As CPAs everywhere are burning the midnight oil, the National Society of Accountants (NSA) released the results of their 2009-2010 Fee Survey of nearly 8,000 tax preparers, which showed the average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return to be $229. The average cost to prepare a Form 1040 and state return without itemized deductions is only $129.
Here’s a link to the full press release. The costs varied by geographic region, with the highest being the Pacific (AK, CA, HI, OR, WA).
They also listed the average fees for preparing other tax forms:
• $212 for a Form 1040 Schedule C (profit or loss from business)
• $551 for Form 1065 (partnership)
• $692 for Form 1120 (corporation)
• $665 for Form 1120S (S corporation)
• $415 for Form 1041 (fiduciary)
• $2,044 for Form 706 (estates)
• $584 for Form 990 (tax exempt)
• $58 for Form 940 (Federal unemployment)
If you used an accountant, how do you compare?
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Thank god for online DYI. Cost=$0
Mine was $450 for Form 1120S (S corporation).
This is my 4th year with this accountant and he has me properly trained. It was $1,500 the first year because I did my books wrong! 😉
M
I wish I knew – still waiting for my tax return to submit and the final bill.
i clearly paid more. but i don’t mind since my accountant always gets me a larger return than i estimated on my own.
I’ve paid from $300 – $800 varying with the year’s complexity. I do my taxes on my own at the same time, as a challenge, and my CPA consistently gets a bigger refund (by more than the fee, so it’s like he costs nothing).
$0. Did it myself. Although I had business income and some capital gains my tax return is still pretty easy to prepare.
I know some people say they use accountants because they do not have the time, which is fair enough to say. But some people say they use them because they usually get a bigger return than themselves doing it. To be honest, I’ve been doing my taxes myself for the last 10 years with pirated copies of TurboTax. I have a mortgage, car , credit cards, and retirement accounts. I get some dividends from banking accounts and etc. But I don’t have extra money to invest outside of retirement accounts. So I’m pretty ok with doing my own taxes. I hate paying to submit my state taxes electronically. But if you know your tax bracket, exemptions and the concept of doing your taxes – you should be ok doing them yourselves. I think people are ripping themselves off with accountants. The only way I would use an accountant is if I had own my business and had things depreciate to better calculate losses and other gains for tax purposes. I would believe most accountants do their job good to well. Then the one percentage that do their job with excellence. I work with computers so an analog might be someone who attempts to clean your computer with third-party anti-malware/spyware/virus tools and say they fixed your computer. Or myself, who would explain what happened and what not to do on the internet. Then reinstall your OS, install tools and explain that you need to keep these tools up to date. Finally, making sure you’re not logged into your computer as an Administrator so every nasty thing you download can not make system wide changes.
I attended a General Accepted Government Auditing Standards (GAGAS) class two years ago. One of the other attendees was an IRS agent. He says the IRS loves TurboTax, because it is always wrong. Intuit had to demonstrate that an “experienced CPA” could get the right answer using TurboTax 90% of the time. Meanwhile MOST TurboTax filings are wrong. If you underpay, the IRS will collect the difference. If you overpay, well, the IRS has no obligation to tell you that. Yes, the IRS just loves people who do their own taxes using TurboTax.
About $2 for postage and printing. It’ll cost me a bit more because I made a small mistake and the state still owes me $18. Still that’s a lot less than the cost of the mistakes when I’ve had professionals do it.
If you are confused by taxes it’s a good idea to get some help. However, I have used Turbo Tax online for many years and am exceptionally happy with it. I think it costs around $70 for us. You do have to go through the Q&A process and make sure you understand the questions. Do it slowly and surely, and make sure you’re putting in what’s expected. Very important.
Since I have done taxes myself, no problems with the IRS. I had H&R Block do them one time and they screwed it up.
I’m a CPA and I have to say that the majority of self-prepared tax returns I see have not been prepared correctly and I can usually find tax savings that would cover my fee.
Did it myself using home-made Excel spreadsheets, so my dollar cost was zero but I feel like I paid dearly in terms of time.
