What’s the average cost of tax preparation?


​Written by: Dan Gilbert
•5 min read
In a Nutshell When it’s time to file your federal income tax return, you have many options. Costs vary for tax preparation and filing help, from professional tax preparers to free tax filing software. Here’s what you should know about your options and how much each costs.

Should you use free tax-filing options to prepare and file your own taxes, or should you pay someone to do them for you? And if you do pay, how much?

The average cost of having a professional prepare a federal Form 1040 income tax return for the 2021 tax season was nearly $200 for the simplest returns, according to the National Society of Accountants. And the more complex your tax situation, or the more forms you need to file, the higher the cost can run.Let’s look at how much it could cost to pay someone else to do your taxes, and what your options are if you choose to save money by going DIY.

How much might it cost to have a professional prepare your tax returns?

According to the National Society of Accountants’ 2021 Income and Fees Survey, the average tax preparation fee for a tax professional to prepare a Form 1040 and state return with no itemized deductions is $188. Itemizing deductions bumps the average fee by more than $100 to $294.If your financial situation is a bit more complex or requires filing additional IRS forms, other fees could apply and add up. Here are some average filing charges by form, according to the National Society of Accountants.
  • $187 for Schedule C, for business income
  • $109 for Schedule D, for gains and losses
  • $136 for Schedule E, for rental income
  • $175 for Schedule F, for farm income
  • $65 for Form 940, for federal unemployment
  • $49 for Form 8965, for health coverage exemptions
  • $52 for Form 1095-A, for health insurance marketplace statement
And if you have to file an estate tax return on behalf of a deceased taxpayer, the average cost for preparing the form is $1,784. Considering that generally only estates worth more than $11.4 million are required to file an estate tax return, it may seem fair for tax professionals to charge more to prepare these complex forms.But keep in mind some lower-income individuals must also pay more to file a tax return if they want to claim the federal earned income credit, a refundable tax credit designed to benefit workers with low to moderate income. On average, they’ll pay an additional $62 to file Schedule EIC, which helps them claim the credit — for an average total cost of $250 to file their federal and state returns, using the standard deduction, and claim their credit.

Do I have to pay someone to do my taxes?

Many Americans lean heavily on professionals to do their taxes. Paid tax preparers filed about 59% of the more than 134.2 million individual income tax returns e-filed in 2018, according to the IRS. Keep in mind that number doesn’t include paper returns or more-complex returns like ones for estates, trusts or tax-exempt organizations, so the actual percentage of returns done by paid preparers is probably higher.Here are some points to keep in mind if you’re debating whether to use online tax preparation software or shoulder the cost of tax preparation by a professional.

Advantages of AmeriTax USA KY tax preparation

  • Affordable: Many online tax preparation services offer to file your basic federal tax return for free. However, they may charge a fee if you have a business or investments, if you want to file a state return or need to complete and file certain other tax forms along with your personal 1040 tax return or your Partnership, Corporation tax return.
  • Faster:

    Advantages of working with a tax professional

    • Personal touch: Some people prefer working with another human when going through a complicated process like a tax return. This may be especially beneficial if your financial situation is complex.
    • Year-round advice: If you work with the same tax professional each year, that person is available throughout the year to give advice based on your specific situation.
    • May offer IRS help: If you end up getting audited, a tax professional may be able to assist and possibly even mediate with the IRS on your behalf.

    Bottom line

    Even basic tax return filing can cost hundreds of dollars when a professional does your taxes. It’s important to weigh the value of professional tax preparation against the cost. You may not have to pay for tax return preparation if you don’t want to, especially if your returns are fairly simple. Free online tax preparation software may be able to guide you step by step through the tax filing process to help you avoid mistakes and maximize any refund.As you prepare to file your taxes for the year, consider all your options and go with the one that makes the most sense for your financial situation.Relevant sources: Form 1040| About Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship) | About Schedule D (Form 1040), Capital Gains and Losses | About Schedule E (Form 1040), Supplemental Income and Loss | About Schedule F (Form 1040), Profit or Loss From Farming | About Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return | About Form 8965, Health Coverage Exemptions | About Form 1095-A, Health Insurance Marketplace Statement | About Schedule EIC (Form 1040 or 1040-SR), Earned Income Credit
    Dan Gilbert is senior manager of tax operations for AmeriTax. He has more than 50 years of experience in tax, accounting and business operations. Dan founded his own accounting consultancy and managed it for more than 40 years. He co-developed an online DIY tax-preparation product, serving as chief operating officer for 14 years. He holds a Master’s Degree in Accounting an MBA from the University of Louisville (Kentucky). You can find him on LinkedIn.