A biennial survey by the National Society of Accountants found that the cost of preparing an itemized Form 1040 with a Schedule A and a state tax return averages $229.
The survey of 8,000 tax preparers from across the country also found that rates for non-itemized returns remain relatively low. The average cost to prepare a Form 1040 and state return without itemized deductions is only $129.
The Tax Code becomes more complex every year especially this year with so many new tax credits and other rules as the federal government attempts to provide some taxpayers with relief during the economic downturn, said NSA president Robert L. Cross in a statement.
The survey found that tax preparation fees for an itemized Form 1040 with Schedule A and a state tax return averaged only $217 at one-person firms, and rose to an average of $245 for firms with three or more staff.
Firms with lower levels of gross income also charged less on average than larger companies. For example, tax preparation firms with gross annual income of $50,000 or less charge an average of $174 for an itemized Form 1040 with Schedule A and a state tax return, while a company with gross income of $400,000 or more charged an average of $305.
The survey found that the average fees for preparing other tax forms include:
$212 for a Form 1040 Schedule C (profit or loss from business);
$551 for a Form 1065 (partnership);
$692 for a Form 1120 (corporation);
$665 for a Form 1120S (S corporation);
$415 for preparing a Form 1041 (fiduciary);
$2,044 for Form 706 (estates);
$584 for a Form 990 (tax exempt);
$58 for a Form 940 (federal unemployment)
Fees also vary 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) $205
Middle Atlantic (NJ, NY, PA) $252
South Atlantic (DE, DC, FL, GA, MD, NC, SC, VA, WV) $243
East South Central (AL, KY, MS, TN) $137
West South Central (AR, LA, OK, TX) $220
East North Central (IL, IN, MI, OH, WI) $193
West North Central (IA, KS, MN, MO, NE, ND, SD) $192
Mountain (AZ, CO, ID, MT, NV, NM, UT, WY) $207
Pacific (AK, CA, HI, OR, WA) $292
Sixty percent of accounting firms do not require payment until returns are completed and clients are satisfied. Ten percent require a percentage of the payment upfront, and 23 percent require payments during tax return processing. Ninety-one percent of accountants also offer electronic filing services for federal and state tax returns, and accountants report that 84 percent of clients eligible for electronic filing choose this option.
Many accountants also hold one or more professional credentials that demonstrate their experience and expertise. These credentials (and the percentage of NSA survey participants holding these credentials) include:
enrolled agents (federally authorized tax practitioners) 49.2 percent
accredited tax advisors 26.3 percent
accredited tax preparers 26.2 percent
CPAs 24.8 percent
accredited business advisor/accountant 16.2 percent
registered/licensed public accountants or accounting practitioner 11.8 percent