The real cost of hiring a tax preparer

If a tax professional catches even one deduction or credit a taxpayer would have missed, it can easily justify the cost.

Robert D. Flach
by Robert D. Flach, MainStreet contributor

NEW YORK (MainStreet) — The National Society of Accountants reports that the average cost of hiring a tax professional to prepare your Form 1040 with a Schedule A and state tax return is $246. Rates for non-itemized returns are also low, as the average cost to prepare a Form 1040 and state return without itemized deductions being only $143.

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If a tax professional can catch even one deduction or credit a taxpayer would otherwise have missed, it can easily pay for the tax preparation fee.

This information is a result of the society’s biennial survey of tax preparers. The tax and accounting firms surveyed were largely owners, principals and partners of local “Main Street” companies with an average of more than 26 years of experience.

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The survey also reported the average fees for preparing other tax forms:

  • $205 for a Form 1040 Schedule C (sole proprietor)
  • $556 for a Form 1065 (partnership)
  • $759 for a Form 1120 (corporation)
  • $717 for a Form 1120S (S corporation)
  • $468 for a Form 1041 (estate or trust)
  • $628 for a Form 990 (tax exempt)
  • $59 for a Form 940 (federal unemployment)
  • $134 for Schedule D (gains and losses)
  • $155 for Schedule E (rental)
  • $185 for Schedule F (farm)

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As one would expect, fees vary by region, firm size, population and economic strength of an area. The average fee for a Form 1040 with Schedule A and a state tax return in the various sections of the U.S. are:

  • $237 in New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont)
  • $258 in the Middle Atlantic (New Jersey, New York and Pennsylvania)
  • $253 in the South Atlantic (Delaware, the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia)
  • $279 in the East South Central (Alabama, Kentucky, Mississippi and Tennessee)
  • $226 in the West South Central (Arkansas, Louisiana, Oklahoma and Texas)
  • $225 in the East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin)
  • $196 in the West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota)
  • $233 in the Mountain area (Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming)
  • $288 in the Pacific area (Alaska, California, Hawaii, Oregon and Washington)

Nearly 90 percent of firms surveyed offer prospective clients a free initial consultation. And 60 percent do not require payment until returns are completed and clients are satisfied.

These fees assume a taxpayer has gathered and organized all necessary information. The less organized the client, the greater the fee.