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Tax Preparation Survey: Average Cost is $233

[ 0 ] Feb. 20, 2012 | SBO Editor

What can you buy for $233?

How about this: the services of a professional tax preparer or accountant who can complete your 2011 tax return, relieving you of endless hours of hassle trying to decipher the ever-changing federal tax code (not to mention state tax law changes).

A biennial survey of nearly 8,000 tax preparers conducted by the National Society of Accountants (NSA) showed the average tax preparation fee for an itemized Form 1040 with Schedule A and a state tax return is only $233. 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 are nearly the same as they were two years ago ($229 and $129 respectively), showing that tax preparers and accountants understand the financial challenges that Americans face.

“This is one of the best values out there for any type of professional service,” says NSA Executive Vice President John Ams, “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.”

The accounting firms surveyed are largely local “Main Street” companies – small businesses that typically operate with fewer than six employees. The average annual billing of these companies is $250,000.

“Members of NSA are highly qualified tax professionals who typically hold multiple credentials that demonstrate their expertise,” Ams adds. “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 Internal Revenue Service (IRS) 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 assume a taxpayer has gathered and organized all necessary information.

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) – $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 accounting firms do not require payment until returns are completed and clients are satisfied. Others may require a portion of the fee upfront or payments throughout the tax return process. Thirty-three percent accept credit cards.

Some of the professional credentials held by NSA survey participants include:

  • Enrolled Agents (federally authorized tax practitioners) – 45.1%
  • Accredited Tax Preparers – 26.8%
  • Certified Public Accountants – 24.7%
  • Accredited Tax Advisors – 21.7%

For more information and to use an online search directory to identify a qualified tax preparer in your area, visit www.nsacct.org and click on “Find a Professional” or call 800-966-6679.

NSA and its affiliates represent 30,000 members who provide accounting, auditing, tax preparation, financial and estate planning, and management services to approximately 19 million individuals and business clients. Most members are sole practitioners or partners in small- to medium- size accounting firms. NSA protects the public by requiring its members to adhere to a strict code of ethics. For more information, visit www.nsacct.org.

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Category: Features