As the year comes to an end, tax season is getting ready to begin. To get you into the mood of thinking about taxes, the IRS recently announced that they will begin accepting personal returns starting on January 31st, 2014. Some tax filers may 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 recent survey conducted by the NSA provides some guidance as to what you can expect.
What services does your accountant provide?
It’s important to understand the services that your accountant offers. 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 advice to their clients. A properly filed tax return is really the bear minimum of what they offer their clients.
Still, complex tax returns require the services of a CPA or Enrolled Agent. Online tax software providers such as TurboTax, TaxACT, & H&R Block online maybe helpful for those that have simple tax returns.
How much does it cost to hire a tax professional?
According to a new study conducted by the National Society of Accountants (NSA), for the 2013 tax year it costs on average $261 to hire a tax professional to prepare an itemized personal tax return, which includes a state tax return. The fee is up 6.1% as compared to the $246 average a year ago. If the taxpayer is just claiming the standard deduction, the average cost is $152 vs. $143 a year ago or up 6.3%. You may be asking yourself how $261 is affordable when you compare that to online tax software programs that are usually less than $13-$75 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 $45 average fee for the federal return plus the $36.99 for the state puts you at $81.99. Yes, it is still cheaper than the average price to hire a tax professional, but there are 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 completing 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 $261 for an itemized federal return and state return or $152 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 you can submit a request here to file your taxes online and receive quotes from multiple tax professionals.
What are the fees for 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 $218 as compared to $205 a year ago or up 6.3%. A more complex business return such as a form 1065 or 1120 can cost $590 and $806 on average vs. $556 and $759 a year ago or up 6.1 . 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. Those in the Pacific states (AK, CA, HI, OR, WA) can expect the highest fees at $303 vs. $288 a year ago, followed by the East South Central states (AL, KY, MS, TN) at $294 vs. $279 a year ago, followed by the Mid-Atlantic states (NY, NJ, PA) at $274 vs. $258 a year ago and then the South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) at $270 vs. $253 a year ago. The New England states (CT, ME, MA, NH, RI, VT) were at $251, the West South Central (AR, LA, OK, TX) states were at $242, East North Central states (IL, IN, MI, OH, WI) were at $238, the West North Central states (IA, KS, MN, MO, NE, ND, SD) were at $208, and the Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) states were at $245.
More tax questions? Browse answers or ask 2013 tax questions online. You can also find accountants online here.
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