Tax-preparation fees: How much does it cost to have your taxes done?

Tax-preparation fees: How much does it cost to have your taxes done?

The cost to file income taxes can fall anywhere between zero dollars — as in you do your taxes yourself and file for free — and several hundred dollars, with an average cost of $273 for using a tax preparer, less if you don't itemize ($159), according to the most recent data available from the National Society of Accountants.

To judge the value correctly, though, those costs have to be weighed against the results you get, your own comfort level with going DIY, plus what could go wrong if things don't work out.

To help you weigh the pros and cons, Get Rich Slowly has compiled this guide with detailed cost comparisons.

What are your Tax-Preparation Options?

Basically, there are four options. Here's the run-down:

  1. Do it yourself. For basic tax returns, preparing it yourself is a fairly straightforward process, especially with IRS online forms and instructions. However, the more complicated your tax situation — e.g., your eligibility for itemized deductions or tax credits — the more you might benefit from the type of analysis and advice that a simple online template can't give you.
  2. Downloadable tax-preparation software. Downloadable tax-preparation software can help walk you through the steps of more complex tax returns, and perhaps present you with more options relevant to your situation than would occur to you just working through a form yourself.
  3. Online tax-preparation services. This provides automation similar to tax-preparation software, only you enter your information online rather than onto software that you download to your computer. The difference comes down to how secure you feel having all that information online in the hands of a third party (i.e., other than you and the IRS).
  4. A tax-preparation professional. Tax professionals can give you customized advice that can save you money this year and perhaps make you more tax-efficient in years to come. However, that advice is only as good as the qualifications of the person giving it, so you need to do some due diligence not just on the firm you use, but on the person responsible for your return.

A Bit about State Tax Returns

If you live and work in Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming, congratulations — you don't have to worry about state taxes.

Otherwise, you'll probably have to file a state tax return. If you had income from multiple states, you may be required to file in more than one state, and this will likely cost you additional tax preparation fees for each state.

Related >> Learn tips to help you file your taxes

What Do Different Tax-Preparation Approaches Cost?

As you can imagine, costs for the different approaches above vary widely. Even the cost for the same type of approach can differ greatly depending on your situation and which provider you use. As a result, there is no single figure that can be quoted as being indicative of the cost of each approach. Instead, we hope to show the range of costs that are out there which can give you a representative idea of what each entails.

  1. Do it yourself. It costs nothing to use the IRS resources and file your returns on its website, though some do-it-yourselfers do incur costs by buying books and other reference materials to help them understand their tax situation. However, the public library system is a good resource instead of buying these types of books.
  2. Downloadable tax-preparation software. Online tax-preparation software assists you in completing and submitting the necessary forms. We've been monitoring these expenses for a few years now, and there hasn't been a lot of fluctuation in price over time. The cost goes up depending on how many forms you use or how many state returns you file if, say, for example, you moved during the year.

Notes:

  • The prices listed in the table below are the lowest amounts for the simplest of returns for Tax Year 2015.
  • If you are using one of these DIY services, look for a discount coupon before starting — there are plenty out there.

Downloadable Software – Lowest Advertised Cost for Tax Year 2016

 
Product (Company Name)

Version

Federal 1040 Simple Price

State Price

State e-File

 
At Home (H&R Block ) – *

Basic

$29.95

(5 Federal e-files included)

$39.95

$19.95

 
Tax Act 2015 (2nd Story Software)

Free

$0

(Federal e-file included)

$13.49

$9.99

 
TurboTax ® (Intuit)

Basic

$29.99

(Federal e-file included)

$39.99

$24.99

(Except NY state.)

 
Notes:
1. Prices shown are the lowest online advertised price as of November 8, 2016.
2. Most “free” services are limited to customers with a certain tax situation.
3. Information provided is for general guidance only. Contact provider or visit official website for specific details, as prices can change without notice.
4. * Visit individual website for special bonus offers.

