In this article:
Hiring someone to prepare and file your tax return can alleviate a lot of stress come tax season, and it can also give you the chance to take advantage of tax breaks you might not have known about. Tax accountants charge varying fees that depend on your needs, tax situation, location and their expertise. Knowing what it's going to cost you upfront can help you determine whether it's worth it to hire someone or if you're better off doing it on your own.
Average Costs to Hire a Tax Accountant
How much you'll pay to have someone do your taxes for you depends mostly on how complicated your tax situation is, but it can also depend on where you live and how experienced the accountant is.
Here's a quick summary of the average costs you can expect based on some of the common tax forms you might need to file your return, according to the National Society of Accountants:
|Average Fees for Various Tax Filing Situations|
|Tax Form||Average Fee|
|Form 1040 (not itemized)||$220|
|Form 1040 (itemized)||$323|
|Form 940 - Federal unemployment||$78|
|Schedule B - Interest and ordinary dividends||$42|
|Schedule C - Business||$192|
|Schedule E - Earned Income Credit||$65|
|Schedule SE - Self-employment tax||$41|
Where You Live
The state you live in will also directly impact the cost of hiring an accountant to do your taxes. For example, if you want a standard Form 1040 with a state tax return and don't plan to itemize any deductions, the average cost ranges from $95 in South Carolina to $450 in New Mexico.
Who you decide to work with can also influence your total cost. For example, if you hire a tax accountant who has their certified public accountant (CPA) designation, you can expect to pay more than if you were to work with someone who hasn't achieved that certification.
The same goes for accountants who are considered enrolled agents (EAs), which is the highest credential awarded by the IRS. In fact, accountants with the EA designation tend to cost even more than CPAs.
Should I Hire an Accountant to Do My Taxes?
There are several factors to consider when deciding whether to hire someone to prepare and file your taxes.
On the one hand, a tax professional has more information about tax breaks and rules than you do, which could increase your chances of avoiding errors. It can also help you maximize your tax refund or minimize your tax bill. The more complicated your tax situation gets, the harder it is to do the process on your own, even with the help of tax software.
That said, if your tax situation is simple—for example, your only income source is W-2 income, and you don't have any other tax issues—or you like to learn and understand how the process works, it may make sense to do it on your own.
As you look for tax accountants, think about the potential cost and determine for yourself whether it's worth the expertise and peace of mind it can provide.
Using Tax Software May Be More Affordable
If your taxes aren't too complicated, and even if you plan to itemize or claim business and other income, you could potentially save money by doing your taxes with the help of a tax preparation service.
These companies implement software to guide you through the tax return process. You'll just have to answer questions about your financial situation to make sure you're taking full advantage of the different tax deductions and credits available to you—and to minimize inaccuracies.
Some of these services even offer audit protection, which can provide you with representation and relief in the event that you become the subject of a tax audit by the IRS.
The costs of these services can vary depending on your income and how complicated your taxes are. For those with an adjusted gross income of $73,000 or less, you may be eligible for the IRS Free File program. Otherwise, here's what to expect from some of the top tax preparation services:
Tax Preparation Services Compared
|Free Tier||$0; simple filers, dependents, and unemployment|
|Tier 1||$44.95; homeowners, childcare expenses, and student loan payments|
|Tier 2||$69.95; investments, sale of home, and rental property|
|Tier 3||$79.95; freelancers, contractors and business owners|
|State Return||Up to $54.95|
Start Your Return Early in Tax Season
Filing taxes isn't always a fun experience, so it's natural to want to push it off. The standard deadline for filing and paying your taxes is normally April 15—it's April 18 in 2022—but you can get an extension on filing if you need it.
But waiting until the last minute to decide how you're going to file your taxes can cause more problems. For example, you can get a six-month extension to file your taxes if you can't do it by the April deadline, but that's not an extension on paying your tax bill. If you end up owing money, the IRS will tack on interest and penalties from the date your payment was due.
Also, filing earlier can prevent identity thieves from trying to file a fraudulent tax return in your name. If they try it, they'll get an error because there's already been a return submitted for you.
Finally, the sooner you file your return, the sooner you can knock it off your to-do list and spend your time and energy on things you'd rather be doing.