How much does tax preparation cost?

How much you’ll pay for tax preparation help will vary based on many different factors, such as where you currently live, your income and if you own property, a business or investments. Ultimately, your expenses will be determined by how complicated your situation is — and how much tax preparers in your area charge for their services. 

Depending on your income, tax-filing status and the forms you need to file, your expenses will vary. To give you a more in-depth look at how prices can vary, here are the average fees for various tax forms, according to the most recent available data from the National Society of Accountants.

Tax preparation fees, 2018 federal tax returns:

Some professionals have hourly fees, set fees or minimum fees based on how complex your income tax return is. 

Whether you will be charged hourly or pay a set fee depends on your preparer. Some professionals will charge you a flat fee for each specific form they must file for you, and they should give you the rates for those forms ahead of time. Other preparers will talk to you and get an idea of what they think filing your taxes will require and provide you with a set fee upfront.

Finally, some tax preparers will give you an hourly rate and charge you for each hour they used in preparing, calculating and filing your taxes. Here are the average hourly rates for individual tax preparation services:

Hourly tax preparation fees:

Here’s a look at common pricing methods professionals have used, according to the National Association of Tax Professionals. 

Tax preparation fee pricing methods:

Other factors that may affect how much you’ll pay for tax preparation services include:

• The type of professional: There are many types of preparers you may choose to work with. Working with a preparer who is a CPA or tax lawyer may be more expensive than working with a bookkeeper or other preparer.
• The preparer’s experience: If they’re just starting their career, they may keep their fees lower to gain more clients.
• The complexity of your situation: Do you own a business, a house or a rental property? Do you itemize your tax deductions or take the standard deduction? Often, the higher your income, the more complex your taxes may be, so the cost of filing your return could depend on how much work the preparer must do.
• Your state: The fees you find may be lower in certain states or parts of the country.
• The time of year: Most returns are due on April 15 of each year. However, the deadline has not always been April 15 in previous years.  In 2020, the tax deadline for individual income tax returns has been pushed back to July 15 due to the COVID-19 outbreak. As the deadline approaches, preparers in your area might get busier and busier. If that’s the case, it might not be unusual to see higher fees if they have to fit you in right before the deadline.

Your preparation fees should include the electronic filing of both your state and federal returns. In most cases, this fee will also include suggestions on which tax deductions you may claim, as well as which credits you may qualify for.

Preparers should also help you identify which forms you need. However, as mentioned above, the price you are told may include a fee for each form. 

Some preparers might also communicate with the IRS on your behalf or correct mistakes they made on your return, covering any fees you may owe because of their error. 

Examples of items that may not be included in the fee are reviewing returns prepared by other professionals and changing previously filed returns — unless this was due to the preparer’s mistake.

A tax preparer is someone who will prepare, calculate and file your taxes. In some cases, the preparer can represent you if you’re facing an audit or if other problems arise. Some have a strong accounting background, while others may be very familiar with the law.

In short, a person who prepares taxes can have different roles and be known by different titles, such as:

Certified Public Accountant (CPA)

These professionals have passed an exam in their state, which qualifies them in accounting, and they must meet certain ethical standards of practice. A CPA not only prepares and files your tax return, but he or she may also help you with maximizing tax refunds and deductions for future returns. They might also help with other accounting needs you might have, and help you plan your financial future.

Tax attorney or lawyer

After completing their education and passing a state exam, attorneys may choose to specialize in different areas, including tax preparation and filing. A tax attorney may be especially helpful when there are complicated cases or you suspect you may need to legally defend yourself against the IRS or state tax department.

Enrolled agent

These agents are licensed by the IRS directly, and have passed a comprehensive exam that qualifies them in tax planning and preparation. These agents also must complete continuing education every three years to hold onto their license.

The professionals listed above may represent you when talking to the IRS, and this could be helpful or -- in complicated cases -- necessary. 

Other professionals, such as bookkeepers, consultants or advisors, may also be very knowledgeable or experienced in preparing and filing your return. However, they might have a few limits on being able to represent you. 

Keep in mind that anyone who has applied and been granted a Preparer Tax Identification Number (PTIN) may file on your behalf. However, they cannot represent you when talking to the IRS.

Remember that it is important to choose your tax professional wisely. Reading the reviews and checking the credentials of preparers in your area may help you find the professional that is best for you. 

Yes, in some cases it is worth it to hire a professional to do your taxes. This is especially true if you have a complicated tax situation, you own a business, you have numerous investments or you need to file several state returns. But, if your taxes are fairly simple, you may be able to file taxes by yourself. 

The bottom line: Getting your taxes done right is important and can save you money in the long run. If you’re not confident you won’t make any mistakes, consider hiring a qualified preparer near you.