Any advice from anyone regarding the best DYI software? I don’t like the idea of having to pay for a new software package every year b/c of tax law changes.
Thanks
Did it myself using TaxAct online. It’s the best software I have used
I had the first time home buyer credit and some capital gains. Did 1040 with standard deductions.
Paid $17.95 (because I had to print and mail my returns in) + $1.83 for postage.
@ NewFitOwner – TurboTax online is free.
@ everyone else – For the vast majority of people taxes are simple enough to do on your own, and I refuse to pay money to get a return on money that is owed to me.
$270.00 for 2 state Tax and 1 1040A form with schedule A.
$900 for my CPA. worth every penny
Good reason for a flat tax. Just multiple your income by a percent. It is ridiculous that you have to pay someone a couple hundred dollars to a few thousand complete your return.
There are estimates that if we went to a flat tax, the rate would only need to be 11-13% to match our current tax revenues. Imagine what a boost that would be to our economy.
@Kevin: You pay with time or you pay with money. I prefer to pay with money. My taxes are fairly simple, but the tax code is complex enough that there is a fair chance I will miss an exemption. Having my taxes prepared has saved me time and probably money, but more importantly, it gives me piece of mind that if the IRS comes calling I will have the person who prepared my taxes there to represent me.
$230 for Federal and State. (about 75 pages)
My CPA charges $600 for my S-corp return, and about $800 for my personal return (which includes a pass-through LLC with real estate holdings).
For the past two years, I noticed errors in his preparation that would have cost me about an extra $500 in taxes each year, so I fired him and attempted on my own this year.
So far, I’ve only done the S-corp return via TurboTax for business ($125 or so), and as I learn more about the process, I’ve noticed even more errors in my CPA-prepared returns. Naturally, I’m really upset about this. Fortunately, they were not errors that would affect the bottom line.
Next up are the personal returns. I’ve already started filling the info into TurboTax. The personal returns are the ones I’m really worried about. My s-corp had simple returns.
So far, I’ve been through 2 CPAs before having a go using TurboTax. Not not really sure it’s taking me much more time to do it on my own, given how much effort I had to put into preparing all the info for the CPA.
We pay only $75 for federal and state.
Yes, we have only W-2 and 1099-INT, very simple. If we used local someone here in California, the cost would be, say $150 at cheapest.
We use an EA in MO whom my husband known for a long time.
She is very good, fast as long as we send her documents in time and cheap.
I know how to file myself and always estimate tax before we send her, and her return is better every year. Can’t beat pro and her price.
Interesting, the MINIMUM fee my cpa firm charges is $300 for a 1040 w/o deductions and $500 with itemized deductions.
Used father in law’s copy of turbotax. Cost to us: $0. Each copy of turbotax comes with 5 free federal e-files. so no cost on federal e-files. Just typed my stuff into the online state filing website and filed state for free without going through turbotax.
Mine Cost me $30.00 on taxact.com and I had it in 8 days!
@Ryan: Please do not discuss pirated copies of software here. Let’s keep MyMoneyBlog a legal place to come and discuss finances. I work with computers, too, as a software engineer. If I were a software engineer for Intuit, I’d be livid that someone pirated the software that I make my livelihood on.
Shame on you for discussing theft so nonchalantly!
Woo hoo! I paid about half this and the poor guy even had to redo them after we got a bunch of statements from funds we’d forgotten we had.
I used TaxAct free version this year and was very impressed with the thoroughness of the questions they ask. Very simple to understand. Then did the CA state return directly on the CA tax board website $0.
In the past when we had our self-employment income, there was such a huge difference in CPA prices per region. We worked in NYC, Seattle, and San Diego. Oddly enough the price was VERY cheap in NYC (Staten Island. $150!! great service too). Seattle and San Diego were around $550 for sub-par quality. Strange because Seattle and San Diego aren’t exactly in the same echelon as NYC.
I live outside the US, and pretty much the only service I get for my paid taxes is a local US consulate. My tax return for 2009 required 5 schedules and 9 forms for a total of 37 pages. The cost to have a person specialized in preparing US returns for American living outside the US was close to $1,500.
