Tax Preparation Costs and Fees

Elizabeth Rosen
by Elizabeth Rosen, Contributor

 

The costs associated with professional tax preparation can be considerable, depending on how much assistance you need. However, using a tax preparation service does give you the advantage of having a tax professional point out the various tax credits and tax deductions you are eligible for. Additionally, you may even have the extra benefit of being able to deduct the tax preparation fees themselves.

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The Cost of Tax Preparation

Recently, the National Society of Accountants (NSA) conducted a survey which showed that the average cost of professional tax preparation is $261. This is price that most tax preparers will charge for a 1040 Tax Form with itemized deductions (Schedule A) plus a state tax return.

On the other hand, the cost of getting a simple 1040 Form (without itemized deductions) prepared by a professional averages around $152.

The NSA survey also looked at the average costs of having a professional prepare various other types of tax forms, and found the following information:

  • The average cost for preparing a 1040 (Schedule C) Tax Form is $218
  • The average cost for preparing an 1120 Tax Form (C corporation) is $806
  • The average cost for preparing an 1120S Tax Form (S corporation) is $761
  • The average cost for preparing a 1065 Tax Form (partnership) is $590
  • The average cost for preparing a 1041 Tax Form (fiduciary) is $497
  • The average cost for preparing a 990 Tax Form (tax-exempt organization) is $667
  • The average cost for preparing a 940 Tax Form (Federal unemployment) is $63
  • The average cost for preparing a Schedule D (capital gains and losses) is $142
  • The average cost for preparing a Schedule E (supplemental income and loss) is $165
  • The average cost for preparing a Schedule F (farming) is $196

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While the cost of tax preparation may not sound appealing, keep in mind that a professional tax preparer can often catch credits or deductions that you may have missed — saving you money that can pay for the cost of the tax preparation! Additionally, you should consider the time it would take to prepare your income tax return yourself. Just having to read through the instructions and understand all the IRS rules can take you hours! For a lot of people, this alone makes the cost of professional tax preparation worthwhile.

Finally, remember that certain taxpayers qualify to use the IRS Free File system. If your Adjusted Gross Income (AGI) is $58,000 or less, you can file your Federal income tax return using a participating Free File Alliance company. (See the IRS website for a list of approved companies.) Keep in mind, each participating company has its own requirements and not all taxpayers may be eligible for all companies.