When tax season comes around, you may find yourself asking: How much does it cost to file taxes? The cost of tax preparation is important because it determines how much of your hard-earned refund will go toward making sure you get it at all.
There’s no simple answer to the question, though. Typically, the cost to prepare taxes depends on your preferred method, tax preparer, and the complexity of your returns.
Table of Contents
- Do I have to pay someone to do my taxes?
- Cost of working with a tax professional
- How tax preparation cost is calculated
- Advantages of filing with a tax professional
- Can I file my own taxes for less?
- How can I file my taxes for free?
- Advantages of filing on your own taxes
- How much to file taxes? That depends on your situation
Do I have to pay someone to do my taxes?
You can pay a professional to do your taxes – or lower the cost to file taxes by doing them yourself. Several online platforms offer tax help that ranges from simply filling out your forms to searching for tax deductions. (Paper forms are another option, albeit an increasingly uncommon one.)
Cost of working with a tax professional
According to a survey from the National Society of Accountants, the average cost to file taxes is $220 for simple returns. The numbers trend higher for more complicated tax situations, ranging from $323 to $903.
However, these numbers vary widely between tax professionals based on factors like:
· Where you live
· If you’re self-employed or receive a W-2
· The complexity of your tax situation
How tax preparation cost is calculated
Different tax professionals calculate fees in different ways. A few examples include:
· Set fees for each tax form
· A base fee plus extra charges based on your situation’s complexity
· Hourly rates for time spent preparing your return
· Set fees for each data point included
The final price tag also depends on which state you live in and whether you’re paying for federal or state returns. (Or both.) However, tax professionals can’t charge based on the size of your refund or tack on unwarranted fees.
Advantages of filing with a tax professional
Using a tax professional can cost more than filing yourself, but the benefits may be worth the price.
If you work with the same tax professional every year, you can often get valuable year-round advice catered to your situation. Plus, your preparer’s knowledge of your financial situation comes in handy when looking for deductions.
Help with complex filing situations
Filers with more complex situations – such as business owners or independent contractors – can benefit from professional tax expertise.
Possible IRS assistance
Many tax preparers offer IRS assistance in the event that you’re audited or contacted by the IRS. Depending on your preparer, they may even handle the situation for you.
Saves you time
At the end of the day, doing taxes can be frustrating and time-consuming. But working with a professional means that you can save time and stress. All you have to do is hand over the necessary documents, sit back, and await your return.
Can I file my own taxes for less?
Filing your own taxes is an option that can cost less than hiring a professional. You can find free assistance online through the IRS website and online filing platforms. Some platforms do charge fees, but you may still come out on top if they find extra savings.
How can I file my taxes for free?
If you want to lower the cost to file taxes, these free options maximize your refund without charging a penny.
IRS free filing tool
The IRS free file tool provides two ways to do your taxes for free:
· Offering electronic federal tax forms
· Partnering with several online platforms that let you file simple taxes for free
Volunteer Income Tax Assistance or Tax Counseling for the Elderly
The IRS also offers two free options to qualified filers: Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). Each of these programs provides free tax preparation services for individuals who earn under $58,000.
Some online platforms, such as Turbo Tax and H&R Block, offer free tax filing programs. However, these services usually come with income limits.
Advantages of filing on your own taxes
From lowering the cost of tax preparation to learning more about the tax process, here are the advantages of filing yourself.
If you only have to file a simple return, doing your own taxes can save you money because you have fewer opportunities to increase your refund to miss.
Using an online platform is often faster than waiting for a busy tax preparer to get around to doing yours.
While many find paper taxes frustrating, many online platforms provide user-friendly interfaces. (Plus, their software may search for additional savings you wouldn’t know to look for on your own.)
Increased tax knowledge
Filing your own taxes gives you a chance to learn more about the tax process. While you may never be an expert, you can discover strategies that can lower your tax bill year-round.
How much to file taxes? That depends on your situation
So, how much does it cost to file taxes? Ultimately, it’s difficult to say. Your expenses will vary based on if you do your taxes yourself, pay for software, or hire a professional. Additionally, more complex situations may rack up a bigger tax preparation bill.
How much does it cost to file taxes electronically?
That depends on if you choose free or paid services. The average cost to file taxes electronically ranges from free to around $25 per year.
How much does a CPA cost for taxes?
The cost to prepare taxes professionally ranges from around $220 to over $900, depending on the complexity of your returns. If you aren’t filing as a contractor or small business owner, you’ll generally err on the lower side.
How much do tax accountants charge?
Tax accountants may charge per form, per data point, or per hour. Exact costs vary by state and financial situation. But generally, the more complex your taxes, the more you’ll pay your accountant.