Monday, February 27, 2012

Comparing Tax Preparer Costs

From -

Taxpayer asks:
Before I got married, I used TurboTax to do my taxes. Now, my wife wants me to go somewhere to get our taxes done. I called around and got a few quotes. Some of them were as low as $150 and one guy wanted $500. How do I know who is the best one? Should I just go with the most expensive? I don’t know how to choose.

You’re clearly on the right track: researching potential tax preparers is key to finding a good one.
But don’t get caught up just on pricing. There are lots of issues to take into consideration: experience, niche (it’s important, for example, if you have a small business, to find someone who handles that sort of return), accessibility, know how and good ol’ fashioned professionalism. So keep checking out those tax pros – it’s the right thing to do. You can find some more info about what to look for when searching for a tax preparer at this prior post.
Since you asked about pricing, I won’t completely gloss over it. On the one hand, the most expensive preparer doesn’t necessarily equal the best preparer: sometimes they’re just more expensive. That’s like saying that you need to buy Cadillac when the Ford will do just fine. Remember, pricing can vary for all sorts of reasons, from geography to education to overhead to ego.
In terms of real numbers, last year, a survey conducted by the National Society of Accountants (NSA) of nearly 8,000 tax preparers indicated that the average tax preparation fee for an itemized federal form 1040 with Schedule A and a state tax return was $233. The average cost to prepare a federal form 1040 and state return without itemized deductions was $128.
Again, keep in mind that those are averages. You can expect higher prices in more expensive areas of the country (and of course, lower prices in less expensive areas of the country). Prices may also vary based on the complexity of your return, whether you require additional schedules (like dividend and interest information reported on a Schedule B, business information reported on a Schedule C, capital gains and losses on a Schedule D and/or rental income and losses reported on a Schedule E) and supporting forms (like, for example, for the child tax credit or additional charitable donation information) and whether your return has “out of the ordinary” line items (like Roth IRA conversions or homebuyer credit repayment). Add-ons, like e-filing, preparing local returns or rental rebates, may also cost you.