How much do accountants charge to prepare tax returns?

Filing taxes can be a tedious and complex process for many individuals and businesses. While some may choose to self-file using tax software or online platforms, many turn to professional accountants and tax preparation services for help. But how much do accountants charge to prepare tax returns? The fees can vary quite a bit depending on your personal tax situation and the complexity of your returns.

Some of the key factors that impact how much accountants charge for tax preparation services include:

• Your tax filing status - Fees are typically higher for businesses, partnerships, trusts and those filing multiple state returns. Individuals and married couples filing jointly typically pay less.
• Complexity of your tax situation - The more complex your tax situation, the more an accountant will charge. Complexities include high-income earnings, rental properties, extensive investments, stock options, foreign-earned income, etc.
• Type of accountant - CPAs (Certified Public Accountants) and experienced tax pros will charge more than entry-level preparers.
• Geographic location - Accountants working in major metro areas tend to have higher fees than those in smaller towns.
• Type of firm - Larger firms tend to have higher fees than independent accountants and smaller practices.
• Additional services - Fees increase if you need help organizing tax documents, bookkeeping, audit support, small business services, etc. beyond just filing the returns.

Average Cost Range for Individual Tax Returns #

For individual tax returns, including Form 1040, 1040A and 1040EZ, the average fee ranges from $150 to $400. Simple tax returns start around $150-$200. More complex itemized returns run $200-$400+.

According to the National Society of Accountants, the average tax preparation fees for individuals in 2022 were:

• 1040EZ: $176
• 1040A: $273
• 1040 with Schedule A (itemized deductions): $341
• 1040 with Schedule C (sole proprietorship): $535

The overall average fee nationally was $273 for an Itemized Form 1040 return. Simple non-itemized 1040 returns had an average fee of $176.

Average Cost Range for Business Tax Returns #

For businesses tax returns, fees can range widely depending on your entity type, income, deductions, assets and other complexities. Average ranges are:

• Partnership Returns (Form 1065): $800 - $5,000
• S-Corp Returns (Form 1120S): $600 - $3,000
• C-Corp Returns (Form 1120): $1,000 - $7,000+

Many accountants will charge additional fees per state return needed. Average per state fees range from $100-$700 per state.

What Impacts the Cost? #

The main drivers of cost for tax preparation fees include:

• Number of forms and schedules needed - The more pages, the higher the fee. If you have investment income, rental properties, own a business, sold assets, etc. more forms are required.
• Number of states you file in - Accountants will charge more for each additional state tax return needed. This includes part-year resident returns.
• Supporting documentation - Fees increase if your documents are disorganized, incomplete, or the accountant has to track down missing info. Cleaner documentation can reduce fees.
• Quick turnaround needs - Accountants charge premium rates for rushed or last-minute filings, especially if you bring documents in late.
• Tax planning & strategy - Fees increase if you need additional tax planning and strategy sessions, multi-year projections, advice on major transactions, etc.
• Audit support - Accountants charge significantly higher rates if you get audited and need their expertise and efforts to handle an IRS or state tax audit.

When setting their rates, accountants consider factors like overhead, employee salaries, licensing fees, technology costs and the complexity of returns they handle. Many charge hourly rates ranging from $50-$500 per hour based on experience level.

Ways to Lower Your Accountant Fees #

If the cost is higher than you expected or can handle, there are some ways to reduce the amount you pay:

• Provide complete information upfront - Being organized and providing all needed documents early can reduce billable time.
• Book early - Accountants may offer discounts for booking early and having more flexible timing.
• Request a fee cap - Some accountants may be willing to set a fee cap or maximum cost upfront.
• DIY simple returns - Using software or IRS Free File for simple 1040s with standard deductions can save hundreds of dollars.
• Review billing - Check for errors in billing and request removal of unnecessary charges.
• Use a lower-cost accountant - Shop around online, but confirm they are registered and reputable.
• Adjust next year’s withholding - Increase your tax withholding to get as close to zero due/refund as possible and simplify next year’s return.
• Standardize deductions - Using the standard deduction each year avoids itemizing fluctuations and complexities.

While fees are rising across the board, taking some of these steps can help minimize the dent to your wallet. The most important thing is working with a qualified tax pro that you trust, and who can ensure you maximize deductions legally and avoid any costly mistakes or penalties. Take time to find the right accountant for your needs and budget.