How Much Does It Cost To File Taxes?

The answer depends on the complexity of your financial situation

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The Balance / Julie Bang

Tax professionals set their prices for preparing tax returns in various ways, so it can be a little like comparing apples to oranges when you're looking for the best deal. Prices generally increase as your financial situation and your tax return become more complex. Those with extremely simple returns and modest incomes can often get the job done free of charge.

Key Takeaways

  • The cost of preparing your tax return will typically increase as your tax and financial situations become more complicated.
  • It usually costs more to have a professional itemize your deductions than to claim the standard deduction for your filing status.
  • You're always free to negotiate the price. Tax professionals are generally prohibited by law from charging "unconscionable fees" for providing tax services.
  • You have several other options for getting that tax return filed, such as using lesser-priced tax preparation software or taking advantage of IRS Free File if you qualify.

Pricing Methods Used by Tax Preparers

You can inquire upfront how an accounting or tax firm determines its prices. Ask for an estimate of what their services might cost you. But you might not get an answer, or at least not a firm, definitive answer, until you've met with the professional and they have an understanding of your tax situation.

Otherwise, the firm would have to base its number on your personal summary of your situation. This might or might not provide an accurate picture of your tax situation. After all, you probably wouldn't be seeking a professional's services if you were exceptionally savvy about tax matters.

Note

Some accountants offer free consultations, so you might get an answer at the end of an initial meeting.

Some of the methods used by tax professionals to set their prices include:

  • A set fee for each tax form or schedule
  • A fee based on the complexity of the client's situation
  • An hourly rate for time spent preparing the tax return and its accompanying forms and schedules
  • Additional fees for services such as expediting returns, filing for an extension, or responding to Internal Revenue Service (IRS) audits

Average Tax Preparation Fees

According to a National Society of Accountants survey, you would have paid an average of $323 in 2021 if you itemized 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 dropped to $220 if you didn't itemize, which tells you something about how complicated and time consuming the process of itemizing your deductions can be.

But cost can also depend on the cost of living in your location. Preparing a simple 2022 tax return in New Jersey in 2023 will reportedly cost you about $175.

Note

Be prepared to pay more if you show up for your appointment with receipts stuffed haphazardly into a cardboard box, or if you're missing one or more important tax documents like that Form 1099 you received for interest income you earned during the year.

To Itemize or Not To Itemize?

You might not have to torture yourself over the decision between itemizing and claiming the standard deduction. The answer could be pretty clear cut.

You'd need more than $25,900 in itemized deductions in the 2022 tax year to make itemizing worthwhile on the return you'd file in 2023. That's the standard deduction for married taxpayers who file a joint tax return. The standard deductions for other filing statuses in tax year 2022 are $12,950 if you're single or if you're married and filing separately, and $19,400 if you qualify as head of household.

You'd be paying tax on more income than you have to if your itemized deductions add up to less than the standard deduction for your filing status. Both itemized deductions and the standard deduction subtract from your taxable income. You're taxed on what's left. But you must choose between these options because tax law won't let you claim both.

What Does the Tax Preparation Fee Include?

Be sure to ask what's included in their fee if you decide to use a professional. Do they charge extra for electronic filing, or for each phone call and office visit? 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 IRS ultimately 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 were made by the preparer and were no fault of your own. 

How To Negotiate a Fair Price

Call various tax preparation firms to get a feel for their price ranges if you're searching for the lowest price. 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 general price range for your tax situation.

Note

Some firms might charge additional fees during their busiest times, like the weeks right after W-2 forms are mailed out or just before the April tax filing deadline. You might be able to obtain a lower price quote during a less hectic time of the tax season.

Inappropriate Pricing Methods

Some pricing models are illegal and prohibited by the U.S. Treasury Department. Tax professionals are generally prohibited from charging "an unconscionable fee" for providing tax services, or from charging a fee that's based on information that's contained in your return. One common example is a fee that's based on a percentage of your tax refund.

Tax preparers are also prohibited from charging contingent fees except in certain limited circumstances.

Note

Be wary of a fee that seems much higher than average. Exorbitant fees for tax preparations are a definite red flag to watch out for.

The IRS and U.S. Department of Justice have issued warnings about unscrupulous tax preparers taking inappropriate deductions and tax credits and charging large fees to their clients. Select a tax preparer only after doing proper diligence. The IRS offers resources to learn how to choose a tax preparer and how to check their credentials. Be sure to ask how the fees were determined if your invoice is much higher than you anticipated.

What To Do in the Event of Dispute

Clients and tax accountants might disagree over the appropriate price of tax preparation services. Treasury Department regulations protect you in fee disputes. You're entitled to receive your original tax documents back from the accountant even if you haven't paid the fee.

Note

Accountants can keep any forms, schedules, and documents that they've personally prepared. They don't have to turn these over to you without compensation.

You Have Other Options

You can save considerably by purchasing tax preparation software instead of using a professional if your tax situation isn't very complicated. 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 the data you input.

Prices start as low as $19.95 for the H&R Block basic tax software in February 2023, when you'd be filing your 2022 tax return. You can file a simple tax return for free with TurboTax, but any returns looking to maximize deductions would require programs starting $39. There might be an extra cost for preparing state returns.

You can have your return prepared and filed for free through IRS Free File if your tax situation is very simple and basic, subject to some income limits. You're generally eligible for the Free File program if you made $73,000 or less in income in 2022, but some participating providers have limits that are less for some individuals. The Free File website can guide you as to what's available.

The IRS Volunteer Income Tax Assistance Program also provides free tax preparation for taxpayers who earn $60,000 a year or less, as well as for the disabled and those for whom English is a second language.

Frequently Asked Questions (FAQs)

How much does tax preparation cost?

How much you pay for tax preparation will depend on several factors, including how complex your financial situation is, what type of preparer you choose to work with, and where you live. Generally, the more complex your tax situation, the more you'll pay. As for preparers, you may choose to work with a certified public accountant (CPA), an attorney, or an enrolled agent, which will change the cost.

Can I deduct tax preparation fees on my taxes?

Tax preparation fees are considered a miscellaneous expense and they're no longer deductible for the average taxpayer. But self-employed individuals can still deduct tax preparation fees.

What do I bring to an accountant for tax preparation?

It's important to bring all necessary documentation for income and deductions to ensure that your taxes are done properly. Be sure to bring a copy of your most recent tax return, all W-2s, Forms 1099, and other income documents, as well as real estate documents and receipts to prove deductible expenses should you decide to itemize.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. National Society of Accountants. "2020-2021 Income and Fees Survey."

  2. LSNJ Tax Legal Assistance Project. "Understanding Your 2022 Taxes."

  3. IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2022."

  4. National Society of Accountants. "2020-2021 Income and Fees Survey."

  5. Cornell Law School Legal Information Institute. "31 CFR § 10.27 - Fees."

  6. IRS. "IRS Unveils "Dirty Dozen" List of Tax Scams for 2020; Americans Urged to Be Vigilant to These Threats During the Pandemic and its Aftermath."

  7. U.S. Department of Justice. "Justice Department Warns Taxpayers to Avoid Fraudulent Tax Preparers."

  8. Cornell Law School Legal Information Institute. "31 CFR § 10.28 - Return of Client's Records."

  9. H&R Block. "File the Way You Want With Our Tax Software."

  10. Turbotax. "Getting Started."

  11. IRS. "Free File: Do Your Federal Taxes for Free."

  12. IRS. "Free Tax Return Preparation for Qualifying Taxpayers."

  13. IRS. "Publication 529 Miscellaneous Deductions."

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