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Tax season can be a stressful time, even if you hire someone else to prepare and file your return for you. But the average cost of having someone do a simple non-itemized Form 1040 and state return is $220, according to the National Society of Accountants.
That may not seem like a big deal compared to the average tax refund, which was $3,176 for the 2022 filing season. But the more of that cash you can keep, the better.
Who Does the Preparation and Filing?
If you decide to file your own tax return, you could be able to do it without paying anything at all. If you decide to hire a tax professional, however, expect to pay an average of $220 for a basic federal and state return.
Tax Preparation Services
There are several tax preparation services you can use to file your taxes on your own, each one guiding you through the process to make it simpler and more convenient. Most offer a free version but come with up-charges, sometimes on incredibly basic things like adding a state return or deducting your student loan interest. Credit Karma and the IRS Free File program are the only truly free services (though the IRS program is only available to taxpayers with an adjusted gross income of $73,000 or less in 2022).
TurboTax shines when it comes to customers who have more complex tax returns. The Deluxe Edition helps maximize tax deductions and credits, while the Premier Edition covers investments – including cryptocurrency and and stock activity – and rental properties. Plus, you can easily import your investment income automatically with TurboTax.
Regardless of how complex your tax return is, you’ll likely be able to find a TurboTax service that meets your needs. TurboTax offers five different pricing tiers, including a Free Edition (for simple returns only, not all taxpayers qualify), as well as multiple premium tiers geared towards more complicated returns. There’s even a full-service edition for anyone who’s worried about filling out their tax return incorrectly.
- A product for every tax situation, both simple and more complex
- The Premier Edition includes investments and rental properties
- A comprehensive review of your return, ensuring nothing gets missed
- Some products are more expensive than industry average
Where You Live
The National Society of Accountants found that the cost of hiring someone to file your return can vary wildly based on where you live. For example, if you want an itemized Form 1040 and state return, the average cost is $288 in Alaska and $486 in Hawaii. In contrast, the same service in Kansas averages out to $244 but is just $163 in Ohio.
TaxAct has a robust accuracy and refund maximum guarantee that eclipses most competitors. Its no-frills tax service is easy to use and simple to navigate. It really shines with its free Xpert Assist help service, which allows filers across all tiers to consult a tax expert at no additional charge.
TaxAct’s filing software comes with four tiers: Free, Deluxe, Self-Employed, and Premier tiers. Whether you have the most basic tax filing needs or more complex filing as a freelancer or a business owner, TaxAct makes the process affordable and easy to navigate with its intuitive software. The service comes with live chat help that is also available to users in the free tier. Keep in mind that filing a state return can come with a higher fee than other competitors.
- Maximum refund and accuracy guarantee
- Free live tax help from an expert
- Ability to import previous returns from other online tax softwares
- No free state return filing
The Number of Forms
The cost of your return will also depend on how complicated your tax situation is. For example, an itemized Form 1040 and state return will cost you $323 on average, $103 more than if you just take the standard deduction. And if you own a business, you'll add $192 on top of the cost for your standard tax forms.
How Much Should You Pay?
It really depends on your situation. I did my taxes for free for years because they were mostly uncomplicated, even when including business expenses. But now that I own an S Corporation, the reporting process is much more complicated, so I pay someone to do all of it now.
If you're not sure, consider using a free service like Credit Karma and go through the process. If it covers everything you need, you can file for free. But if you get to the point where you're not 100% sure you're doing it right, your situation is too complex or you just don't want to deal with it, consider hiring a certified public accountant to help.