide you with top-quality service.
The cost of tax preparation services is more than worth the investment. Keep yourself out of hot water with the IRS and take advantage of Community Tax’s competitive tax preparation pricing. We charge less than our competitors while pairing you with more seasoned professionals, so you get more bang for your buck.
And we don’t just provide tax preparation services. Depending on your situation, we can also provide all-in-one tax solution services by combining tax preparation services with tax resolution, accounting, and tax assurance services.
Key takeaways on the cost of tax preparation services
Preparing taxes is never easy. Sometimes you may be missing a document. Other times you may have no clue what the IRS is asking. And other times, you may not have the time to itemize your deductions, sort through your paperwork, and calculate your expenses. We get it. Taxes can be stressful, and sometimes expensive, depending on how you file and where.
The cost of tax preparation services varies due to numerous factors, from complexity to volume and location to the time of year. At Community Tax, our certified professionals are here to help put your worries at bay so you can get the most out of your tax return this year. All you have to do is give us a call, send us a live chat, or provide us with your information so we can contact you.