Millions of personal and business tax returns will be filed within the next three months. Some filers will opt to use online tax software, while others will seek the professional assistance of a CPA or Enrolled Agent. If you decide to use a tax professional, how much should you expect to pay in fees? A new survey provides some key pricing figures that we should all review.
What does an accountant offer their clients?
Before we review pricing, it’s important to understand the services that an accountant offers their clients. In most cases, CPAs and Enrolled agents do not just provide tax preparation, bookkeeping, payroll and other related services to their clients. Rather, they are trusted personal and business advisors that can offer strategic consulting guidance to their clients. A properly filed tax return is really the bear minimum of what they offer their clients. Having said that, complex tax returns require the services of a CPA or Enrolled Agent. Online tax software providers such as TurboTax, TaxAct & H&R Block online are recommended for those that have simple tax returns.
Is it affordable to hire a tax professional?
Yes. According to a new study conducted by the National Society of Accountants (NSA), it costs on average $246 to hire a tax professional to prepare an itemized personal tax return, which includes a state tax return. If the taxpayer is just claiming the standard deduction, the average cost is only $143. You may be asking yourself how $246 is affordable when you compare that to online tax software programs that are usually less than $50 for federal returns. That’s true, software programs are less, but don’t forget that many of them also charge a fee for state returns. For instance, if you filed with TurboTax, each state tax return currently costs $36.99. Therefore, the $50 for the federal plus the $36.99 for the states puts you at $86.99. Yes, still cheaper than the average price to hire a tax professional, but there’s other factors to consider. First, the tax professional will undoubtedly be able to offer you advice and consultations that simply aren’t available with a software program. Second, you don’t have to spend any time filing out forms online if you choose to use a tax preparer. Third, you have piece of mind that a CPA or Enrolled Agent prepared the return and thus holds some responsibility for it. Fourth, those figures of $246 for an itemized federal return and state return or $143 for a simple return, are only averages. There are many tax preparers that offer services below these rates. Many of the accountants in our network can attest to that as detailed in their tax service offerings.
What about different types of tax returns and services?
As you might expect, the survey indicated a wide range of average prices for different type of services. For instance, the average fee to prepare a 1040 and simple business form – Schedule C is $205, but a more complex business return such as a form 1065 or 1120 can cost $556 and $759 on average. Most accountants offer these services with a one hour free consultation with an average value of $100.
If you’re wondering how the pricing in your area compares to the rest of the country, the survey provided details. Surprisingly, those in the Pacific states (AK, CA, HI, OR, WA) can expect the highest fees at $288, followed by the East South Central states (AL, KY, MS, TN) at $279, followed by the Mid-Atlantic states (NY, NJ, PA) at $258 and then the South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) at $253.
More tax questions? Browse answers or ask 2012 tax questions online. You can also find accountants online here.
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