Online Tax Preparation – Lowest Advertised Cost for Tax Year 2016

Product (Company Name)

Version

Federal 1040 Simple Price

State Price

State e-File

1040.com
(HBS Financial Group Ltd)
Federal Edition$0$9.95$0
1040now.net1040EZ$14.95 (includes e-File)$17.95$0
completetax.com (CCH)
(Now esmarttax.com – by Liberty Tax)
Free Simple Solution$0$31.95$0
efile.comFree Basic$0$19.95

(Unlimited states)

$0
efiletaxreturns.comFree Edition$0$29.95$0
esmarttax.com
(by Liberty Tax)
Free$0$31.95$0
etax.comFree$0 (State purchase required)$29.95$0 (Not available in every state)
expresstaxrefund.comBasic Return Package$29.95 (Add $20.00 for e-file)$20.00No information
eztaxreturn.comFederal Tax Return$29.95$10 (if ordered with federal tax return)$0
fileyourtaxes.comFederal Tax Return$39.75$36.50 (If ordered with federal tax return)$0
free1040taxreturn.comStandard Return$19.95 to $39.95$9.95 to $19.95$0
freetaxusa.com
(Tax Hawk, Inc.)
Free Edition$0$12.95$0
hrblock.comH&R Block Free ™$0$29.99$0
jacksonhewitt.comFree$0$29.95$0
olt.com
(OLT OnLine Taxes)
Free Edition$0$7.97-$9.95Free if e-filing is available for your return
onepricetaxes.com
(AFJC Corp)
Free$0No informationNo information. (all states may not be supported)
onlinetaxpros.comStandard/Deluxe$19.95 (Standard)$29.95 (Available only with Deluxe)$0
rapidtax.com
(Rapid Filing Services LLC)
Basic Package$9.95$9.95 (If filing with federal tax return)

$29.95 (If filing as standalone state return)

No information
taxact.com
(2nd Story Software)
1040EZ/A Tax Return$0$0$0
taxbrain.com
(Petz Enterprises, Inc. – Now Liberty Online)
EZ$19.95$31.95$0
taxhawk.comFederal Tax Return$0$14.99$0
taxslayer.comFree Basic Edition$0$28.99 (Actual price determined at print or e-file and subject to change without notice)$0
turbotax.com
(Intuit)
Federal Free Edition$0$0$0
Notes:
1. Prices shown are lowest online advertised price as of November 8, 2016.

2. Most “free” services are limited to customers with a certain tax situation.
3. Information provided is for general guidance only. Contact provider or visit official website for specific details, as prices can change without notice.

Cost to Professionally Prepare Other Tax Forms

Not everyone has a simple return. Here's what the NSA's most recent survey found for average tax preparation fees for more complicated forms:

  • $174 for a Form 1040 Schedule C (business)
  • $634 for a Form 1065 (partnership)
  • $817 for a Form 1120 (corporation)
  • $778 for a Form 1120S (S corporation)
  • $457 for a Form 1041 (fiduciary)
  • $688 for a Form 990 (tax exempt)
  • $68 for a Form 940 (Federal unemployment)
  • $115 for Schedule D (gains and losses)
  • $126 for Schedule E (rental)
  • $158 for Schedule F (farm)

In terms of location, the association also found the West had the most expensive returns per Census region:

They calculated the average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return. Here's how it breaks down according to the NSA:

  • $348 for the Pacific (AK, CA, HI, OR, WA)
  • $314 for the Middle Atlantic (NJ, NY, PA)
  • $268 for the South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV)
  • $262 for East South Central (AL, KY, MS, TN)
  • $256 for Mountain (AZ, CO, ID, MT, NV, NM, UT, WY)
  • $246 for New England (CT, ME, MA, NH, RI, VT)
  • $240 for East North Central (IL, IN, MI, OH, WI)
  • $205 for West South Central (AR, LA, OK, TX)
  • $198 for West North Central (IA, KS, MN, MO, NE, ND, SD)

Advice on Hiring a Tax Preparer

When it comes to hiring a tax preparer, in-person advice is only as good as the qualifications of the person giving it. Here are some things to think about:

