Cost/Advantages of Hiring a Preparer
I.What is the cost to Get Your Taxes Done?
If you’ve never hired a tax preparer before, you’re probably wondering, “How much does it cost to get your taxes done by a professional?” It depends. It all comes down to time spent preparing your tax return. Average tax preparation fees depend on three factors: 1.How organized are you? 2.Where do you live? 3.Are your taxes complicated?
Organization matters: Show up with a shoebox full of documents, receipts, and miscellaneous statements, you’ll pay an hourly rate that can add dollars to the cost of preparing the return.
Location matters: Your location is also a factor. Some states have no income tax, so its cheaper. The National Association of Tax Professionals, the average hourly rate is: $189.00
Complexity matters: Finally, the complexity of your tax return impacts your preparation cost. Tax professionals generally charge by the form,– for example, an hourly rate for organizing your shoebox full of receipts plus separate charges for your tax forms. Expect to pay less than the average cost if you’re a salaried employee taking the standard deduction with no additional schedules or tax credits.
You can expect to pay more if you have any of the following:
- Real estate taxes or home mortgage interest deductions
- Small business expenses that may qualify for deductions
- Rental income and expenses that may qualify for deductions
- Investment income on stocks, bonds, or cryptocurrency
- Set fee per form and schedule (39% use this method, and the average charge for a Form 1040 in 2020 was $131, Schedule A was $41, Schedule C was $84, Schedule D was $38 and Schedule E was $59) The charge is $ 353 plus STATE.
- Hourly rate (7% use this method and the average hourly rate in 2020 was $120)
II.Advantages of Hiring a Tax Professional
According to the IRS, about 60% of individuals prefer professional tax preparation over DIY solutions. There are four main reasons for this:
- Human interaction-Many prefer to work with another human when dealing with money,
- Year-round advice-Professionals can help you respond to information requests from the IRS, negotiate payment options if you owe more than expected, and create a tax plan to save on taxes in the future.
- IRS help -Tax attorneys, CPAs, and EAs are allowed to represent you in tax court if you get into trouble.
- Time savings-Tax preparers deal with tax returns all day, all year. You do it once a year, and time spent learning all the updates and forms can be extensive.