The cost of tax preparation can add insult to the injury of forking over checks to Uncle Sam. A number of factors, including your geographic location, the complexity of your finances and how late you wait to file your returns, can affect your costs. But the cost of tax preparation isn't just limited to the amount you pay your accountant. Money you pay to gather information about your taxes, as well as the cost of lost time that could be spent earning money, are also factors.
The Cost to Have Taxes Done
There's no single rate that everyone pays to complete their tax returns. If you use tax preparation software or file yourself, you may be able to complete your returns for very little money, or even for free. Tax preparation costs can also vary from location to location. Accountants living in areas with higher costs of living generally charge more. The complexity of your tax returns is also a major factor. A simple return may be pretty cheap, but complex returns with lots of documentation can cost hundreds or even thousands of dollars. You might end up paying more if you wait until the last minute and have to file an extension or have your taxes completed in only a few days. The average cost for a professional tax preparer is $273 for a standard return with a Schedule A and state return, according to the National Society of Accountants.
Exceptions to Tax Preparation Fees
Although you may have to pay tax preparation fees, until recently there was at least a little relief in the form of deducting the cost on your taxes. Unfortunately, the new tax laws require that the fee equate to 2 percent or more of your adjusted gross income. The good news is that you can combine your preparation fees with other miscellaneous deductions, including investment fees and professional dues, to meet the minimum. If you find your preparation fees are too high, it's worth considering a software package like TurboTax, which costs $0-$180, depending on the version you choose. It's important to consider the cost of your own time, however. Time is money. Particularly if you own your own business or are a freelancer, preparing your own taxes can cost you. To reduce the costs, try estimating the time you'll need to do your own taxes. If your hourly wages for this period are greater than this sum, you'll save time and money by paying someone else to do your taxes.
2018 Tax Laws on Fees
Tax preparation fees will no longer be deductible unless they exceed 2 percent of your adjusted gross income when combined with other miscellaneous deductions. However, the standard deduction has nearly doubled to $12,000 for individuals and $24,000 for married couples, so you may find you don't miss the lost deduction.
2017 Tax Laws
For your 2017 taxes, you could claim the cost of tax preparation fees, including those you paid toward a professional. If you used software or paid any filing fees, you could also itemize those along with your other miscellaneous deductions.
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