  • Check your preparer's professional designations. A CPA, tax attorney, or Enrolled Agent is a plus. An enrolled agent is a tax preparer who has specific and technical expertise as defined by the U.S. Department of the Treasury. Once they become “EA”s they can represent taxpayers before all administrative levels of the IRS. According to the National Association of Enrolled Agents, you earn the designation if you've worked for five years at the IRS “in a position requiring the interpretation of the tax code” or pass an exam plus background check.
  • Make sure a preparer has a Preparer Tax Identification Number (PTIN). The IRS now requires all paid tax preparers to have a PTIN, so steer clear of a preparer who doesn't have one.
  • Research your preparer's history. Check with your local Better Business Bureau to see if there have been any complaints. Skim online reviews, remembering to take both highly negative and highly positive reviews with a grain of salt.
  • Full time vs. part-time. Many tax preparers work seasonally, but people with complex tax situations often need advice throughout the year.
  • Ask about audit services. It helps to have assistance from your tax preparer if you are audited. Some preparers include this in the price of your return, others charge extra, and still, others don't provide this service at all. You should know whether your preparer will back up their work if you are audited, and how much it will cost you to get that assistance.
  • Ask about audit experience. Some successful IRS audit experience can be a plus; multiple instances of audits that went against the taxpayer should be a red flag.

Bottom Line on Finding a Tax Professional

Perhaps the most important decision in choosing tax-preparation help is fitting the service to your needs. Depending on your situation, free advice can be a tremendous bargain — or it could be the most costly mistake you've ever made. Know your tax situation, and get appropriate help if you need it.

Above all: The IRS advises taxpayers that when using a paid preparer, never sign a blank return in advance.

Why Cost isn't the Only Consideration

You can get quotes and compare costs, but bear in mind that cost is not the only consideration. Here are some other things to think through:

  • Your time. Let's say you can save $50 by doing your taxes yourself. What you have to ask yourself is how long it will take you to complete your returns and how you value your time. You might well find that the value of your time exceeds, or at least significantly offsets, the cost of paying to have your taxes done.
  • The risk of over-paying. Tax laws change all the time, impacting credits, deductions, and different options for treating income and investments. Missing just one potentially tax-saving new wrinkle could cost you a multiple of what you would save by doing the returns yourself.
  • Possible fines for mistakes. For individual and estate tax returns during the 2014 fiscal year, the IRS assessed more than 31 million penalties, totaling just over $13 billion in value. Clearly, it is all too easy to make a very costly mistake in preparing returns.
  • Legal consequences for misleading returns. Beyond monetary penalties, particularly serious tax violations result in criminal prosecutions. When this happens, the IRS secures a conviction in the majority of cases it investigates, and nearly 80 percent of those convicted do jail time.

How to Choose a Tax Preparation Approach

Besides weighing the cost and consequences of various tax preparation methods, here are some other things you should do when choosing your approach:

  • Match the approach to your needs. Generally speaking, the more complex your tax situation, the more help you are likely to need. As your wealth and family size increase, the more you might want to use electronic tax tools or professional help — which is just as well because, as your career goes on, you are more likely to be able to afford that assistance.
  • Choose software that is up to date and well supported. If you use software, make sure it is up to date both technologically and with respect to changes in the tax code. Also, find out in advance what kind of user support is available.
  • Consider the reputation and resources of each provider. Do some online searching, and also find out what resources any tax preparation firm or technology provider has to keep abreast of tax code changes and tricky interpretations.
  • Take the long view. Often, people are so focused on meeting the April 15 filing deadline that they don't think of any possible tax issues beyond that, but there are longer-term considerations. For example, some approaches offer better record-keeping that might help you if you need to reference past returns at some point.

Also, active tax advice can help you better minimize your taxes and right-size your payroll withholding so more of your money can be earning interest in a savings account rather than being held by Uncle Sam throughout the year.

Related >> Find the right savings account for your tax refund

Plenty of people successfully complete their own returns every year. The important things to know before you decide to do it yourself or pay for tax preparation are how the complexity of your tax situation compares to your expertise, and what the consequences of a wrong decision could be.

What option will you select this year for how to prepare your taxes? How much do you think it will cost?

More about...Taxes, Planning

Become A Money Boss And Join 15,000 Others

Subscribe to the GRS Insider (FREE) and we’ll give you a copy of the Money Boss Manifesto (also FREE)

Yes! Sign up and get your free gift
Become A Money Boss And Join 15,000 Others

243
Leave a Reply

avatar
newest oldest most voted
Nicole
Nicole

Love the charts!

