Tax Preparation Prices and Fees
Tax professionals have a variety of ways they use to set prices for preparing tax returns, so it can be a little like comparing apples to oranges when you re looking for the best deal. As a general rule, prices increase as your financial situation and your tax return become more complex.
Pricing Methods Used by Tax Preparers
If you re comparing different tax professionals or accountants, you can ask up front how the firm determines its prices.
You can also ask for an estimate of what their services might cost you, but you probably won t get an answer, at least not until you ve met with the professional to go over your tax issues. Some accountants do offer free consultations.
Without having first met with you, however, the firm would have to base its number on your summary of your situation, which may or may not provide an accurate picture. After all, you probably wouldn t be seeking a professional s services if you were exceptionally savvy about tax matters.
Some of the methods used by tax professionals to set prices include:
- A set fee for each tax form or schedule
- A fee based on last year s fee plus an additional fee for any changes in a client s tax situation
- A minimum tax return fee, plus an additional fee based on the complexity of the client s situation
- A value-based fee based on the subjective value of the tax preparation service
Average Tax Preparation Fees
The CPA Practice Advisor says that you should expect to pay an average of $273 in the 2017 filing season if you want to itemize your deductions on your tax return. Before you gulp, you can take some comfort in knowing that this generally includes both your state and federal returns.
The average fee drops to $176 if you don t itemize, which tells you something about how complicated and time-consuming itemizing your deductions can be.
Be prepared to pay more if you show up for your appointment with receipts stuffed haphazardly in a cardboard box, or if you re missing one or more important tax documents like that 1099 you received for interest income you earned during the year.
If your tax situation isn t very complicated, you can save considerably by purchasing tax preparation software instead. These programs have evolved considerably over the years and are set up to ask you specific questions then prepare your return based on your answers and data you input. Prices start as low as $29.99 for the H R Block and TurboTax programs for 2016 returns. There may be an extra cost for preparing state returns.
Find Out What s Included in the Tax Preparation Fee
Some firms, especially franchise chains like H R Block, charge an extra fee for audit protection. You re basically prepaying for any costs you d incur if the Internal Revenue Service decides to shine a spotlight on your tax return. Find out what s included with your initial fee if your return is audited, and what happens if the mistakes called into question were made by the preparer and were no fault of your own.
How to Negotiate a Fair Price
If you are searching for the lowest price, call various tax preparation firms and get a feel for their price ranges. The business might not be able to give you an exact price quote, but they should be able to quote you either an average price or a price range for your tax situation.