What Is the Typical Tax Return Cost?
The cost to prepare and file a tax return is on the minds of all taxpayers. After all, that cost reduces any anticipated refund or is simply another expense on top of a payment to the government. The answer depends on whether you intend to hire an expert to prepare your taxes or are considering relying on a software program and your own expertise. In general, the simplest returns are the least expensive. Consider the following information to help decide how to prepare and file your tax return.
Who’s doing the tax preparation? Generally speaking, the more experienced and qualified the tax preparer, the more the return will cost. That, of course, assumes that similar returns are being compared. The normal hierarchy starts with a tax preparer or worker with a franchise company near the low end of the spectrum. Enrolled agents and then tax accountants will generally be on the higher end of the scale.
How complicated is the return? A taxpayer with his or her records generally in hand who requires only a 1040EZ return will not be charged as much as someone with a 1040 return that includes deductions, for example. The more complications, the higher the tax preparation cost. A taxpayer who has a business on the side or who has a number of investments or who has bought or sold homes during the year, for example, would be even more expensive.
What are some typical fees? According to the National Society of Accountants, the typical fee for a professional to prepare an itemized Form 1040 with Schedule A and a state tax return was $273 in 2015, though fees vary by region, from $198 in the Midwest to $348 on the West Coast. Business forms are more costly than personal forms, for instance, $174 for a Schedule C business or $778 for an S corporation. The average hourly fee for representation in an audit: $144. Present your tax preparer with incomplete and disorganized files and you’ll face an average extra charge of $114 to straighten out the mess.
What should I expect from my tax preparer? In a word: more. The accountants group found that taxpayers who regularly go to the same tax preparer or agent can expect their bill to increase by a set percentage every year, generally regardless of whether their return was more complex than the previous year.
Ask about costs in advance. Because tax preparation costs can vary so widely, it’s wise to ask in advance so there are no surprises. Some tax professionals will charge a certain fee for a particular tax form or schedule. Others may offer a minimum fee and then add charges depending on the number of forms and schedules that must be filled out. Still others charge an hourly fee based on the length of time required to complete the tax return. Despite the many differences, most tax professionals should be able to explain enough about their pricing policies so a taxpayer will have at least an idea of the final tax bill in advance.
Tax software programs. All of the leading tax programs embed their software with helpful tips and advice, and many also offer access to online chat, so that taxpayers looking to save money can do their own return. If your return is simple – meaning you can use the federal 1040EZ form – you should be able to find a free program to use. All of the leading companies, including TurboTax, H&R Block and eSmart Tax, offered free access to tax preparation and tax filing in 2015. If your return is a little – or a lot – more complicated, expect to pay between $24.95 to $54.99 for a family return with itemized deductions and $59.95 to $104.99 for business returns or returns that include rental property – based on 2015 information. Remember that you may choose to purchase a tax software program to help you get all the information together and then bring in a tax preparer at that point.