Bogey@BackNineFinance

I did my own taxes this year using the online version of TurboTax. I think it cost me $112 dollars including both my federal and state return. I have rental properties and a few other complicated situations and I found this product more than adequate to handle those items.

I think that if it all possible, people should attempt to do their own taxes (even using software or an online product). You learn a lot about the tax code, and about ways to optimize your tax situation for the following years.

A & S DeMendoza
A & S DeMendoza

We are in your situation and always talk about trying to do it ourselves. We have gone to the same tax preparation fellow for years. We pay $435 each year and always feel it is way too much!! “There must be another way” Ty for sharing…..

Owen
Owen

I was paying $195.00 to have my axes copleted by a CPA. I thought that was too much money to spend when all he did was just enter my information into his software on his computer. I now pay $65.00 to a book keeper with the same software program and she found my extra savings.
Owen

jeff
jeff

Cheaper isn’t always better. If you use turbo tax and have a return that is somewhat or very complicated you should know you probably missed something a human would pick up on and left hundreds or thousands of dollars behind that you could have gotten back by going to a professional. The programs do miss things every year because they cannot think and are not able to pick up on scenarios as humans are. The IRS would want everyone to use a computer program or do it themselves because they would save paying back millions of dollars every year.

Sam Warren, CPA
Sam Warren, CPA

Yeah, you can do it yourself. Like they said, what is your time worth? Are you willing to take the risk of over paying or fines for errors? I don’t work on my truck because I haven’t invested in the training and equipment. Yes, I pay $140 / hour to the mechAnic. Why wouldn’t you want to pay $150 – hour to your CPA when you consider his education licensing, ongoing CPE that meets and probably exceeds the training your mechanic receives? Duh.

Jeff C
Jeff C

Taxact does not charge to e file a state return.

Federal Free plus $14.95 for state, both e file for free.
Or use the deluxe version $17.95 for both state and federal plus free e file for both. I usually use taxact every year to file my wife and I taxes as well as my four children’s taxes. I have never paid extra to e file state taxes.

Matthew
Matthew

You forgot to mention the free tax preparation service offered by the IRS. I have been working with VITA (Voluntary Income Tax Assistance) for three years now, and I am always surprised how few people are aware of this service.

http://www.irs.gov/individuals/article/0,,id=107626,00.html

Greg
Greg

Yes, Matthew!!

The VITA program has so may things going for it: free, obviously; partial to the taxpayer, since they don’t profit from the service; longevity, since the services, and many of the IRS-trained volunteers serve year after year, as you and I have done; benefit to the community, since refunds flow back to the local economy undiminished by the usurious fees often charged by storefront preparers whose profits go to corporate coffers.

Additionally, these centers offer benefits in other ways by promoting financial literacy and establishing networks of community support involve. Win-win!

Snowballer
Snowballer

Most of the cost of paid preparation lies in the processing cost of untangling the taxpayer’s bookkeeping errors, and hand sorting through many volumes of data to find the handful of it that’s relevant, FWIW.

Sam Warren, CPA
Sam Warren, CPA

Absolutely correct. If clients would keep good records and use the organizer we typically give them the fees would drop. My time is worth something. If you’re too lazy to help me help you then you’re going to pay for that.

Mom of five
Mom of five

I just use TurboTax. I’ve noticed that Jackson Hewitt and H&R Block are heavily represented in somewhat rundown neighborhoods. I have a relative whose taxes were completely messed up by H&R Block and he ended up owing thousands in penalties. I don’t know if they’re all like that, but my opinion of them is not very high.

jeff
jeff

HR Block and JackHewitt are equivalent to fast food chains. If you want better service go to a nonchain tax preparer’s office. You will pay less and get more service and he will be there year round.

kelsey
kelsey

I used TurboTax for the last few years, as most of my returns have been simple. This year I did my taxes by hand for the first time, because I sold stock this year and TurboTax wanted too much money to deal with that complexity. I used the IRS online tool (FreeFileFillableForms) to e-file my returns. It was tricky, and my submission was rejected the first time, but I fixed my mistake and submitted again. Second time’s the charm? 🙂

Brian
Brian

Tennessee also has no state income tax.

