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 $188, according to the National Society of Accountants.
That may not seem like a big deal compared to the average tax refund, which was $2,535 in 2020. But the more of that cash you can keep, the better.
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How Much Does it Cost to File a Tax Return?
The cost of filing your return depends on a few different variables, including whether you do it yourself or hire someone else to do it, the tax preparation service you use (if you’re doing it on your own), where you live and how many tax forms you need to have done.
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 $188 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 $72,000 or less in 2020).
Read our guide on how to compare online tax preparation services.
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 on the West Coast, Alaska or Hawaii, the average cost is $339. In contrast, the exact same service in the West North Central region (from Kansas and Missouri up to North Dakota and Minnesota) would cost you just $137 on average.
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 $294 on average, $106 more than if you just take the standard deduction. And if you own a business, you’ll add $187 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 (CPA) to help.