Signs you need a professional to do your taxes

You may decide that you’re comfortable doing taxes on your own and are confident that you can get it right. But if any of the below situations apply to you, you might want to consider hiring a professional:

• You are unsure about the financial benefits of filing as married or married filing separately.
• You work from home or as a freelancer and are unsure of what to claim as a legitimate business expense.
• You have a large income.
• You recently purchased or sold a home, or you have rental properties.
• You have several other assets such as artwork, large savings or retirement accounts.
• You itemize your deductions.
• You have been audited previously.

The above situations highlight just a few examples of when a preparer may be in your best interest.

Benefits of hiring a professional to do your taxes

There are many benefits to working with a professional tax preparer, such as:

• Peace of mind: Knowing that a trained professional is working on your taxes can be a source of stress relief.
• Support: If you are audited, your preparer should work with you on reviewing the return that was filed and assisting in any corrections or explanations.
• Maximized refunds, deductions and credits: The professionals understand the tax code and are familiar with what credits you can claim.
• Answers to your questions: When you file on your own, you are left to find the answers on your own. Working with a CPA, enrolled agent or another experienced tax preparation expert allows you to tap into their knowledge.

The government has some helpful tips on choosing a qualified preparer to work with you on your taxes, such as checking their qualifications, asking about service fees, asking if they offer e-filing and making sure they’re available. The agency also has a database where you can check on your preparer’s qualifications. 

Here’s a quick guide on how to make sure you find the most qualified professional to help you with your taxes: 

• Check their credentials and qualifications. Are they an accountant? A CPA? Did they take the appropriate accounting courses? Are they an enrolled agent? Or are they an attorney? Take the time to research their history and background so you can trust they'll provide exceptional service.
• Ask for referrals. Asking for referrals and speaking to those referrals directly can inform you how easy it is to work with the preparer and if they completed their returns accurately. 
• Read online reviews. Keep in mind that experiences are very personal, and one person’s bad experience may not truly indicate that you should not work with the professional. However, if you see a trend of bad reviews for that preparer, you might want to choose a different one.
• Ask if they’re a member of any professional organization. Perhaps they belong to the National Association of Tax Professionals. You might want a preparer who meets certain standards and appreciates continuing education.

If they refuse to provide referrals or a copy of their certifications, or if you cannot find them listed in the IRS directory, then you might want to consider hiring someone else.

Once you've found someone to help you complete your taxes, come up with a checklist so you and your accountant (or lawyer) are prepared. Preparing for your appointment will make completing your tax return a smoother process, possibly reduce your preparation costs and ensure that you provide your tax professional with all of the items they will need to file your taxes accurately.

Here's a checklist of some documents you might want to gather to help you get organized:

• Any proof of identity documents, such as your legal IDs, driver’s license, green cards or authorization to work permits, as well as your Social Security number and card. Don't forget to grab the appropriate document for your spouse and dependents, too.
• Individual Taxpayer Identification Number (ITIN) if you are assigned one as a non-resident or resident alien
• All documents that show your wages or other earnings, including W-2 forms, 1099 forms, interest received from savings and other bank accounts, Social Security earning statements (an SSA-1099 form), lottery winnings, and any other assets that have added to your income or paid dividends
• Any documents or receipts for charitable giving and itemized expenses, such as home office expenses
• Receipts for daycare expenses and college tuition
• Your bank account and routing number if you want to receive any refunds electronically
• It may be helpful to have a copy of last year’s returns on hand

When you're contacting a professional, ask them if there are any other items you should add to your checklist before meeting with them.

For more helpful tips, read our guide on how to file taxes.

Here are some commonly asked questions about hiring a professional to prepare and file your taxes.  

Do tax preparers need to be licensed?

No, anyone who has been issued a Preparer Tax Identification Number (PTIN) from the IRS may file taxes on your behalf.

Do I need a CPA to do my taxes?

You can use a CPA to file your income tax returns, but other professionals may also do this for you. If you already have an accountant, ask them what fees they charge to prepare your return.

Can you claim the cost of tax preparation?

No, you cannot deduct the cost of tax preparation as an individual taxpayer. Self-employed taxpayers may still be able to claim these fees.

How long does it take an accountant to do a tax return?

This will vary based on how simple or complicated your situation is and what tax forms the preparer will need to file. If you’re worried about not meeting the deadline, ask your prospective accountant how long it might take. 

How easy is it to do your own taxes?

If you have an uncomplicated situation, you may be able to file your taxes on your own using the various types of tax software. You must be able to comprehend the instructions on your form and under which tax documents you need to complete your taxes.

However, if you own a house, property or business, or have a large number of assets, you may benefit from hiring a CPA or other type of preparer.

Is it free to file taxes?

If you choose to file taxes on your own, you may use the IRS Free File program at no cost (however, you must meet certain qualifications).

You might have the option to file your state return for free. Try using the IRS Free File Online Lookup Tool for more options.

Where can I ask tax questions for free?

The IRS has Local Taxpayer Assistance Centers available to help you. To find your local center, please visit this webpage. The IRS also assists with specific questions through its website.