Jeremy
Jeremy

We’ve been happy with TurboTax for the last 5 years, although we’re probably going with a CPA next year due to business income. You can get 10-20% off TurboTax through various bank promotions. State Farm Bank gives TurboTax Deluxe away free to the first 25,000 customers each year for instance, and my local credit union gives 10% off (since I missed the 25,000 this year) Google around for other promotions and coupon codes.

Julie Buttry
Julie Buttry

I was wondering where you heard State Farm Bank gives TurboTax Deluxe away free to the first 25,000 customers each year? I have been a state farm employee for several years and have never heard of this? That would be great to be able to tell my customers.

Jake @ NotRichYet
Jake @ NotRichYet

My taxes are more complicated these days:
* Income in 4-5 states (road warrior) -> TurboTax usually chokes on multi-state stuff

* Rental property (need guidance on what are legit expenses)

* At the cusp of just being in or out of AMT

I have a CPA I have used for several years now. Last years return cost me $500. My company acknowledges that travel causes tax issues so they give me some $ that usually covers this expense.

Wayne Mates
Wayne Mates

New Hampshire also does not have an income tax, but it does tax interest and dividends over $2,400 (individual) and $4,800 (joint) at a 5% rate.

cc
cc

i’m a freelancer in brooklyn with multiple income streams, expenses, a retirement account and some investments. i’m a bit of an airhead, so i pay to get my taxes done professionally in manhattan- i don’t trust my math skills as far as i could throw them. it costs $350, but my cpa is friendly, quick, and answers any questions i have about these things. i was advised to just pay up and have them done because i’m a relatively new transplant to nyc, and there are fed/state/city taxes and fees to deal with. if i were more dedicated i’d try… Read more »

Bob
Bob

Take your taxes to a professional – and not one of those H & R Block types. It costs more upfront but a real, professional accountant who knows the ins and outs will save you thousands.

You’re probably costing yourself money if you use any “free” service.

Sam Warren, CPA
Sam Warren, CPA

LOL – Ever hear of anything good being free? Momma lied if she told you that!

Jenna
Jenna

My taxes are pretty straight forward. I have used FreeTaxUSA.com for a few years with no problems. Free Federal E-file and $9.95 for State. Love it!

Suzanne
Suzanne

I use TaxACT, and they give a discount after the first year. This year for state & federal (simple return) I paid $19.90 for everything, including e-filing and archiving my return. If you commit early in the year to using them (they send an email in the fall) then you can get a lower price.

I think TaxACT is the best. I saw very little difference between them and TurboTax, except the price.

gail
gail

I file personal and business (sole proprietor) taxes for my home office (25 subcontractors). I have had the same CPA (in Davis, CA) for 20 years and he charges $500. His CPA company is family-owned and family-staffed. Included in that $500, he is also available year-round for consultation (no charge), his office provides a compilation of yearly IRS changes as well as reminders of deadlines for 1099s to my subcontractors and IRS. What I especially like is the booklet provided each year for me to fill in all my itemized deductions, income, investments, etc., from which he then provides a… Read more »

Kevin M
Kevin M

Whatever you decide, avoid refund anticipation loans at all costs. If you file electronically with direct deposit, you’ll usually get your refund within 10 days or so. It’s just not worth paying the outrageous fees on RALs to get your money a few days sooner.

Tyler Karaszewski
Tyler Karaszewski

It cost me $250 to get my taxes done this year, which I’ll pay gladly to avoid problems like last year’s surprise $9,000 bill from the IRS (which I’ve mentioned before).

Also, my tax guy is in Philadelphia and I live in California, so the cost of paying an actual person to do your taxes doesn’t have to be tied so closely to your location. I just scan and email him my W2s and 1099s. He fedexes me back a package with some things I need to sign and mail.

