Tax Preparation Prices and Fees
What's a Reasonable Price to Pay for Preparing Tax Returns?
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Tax professionals use a variety of methods for setting prices for tax preparation services. As a result, finding out what's a fair price to pay often proves difficult. The only general conclusion I've come to is that the price for tax preparation services increases depending upon the complexity of the tax return.
Pricing Methods Used by Most Tax Preparers
Tax professional use a variety of different methods to set prices. In a study conducted by the National Association of Tax Professionals, pricing methods include:
- A set fee for each tax form or schedule,
- A fee based on last year's fee plus an additional fee for any changes in a client's tax situation,
- A minimum tax return fee, plus an additional fee based on the complexity of the client's situation,
- A value-based fee based on the subjective value of the tax preparation service,
- An hourly rate for time spent preparing the tax return, and
- A set fee for each item of data entry.
Fee structures are decided by each firm. So if you are comparing different tax professionals, you'll want to ask how they determine their prices, and what they estimate your tax preparation service might cost. But because of per-item, per-form, or per-hourly rates, it might be impractical for an accountant to provide you with an accurate price quote. Accordingly, you'll want to ask accountants for a likely price range for your tax return.
Average Prices for Tax Preparation Fees
It's a bit easier to find average prices for tax preparation services. The National Society of Accountants in their 2010 fee study reports the following average prices charged by their members:
- Average for 1040 with Schedule A and state return: $229
- Average for 1040 with state return with no itemized deductions: $129
Average Prices at Franchised Tax Offices
- H&R Block: $189 per return (average, 2010 data)
- Jackson Hewitt: $208 per return (average, 2010 data)