Suppose you are considering retaining a tax professional to prepare your taxes or are currently working with a tax preparer. In either case, you may have questions about tax preparation fees. We frequently get asked about the cost of tax preparation at Steward Ingram & Cooper, PLLC. There isn’t just one standard answer; it depends on the complexity of your tax situation and other factors. In this article, we address the factors that affect tax preparation fees, share average tax preparation fees, and help you estimate about how much you can expect to pay a CPA to prepare your taxes.
What Do Tax Preparation Fees Cover?
Most fees cover filling out the 1040 form with your information and electronically filing it on your behalf. However, a tax preparation service charge varies from one accountant to the next. An accountant’s fees may be based on:
- A set fee for each schedule. For example, the price to prepare a Form 1040 with Schedule A (itemized deductions) may differ from Form 1040 with Schedule C (sole proprietorship profits and losses).
- A minimum fee plus a selection of services, each with a fee.
- An hourly rate.
An accountant may include the state and federal preparation or charge these separately. When looking for a tax preparer, get a clear picture of each service’s fee structure.
Clarifying Your Tax Situation
Here are three questions to ask yourself when searching for a tax professional.
How qualified should a tax preparer be?
An average tax preparer will likely charge less than one with years of experience or a Certified Public Accountant designation. Just like with any professional service, (i.e. a doctor or car mechanic), the goal is to have the service performed well. If that means paying an extra fee upfront from a tax professional who is thorough and accurate, it may be well worth it. Oftentimes, experienced CPAs can identify tax breaks and either minimize the amount of money you owe or maximize your return.
Do I need to organize my tax documents before giving them to an accountant?
If you haven’t done a good job organizing the information the tax preparer will use for your taxes, you will likely incur a higher fee because the accountant or CPA will have more work in front of them. To minimize your tax preparation fee, gather all necessary documents, organize them, and hand them over to your tax preparer in a way that makes their job easier.
Is my tax situation complicated?
If your tax situation is simple–just a basic tax filing–you will probably pay a fee close to the minimum range. But, the more complicated your tax situation is, the more time it takes to prepare your return and, therefore, a higher cost.
Can You Deduct Tax Preparation Fees?
In the past, taxpayers could deduct costs associated with preparing their tax returns if they itemized deductions. However, that tax break disappeared for most people in 2018 with the Tax Cuts and Jobs Act (TCJA). At present, unless you are self-employed, taxpayers cannot deduct the expenses associated with tax preparation.
If you are self-employed, these rules apply:
- You can deduct your tax preparation costs as a business expense on your federal income taxes.
- The deduction is only for business costs and fees that are part of your business’ “ordinary and necessary” expenses–not personal expenses.
You can deduct your business tax preparation fees if you meet the following criteria:
- A sole proprietor or an independent contractor who files a Schedule C
- A farmer who files Schedule F
- A landlord who earns income from rental properties and files Schedule E
- An individual who earns income from royalties and files a Schedule E
The amount of the fee charged for preparing the business portion of your taxes is the amount you can claim. The remainder, including the standard deduction, personal deductions, and credits, fall into personal expense.
Average Tax Preparation Fees
CPAs bill either hourly, per the form, or according to the service being provided. According to a National Society of Accountants (NSA) study in 2021, (the latest information available) the average fee for preparing Form 1040 with Schedule A to itemize personal deductions, combined with a state income tax return, was a flat fee of $323. The average hourly rate of CPAs for filing federal/state tax returns was $180, and $174 for other tax services. The number of hours billed by a CPA depends on the service and is impacted by the level of organization of your files.
The Average Fee for Filing Common Forms
Here are some average fees for filing common forms:
- Form 1040 with a Schedule A and state return: $323
- Form 1040 (non-itemized) and state return: $220
- Schedule C for business: $192
- Schedule D for gains and losses: $118
- Schedule E for rental: $145
- Schedule F for farm work: $200
Steward Ingram & Cooper, PLLC’s Tax Preparation Fees
Steward, Ingram, & Cooper has prepared tax returns for complex individual situations and businesses since 2000. Our team comprised of individuals who have passed the CPA exam and are authorized to perform services as Certified Public Accountants. In North Carolina, one must first acquire a bachelor’s degree with 120 credit hours, 30 of which must be accounting-related, before being able to take the CPA exam. Candidates must also demonstrate good moral character through a law and ethics course specific to North Carolina. Additionally, CPAs must renew their license yearly to legally continue to practice as a CPA.
Our CPAs have demonstrated their professional standards by maintaining their CPA credentials. The clients we work with have complex tax situations; therefore, our fees are reflective of our personalized accounting services. We dedicate as much time as necessary to ensure our client’s tax returns are prepared and submitted accurately and promptly. The cost of tax preparation and consulting is as follows:
- Individual tax returns: A minimum of $900*
- Business tax returns: A minimum of $1,500*
- Advice and Consulting: $300 per hour
*Steward Ingram & Cooper, PLLC may charge additional fees based on the complexity of your tax situation and when additional time is needed to prepare and file your return.
Contact Steward Ingram & Cooper, PLLC for Tax Preparation Services in Raleigh
If you want peace of mind that a tax professional has looked for all deductions, our CPAs are here to help. Our local CPA firm serves Raleigh, Durham, Mooresville, and areas in between. If you have a complex personal or business tax situation or need assistance with your monthly financial statements, reach out to us today at (919) 872-0866 or fill out the form below.