Dan
Dan

In the last few years, I had to the do the 1040 long form because of some investment losses. (Stupid prosper.com) I’m done with that, and for the foreseeable future, it looks like I’ll be able to get away with using the 1040A. My investments are all in Roth IRA and 401k accounts, but I’ll have student loan interest deductions for awhile. I won’t pay for e-file. I’ve done my own taxes for awhile now (I advise having a basic understanding of how taxes work — for example, looking at the forms and seeing what kind of deductions may be… Read more »

Dan
Dan

Tyler,

You might have mentioned your surprise bill before, but I missed it. What happened?

In 2009, I got a surprise $6000 refund — got married while the wife was still in school, and didn’t realize that the tax structures favored single-income married couples quite nicely.

KSK
KSK

I own my own business, so I would never consider anything other than having my CPA prepare my taxes. I pay him quarterly for his services. The advice he gives me is beyond just tax issues–he has a holistic approach to taxes and business practices. It’s money well spent. I know that I will not have any surprises from the IRS, and I’ve received valuable business advice from him over the years.

Amanda
Amanda

You can get 35% off the federal return of Turbo Tax thru Bank of America. Just search for Turbo Tax on their site.

Courtney
Courtney

“If you had income from multiple states, you may be required to file in more than one state, and this will likely cost you additional tax preparation fees for each state.” This will actually be my question for next year, but I might as well ask it now while I’m thinking about it. I just moved from Maryland to Virginia. However, I still work in Maryland (and will continue to do so for at least the rest of this year). The Maryland tax form says if I live in VA and did not maintain a place of abode in MD… Read more »

Sam Warren, CPA
Sam Warren, CPA

Surely, you’re not looking for free tax advice? Say it isn’t so! Suggest hiring a good CPA. You must trust and like this person I’m a way very similar to how you feel about your gynecologist. You are showing this person everything!

Andrea
Andrea

I pay $280.00 at H&R Block in a Twin Cities suburb of Minnesota. I pay way too much and I know it. We always get a huge refund of 3-4k so it doesn’t feel too bad in the moment but really, it’s completely ridiculous. It’s one of the few things that bug me about our finances these days.

Sam Warren, CPA
Sam Warren, CPA

You would probably pay me more. A typical 1040, all in, takes 3 – 4 hours. That includes time on the phone / meeting you and data processing, archiving, printing, mailing, etc, etc. add the cost of the software, forget about CPE and the 10’s of thousands I spent on education, licensing, internship for a couple of years – it works out to around $50 / hour or around ~100k / annum. Since I’m not 100% billable is really works out to be less in terms of my income. You spend more with your mechanic and should consider yourself to… Read more »

Catherine
Catherine

If you are a high income earner or have any sort of complexity in your tax returns (dividends, 1099 income, etc.) you will find that the money you spend having your taxes prepared by a CPA who specializes in taxes (not all do) money well spent…and tax deductbile. I say this as a VP of finance for a small company who routinely guesses my tax liability within a $100 before sending my info to my accountant each year. Why? Two sets of eyes are better than one, especially if one of the sets has spent the best part of his… Read more »

Ali
Ali

I get my taxes done for free by an AARP volunteer. I’ve done this for the last few years, and I couldn’t be happier. I’ve also done my taxes myself, and paid H&R block, but you can’t beat free, professional tax preparation. They provide this amazing service at libraries and community centers, typically. You don’t have to be retired to take advantage of this service! http://www.aarp.org/money/taxes/aarp_taxaide/

KDG
KDG

I am pretty sure that this service is only available to those over 60 (even though AARP accepts members at age 50), and under a certain income level. Check out the AARP web-site before counting on this free option.

Sam Warren, CPA
Sam Warren, CPA

Since when is AARP a “professional” tax preparer??

Free? Is anything free worth ANYTHING? Look up the definition of free if you think I’m wrong.

Based on AARP support/endorsement of Obamacare I refuse to have anything to do with them and you would be well advised to reconsider your association as well.

Gia
Gia

I paid $95 plus tip to have someone do my taxes for me (Brooklyn, NY). I give him a generous tip because he picks up the paperwork from my apartment and bring them back to me.

Richard Barrington
Richard Barrington

Courtney:

You should consult a tax advisor for an answer specific to your situation, but the first thing I would do is check with your employer to see where your state taxes are now going. There’s a good chance that state tax withholding from a Maryland employer is still going to the state of Maryland. Unless your employer can switch this to Virginia, you’ll want to minimize that withholding and set the money aside throughout the year so you can pay your Virginia taxes.