I believe the US, along with North Korea are the only countries in the world that tax their non-resident citizens.
$0. I never have to pay for someone to file my tax. I used turbotax this year. When I was a poor student, I took my W-2 to local tax filing place, they will file it free for student.
@Jon: Fair enough, since I have learned alot from your site in the last 3 years about personal finance. Thank you. Anyways, we wouldn’t want Intuit calling your web hosting provider and shutting your account down again. 😉
@Ryan: I’m not the same Jon that runs the site ;). I should probably pick a different nickname to avoid confusion.
Am I the only one who uses FreeFileFillableForms.com? Completely free for Federal (including efile), and no annoying ‘upgrade’ ads after every filled in answer. For State I had free help from a state run tax office for the first two years, and since then it’s been easy.
I don’t itemize, but I do have stock sales and dividends to deal with. I must say it took me quite a bit of time to work out how to handle these, and I am still not 100% sure it’s all correct. But I also doubt some H&R Block temporary employee woud get those right – I’ve heard too many bad stories on sites like this one.
It frustrates me that I have a Ph.D. and I still don’t understand the few parts of the tax code I have to deal with. Why is it that for a lot of (financially savvy) commenters an accountant still gets a higher return? Something is really wrong about that.
Interesting replies. I am a California CPA.
pogo nails it on the head. I was reading the comments and thinking taxes are very regional. So it’s hard to compare prices across the States. Tax returns can be much more expensive to prepare in California because there is such vast non-conformity between Federal and California income tax laws. Examples? CA does not recognize HSAs as a tax shelter. It’s not tax-deductible for state, and then the income on a HSA IS taxable for state. You get the picture. A state conformity bill was expected to be passed this week, actually. The IRA inflation limits weresn’t even the same (what a PITA) but that might be corrected this week. Stuff like that. Throw in community property laws, which make filing separately as a married couple, pretty complicated.
I think there are 2 reasons to hire a tax preparer – both covered well in the comments. First, if you really just dislike it and value your time. Secondly, I always tell my clients that we should save them more than we cost them. & I don’t mean solely in terms of paying in less taxes when comparing a do-it-yourself return to a professionally prepared return. I also mean as far as less errors made and less IRS whoas if you just hire a professional.
As with anything, a bad professional is worse than doing it yourself.
Oh yeah – I do my own taxes – cost me $0.
@Jon: That was my fault. Jon (the site admin/owner) replies are in green. But I didn’t have my coffee yet and it didn’t click in my head, you were not him. If I had noticed, I would of ignored you. Thanks and have a great weekend.
Put $100 in a StateFarm.com online bank and they provide FREE Federal + State tax return via TurboTax (deluxe edition even, bc i have schedule A, D, dividends + capital gains in my taxes).
I have had this account for years and keep it for two reasons: it saves me $70 per year filing taxes and they refund ATM fees. I keep about $400 in the account for these two purposes.
So this year and every other, I pay $0. You could too!
@ian, I think I misclicked something and my post didn’t seem to show up. Anyway I did some checking and found that the first 25000 customers are good for the free deluxe. I’ll be using Premier next year anyway before I go back to deluxe (premier has helped me get close to maxing out my contributions to my 457b while keeping the same check I got. Plus because I took the Bush First-Time Homebuyers Credit, I’ll be paying $500 starting next year until I sell the house (or stay there for 15 years but it’s doubtful).
http://www.statefarm.com/landing/turbo_tax_09.asp
It cost me $20 (turbo tax deluxe, 35% off using Bank of America referral from BoA web site)
I paid $17 for Taxact. I ended up paying close to $1000 this year. And I don’t mind, because I make quite a lot for my age. But one thing that I really don’t get is:
How are these CPAs getting huge refunds for people?
I have seen the tax return of my gf’s for example and they just list education credits/gift/charity/un-reimbursed job related expenses/etc. None of these should apply really. Are these people and the CPA’s just taking a big risk? They don’t have the receipts or anything to back up these claims.
