The National Society of Accountants has found that the cost of preparing an itemized tax return averaged $233 across the country, but there was still variation in different parts of the country.
A biennial survey of nearly 8,000 tax preparers by the NSA found that the average fee for preparing an itemized Form 1040 with a Schedule A and a state tax return cost taxpayers only $233 this year. Rates for non-itemized returns are also low – the average cost to prepare a Form 1040 and state return without itemized deductions is only $128.
Both average fees were nearly the same this year as they were two years ago ($229 and $129 respectively), indicating that tax practitioners and accountants understand the economic challenges that Americans face.
“This is one of the best values out there for any type of professional service, especially when you consider the complexity of the tax code. If a professional finds even one additional deduction or tax credit, it will probably more than cover the fee,” said NSA executive vice president John Ams in a statement,
The accounting firms surveyed by the NSA were largely local “Main Street” companies—small businesses that typically operate with fewer than six employees. The average annual billing earned by the firms surveyed was $250,000.
“Members of NSA are highly qualified tax professionals who typically hold multiple credentials that demonstrate their expertise,” Ams noted. “Taxpayers receive personal service from people who live and work in their community and fully understand local and state tax laws in addition to their deep knowledge of the federal Tax Code.”
The survey also reported the average fees for preparing other widely filed tax forms, including:
• $236 for a Form 1040 Schedule C (profit or loss from business)
• $524 for a Form 1065 (partnership)
• $695 for a Form 1120 (corporation)
• $660 for a Form 1120S (S corporation)
• $396 for a Form 1041 (fiduciary)
• $566 for a Form 990 (tax exempt)
• $61 for a Form 940 (federal unemployment)
All fees assumed that a taxpayer has gathered and organized all necessary information.
Fees also varied by region. The average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return in each U.S. census district are as follows:
• New England (CT, ME, MA, NH, RI, VT) – $238
• Middle Atlantic (NJ, NY, PA) – $216
• South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) – $244
• East South Central (AL, KY, MS, TN) – $145
• West South Central (AR, LA, OK, TX) – $223
• East North Central (IL, IN, MI, OH, WI) – $202
• West North Central (IA, KS, MN, MO, NE, ND, SD) – $178
• Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) – $247
• Pacific (AK, CA, HI, OR, WA) – $297
Sixty-two percent of the accounting firms surveyed did not require a payment from clients until the returns were completed and clients were satisfied, the NSA found. Others might require that a portion of the fee be paid upfront or payments made throughout the tax return preparation process. Thirty-three percent of the firms surveyed accept credit cards.
Some of the professional credentials held by NSA survey participants include:
• Enrolled Agents (federally authorized tax practitioners) – 45.1 percent
• Accredited Tax Preparers – 26.8 percent
• Certified Public Accountants – 24.7 percent
• Accredited Tax Advisors – 21.7 percent
For more information, visit www.nsacct.org.