Dan N
Dan N

I’ll chime in with the fans of Tax Act. You get to keep lower rates even if they raise the regular rates. I’ve been using them for years and am grandfathered at their old rate. With the early bird savings I pay $13.99 for deluxe Federal and State e-file. Their site is very comprehensive and they have a lot of help information.

Afford-Anything.com
Afford-Anything.com

Doing taxes yourself, by hand — without software — is a really scary idea; I never would have considered it 5 years ago. But then I saw my boyfriend do it, and thought, “well, if he can, then so can I!”

It’s time-consuming, especially the first time, but it did teach me a much deeper understanding of how taxes work … so consider the time spent doing it to be an education!

Richard Barrington
Richard Barrington

Brian:

Tennesee does tax interest and dividends, so anyone with investment income would have to file a state tax return.

Just Jan
Just Jan

Edited to delete comment. Reread the section and found the author posted lowest advertised prices.

leslie
leslie

When I started freelancing about 11 years ago, I hired a CPA to do our taxes because I wanted to make sure I did all the self employment stuff correctly. Our taxes are also a little complicated by the fact that my husband owns 1/4 of a house that he inherited (along with some other relatives) in another state. We have had other oddball things pop up in the past few years too (investment losses, IRA conversion to a Roth that then had to be recharacterized and then converted again this year). Honestly, it pains me every year to write… Read more »

Tyler Karaszewski
Tyler Karaszewski

@Dan: I mis-reported the cost basis for some stock I sold (actually, I think I failed to report it at all, and so the IRS assumed $0). I got my tax guy to fix the problem, and after amending my tax return, I actually ended up with a $9 refund after that. That was *after* I paid $3,000 though. This year, instead of having a $3,000 tax bill and then making a mistake that resulted in a $9,000 scare and a big headache, I just paid the tax guy to do it all for me from the beginning, and I… Read more »

PB
PB

I have used the same CPA for over 20 years, and the peace of mind is worth every penny. It is not cheap (just under $ 400 this year)but he always finds things that I would never think of. My grandmother left a fairly complicated estate in 1997 and he has always helped with that and other inheritances that have come along.

MIKE K
MIKE K

Unfortunately the tax code is so complex that a lot of people believe they’ve correctly done their taxes and haven’t and just slip through the cracks. Often the errors are in the governments favor. Nobody has a duty to pay more taxes than they owe. I’ve seen a lot of people grossly overpaying for no reason to save a few dollars on the preparation. If you have a relatively complicated return, including a business, rental property, etc. this may be penny wise and pound foolish.

lostAnnfound
lostAnnfound

Self-employed and work at home, so I have had a friend of my brother’s do it for the past 10+ years. He is a CPA. He charges $92.00 for federal and state (at least for the past +/- 5 years that has been his rate). I think he is well worth it for my peace of mind knowing I haven’t missed something.

Jenny
Jenny

It’s worth it to do your own taxes, by hand or through something like Turbotax, at least once. I know someone who’s dropped off her taxes at H&R Block year after year, and has obviously never looked at her return–because I discovered H&R was doing them completely wrong. Wrong filing status, not claiming EIC even though she was eligible–in short, leaving about $7K on the table. Every year. She never noticed because she didn’t know enough about taxes to be able to spot the errors.

Just another example of why self-sufficiency is usually in your best financial interest…

Nicole
Nicole

Our taxes were so very complicated last year… that by the time we’d collected everything we needed to bring to a tax professional, had read up and made sure we understood the laws, had talked to the CPA in the family and the retired person in our family who does volunteer taxes… and had gotten luke-warm recommendations from everybody we knew for accountants… (the best recommendation being to ship all of our tax info half the country away)… ..that we ended up just doing the taxes ourselves with the family CPA’s blessing and TurboTax (though not the base version). He… Read more »

KC
KC

I use a CPA because our taxes are a bit complicated. He always catches things we missed, too. I get the info together so I have to have a pretty good understanding of the tax code. But he does the dirty work and gets the numbers right. And now that I moved from TN to NC I have state income tax to prepare. It’s just a headache I’d rather not deal with and money well spent on a CPA. If you go with an individual or even a local firm you will at least have someone you can bounce questions… Read more »