A lot of people justify the $250+ expense of the CPA with the fact that they get a larger refund. But this seems really risky with the fact that if they audit you, you are on the watch list not to mention the penalty + back-taxes + interest payments.
Do most people just think it’s worth the risk?
Thanks for the website suggestions… I ended up using Tax Act online & learned that I had previously missed a credit & made a mistake on my Excel-generated returns.
Another good reason to abolish the IRS and the Federal Income Tax. Too bad we don’t have more Congressman Ron Paul’s.
The tax system is a fraud anyway. Congress spends more than it takes in, and the Federal Reserve creates money backed by nothing anyway for ever bigger government so why pay this?
i tried turbotax online but i didn’t get it. so i paid $120 to get it done. Worth it. i lived in 2 different states so i think i definately needed someone to do it for me. Worst part is owing MD. This state taxes the “blank” out you if you’re single w/o dependents. It almost sux to be middle class and educated on top of that. Someone told me buying a house might help. On 2nd thought, i shoulda withdrew some money from my CDs and invested in the Roth IRA.
I’m a paid tax preparer, OK yeah I have a vested interest in the story I am about to tell but, since I am not saying whom I work for , or where I work, I hope you will believe this story.
Man came into the tax office with a letter from the IRS, he had done his return on the best selling software. The letter said he owed $400 for his 2008 return, I looked it over and at first I saw a glaring error the IRS missed, so I dug in further, I found other errors, but this time they went the other way. When I was done I found the IRS owed him $800 and the state he lived in owed him $200, a $1400 turn around, So if the IRS had not written him, his return would have cost him $1460, $60 for the software, $1400 for the error.
Yesterday nice young lady came in to have her return checked, she used a well respected different online software, she only made a $281 error.
I also am involved in a program where folks wanting to save money prepare their returns online then I check them. Only 7% of the returns I checked were right.
I’ve done hundreds of returns this year, if you are doing yours you did one. If you have wages from a job you live and work in the same state, have no kids, not married, have no investments, rent your home, hey go ahead, if you are sure you know what you are doing OK great, but you must know what you should expect as a n answer. Otherwise you don’t know if it is right or not, do you?
As a preparer, I love to read posts to these types of articles. Not only does it give me insight into my own pricing but I love the comments at the end of the article.
If you have a simple return and average common sense, you can do you own taxes. Most software have a Q & A system so you can answer the questions, you can do your taxes. In my option, some of the questions are a bit complex and many have issues understanding it.
Now for the human side of taxes, I get more calls from people who “forgot” something and they need to fix it than anything else. This is not only time consuming but opens you up for an audit espeically if you forget deductions or add one in by mistake. Remember the IRS is interested in INCOME and the lack there of.
As for bad tax preparers, I can tell you first hand- if you go to a big box prep place you are not only getting overcharged but letting someone with little or no training prepare your return. I was an office manager at Jackson Hewitt and I had no training before I was hired, no training after and the only reason I can prepare taxes is because I took the time to learn the tax code.
Now I own my own business with my father and our rule in our office is you have to have full interview before we prepare your return. We ask a ton of questions to everyone, even those with 1 W-2, no dependents and no itemization. Why? Because we don’t know you or your life. If you own a business we especially don’t know how you manage your business or how you make your money. Most of time we start our process before tax season so we can visit your business and understand your record keeeping. When we are finished, we explain line by line where the numbers came from and how we prepared your taxes.
So in short, you can do it yourself but you have to keep track of your life and your money and in my experience most people can’t. On the flip side, if you hire someone to do your taxes and they don’t ask you questions or inquire about your business, you run the risk of having issues.
One last thing, we are all human and we all make mistakes however, in a tax code system that is very complex, even the best preparers make mistakes. Don’t judge them on the mistakes they made but how they handled it.
I’m a single mom, 2 dependents,own home,buy/sold stocks,Massage Therapist. I was charged 1300.00 to do my taxes. I left my other company because they went from 650 to 850. A friend recommended another tax professional and I just got the bill. 1300!!!! I’m feeling raped!!