Pam
Pam

I used to have my dad do my taxes every year but I moved overseas for about 14 months and ended up with foreign income statements, foreign tax credits, RRSP homebuyer repayments, etc. My dad told me I had to get an accountant and it was worth the money – if for nothing else than having someone know how the complexities of the varying tax years was going to work out. I might go back to my dad now that my taxes are going to be “normal” again but may start using UFile or some other online system. I just… Read more »

Courtney
Courtney

@ Richard #28 – thanks for responding. I was just at my HR department today to change my address and file a VA-4 form, so I know that starting with my April 1st paycheck I should have state taxes withheld and remitted to Virginia instead of Maryland.

Catherine
Catherine

One other point when you use an outside professional. Make sure that the CPA has liability insurance as protection in case of fraud or incompetence. I prefer to have my CPA’s have an office (home or business, it doesn’t matter) where they have been for a while and I get a great deal of comfort seeing their various diplomas and certifications tacked on the wall. You get what you pay for when it comes to tax preparers which is why it freaks me out that people are willing to give all their personal info to a guy who picks it… Read more »

Tara
Tara

@Tyler My tax guy is also in a different state than I am, but he emails me pages to sign and then I scan and email the signed copies back to him. I would far recommend that over mailing! I paid someone to do my 2010 taxes and I will re-evaluate if the cost is worth it for 2011, but it certainly gave me peace of mind for 2010 with income and retirement accounts in multiple countries, residency changing, dividends, interest, and investment sales. Plus, the cost for him to do my taxes was a little more than one day’s… Read more »

Gene
Gene

I used OnePriceTaxes for 2009 and it was a dreadful mistake. The software neglected to include my 1099-MISC forms even though I filled them out. It has no audit function, so you are pretty much on your own to get things right. The help was almost nonexistent so that the experience was akin to just filling out the forms I knew were needed. Also, there was no review function and the print function failed, just couldn’t print, so I had to file with no way to review my return. Once filed I was able to print, but then it was… Read more »

Matthew
Matthew

This is a hugely helpful post! One of my challenges when shopping for services is that it’s hard to know what ballpark the prices should be in until you’ve done it a few times. Now I just need to find similar information for legal services!

Jeanette Glass
Jeanette Glass

In Canada your accounting fees MAY be tax deductible in the year you pay them. If you have any kind of investment or business or rental income they are certainly deductible. The most I have EVER charged for preparing a personal tax return was $1,000 but you should have seen the mess it was in! I actually cut the guy a deal, because it took over 15 HOURS to prepare his taxes, and I could have easily billed him twice that. It pays to be organized when using a professional preparer. You can save a lot of money just by… Read more »

Terrin
Terrin

The price comparisons can be misleading between online tax software. For instance, both Turbo Tax and Tax Act offer free versions. However, Turbo Tax’s free version only really applies to a simple 1040 or E.Z. With Turbo Tax, if you have any investment income or itemized deductions apply you are going to pay significantly more. Turbo Tax charges you extra when the tax return is more complicated. Further, it charges you extra for State filings. I used to pay about Sixty Dollars for Turbo Tax. With Tax Act the most you pay is $17.95 including with a State Return. Further,with… Read more »

Mark
Mark

My income was pretty low last year due to getting hurt at work. If your income doesn’t pass a certain AGI threshold then you can file for free at online tax places like Turbo Tax Freedom Edition. I think the AGI limit is $31k or so.
In several states you also will be able to file state for free through the program.
I saw last year there were other reputable places offering the same thing.

Dally
Dally

I am astonished at the quoted prices for CPAs. I’m a CPA and I think I’m at rock-bottom with a minimum of $125. My hourly rate is $150/hour plus a small forms charge ($5 per return). I can be cheaper than H&R Block for clients who are organized. I only take a few new clients each year and so most of my clients are people I know well and have trained through the years. I consider myself their “personal financial wellness advisor” and we meet in person and I go over all aspects of their finances. How much they’re spending… Read more »

shares