2025 Tax Preparation Fees: What You Need to Know

Someone once said the only things in life you can count on are death and taxes. However, just because you have to file your taxes doesn’t mean you have to do your taxes. You can choose to skip the annual ordeal and hire a tax pro.

How Much Does It Cost to Get Your Taxes Done?

If you’ve never hired a tax preparer before, you’re probably wondering, “How much does it cost to get your taxes done by a professional?” And the answer is it depends.

It all comes down to the amount of time spent preparing your tax returns. Average tax preparation fees depend on three factors:

• How organized are your taxes?
• Where do you live?
• How complicated are your taxes?

Organization Matters

If you show up to your tax preparation appointment with a shoebox full of documents, receipts, and miscellaneous statements, you’ll pay an hourly rate for a preparer to organize and add up your items. That can add hundreds of dollars to your costs.

Location Matters

Your location is also a factor. Some states have no income tax, so filing is obviously cheaper.

Taxpayers who derive earnings from several states will obviously pay more to file.

In addition, it can cost more to have your return prepared in larger cities. According to the National Association of Tax Professionals, the average hourly rate in 2021 was:

• $164 for communities with fewer than 10,000 people
• $189 for towns with 10,000 – 50,000 residents
• $209 per hour for cities of more than 50,000

Complexity Matters

Finally, the complexity of your tax return impacts your preparation cost. Tax professionals generally charge by the form, by the hour, or some combination of the two – for example, an hourly rate for organizing your shoebox full of receipts plus separate charges for your tax forms.

Expect to pay less than the average cost if you’re a salaried employee taking the standard deduction with no additional schedules or tax credits.

If you’re self-employed or derive income from rental real estate, assets that deplete or depreciate, partnerships, or foreign sources, your costs may be much higher than the average tax preparation fees for your state.

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Tax Preparation Options

How much does it cost to file taxes? There is a wide range of services and price points available for every tax situation. From cheapest to most expensive, they are:

Do It Yourself with IRS Forms

Free DIY options using paper forms (get them at the library or post office) or fillable forms at IRS.gov.

Filing Assistance

Taxpayers earning $58,000 or less, are 60 or older, are disabled, or have limited English-speaking ability can get free tax filing assistance through the IRS’s VITA program.

Free Prep for Simple Returns

Taxpayers with simple returns can access free preparation services from many online tax software providers. Check carefully before committing. However, some charge a fee to file the return, and some charge a hefty fee to process and file a state return. In many cases. The “free” option from one service costs more overall than the “paid” option of another service.

Free Prep from Credit Karma

Taxpayers with any income and almost any tax situation can file for free with Credit Karma as long as they are willing to authorize the company to use their private data for marketing.

DIY with Tax Software

Tax software or online subscription services are a cheaper alternative to full-service professional preparation. Some deluxe online services provide access to human preparers for an additional fee.

Use a Tax Prep Service

Full-service tax preparation services like Liberty, Jackson Hewitt, and H&R Block employ tax accountants, but most of their preparers are seasonal employees who have completed required hours of training, passed a test, and (where required) complied with state licensing requirements for tax preparers.

Get an Accountant

Tax accountants, Certified Financial Planners (CFPs), and Enrolled Agents (EAs) specialize in tax planning and tax preparation for more complex situations. If you’re self-employed, involved in limited liability companies, partnerships, or corporation ownership, you might need this extra layer of expertise. That may also be true if your investments are complicated.

Use a Lawyer

Tax attorneys and Certified Public Accountants (CPAs) perform corporate, non-profit, and individual tax planning and preparation for the most complex situations.

Tax attorneys, CPAs, and EAs are allowed to represent you in tax court.

Average Tax Preparation Fees

How much is tax preparation supposed to cost? Average tax preparation fees have little to do with what you’ll pay because your situation is unique. Your best place to get taxes done is probably different than your neighbor’s.

Here are some ballpark estimates for professional preparation, courtesy of the National Society of Accountants:

If you choose to use software and do your own taxes, software and subscription services range from free to about $200 if you buy a premium service and add an optional professional review.

It’s easy enough to get quotes from chain preparation centers because they normally maintain a schedule of fees per schedule. If you want to know the H&R Block cost to do taxes, you have to visit the office and ask. They do not publish their tax preparation fee schedule online.

How Do Tax Advisors Set Their Prices?

There are several methods tax practitioners use to set their fees. From the most to least common, they are:

• Minimum charge plus an additional fee based on the complexity of the return (44% use this method, and the average minimum fee is $172)
• Set fee per form and schedule (39% use this method, and the average charge for a Form 1040 in 2021 was $131, Schedule A was $41, Schedule C was $84, Schedule D was $38, and Schedule E was $59)
• Hourly rate (7% use this method, and the average hourly rate in 2021 was $138)

The average fee also depends on the designation of the provider. For instance, the average fee for a Form 1040 prepared by a seasonal employee was $113 in 2021, while the average CPA charged $162. The middle ground is held by CFPs ($136), EAs ($140), and tax attorneys ($145).

Some pricing methods are not allowed by the U.S. Treasury Department. Tax professionals cannot legally charge “an unconscionable fee” for tax services or charge tax preparation fees based on information that’s contained in your return – e.g., a percentage of your tax refund. Of course, the best way to avoid paying an inappropriately high fee is to get more than one estimate before committing to any provider.

Where Can You Find a Trustworthy Tax Advisor?

The IRS maintains a database you can use to check a preparer’s credentials. The agency’s Directory of Federal Tax Return Preparers with Credentials and Select Qualifications lists preparers who currently hold professional credentials recognized by the IRS.

You can also check the professional organizations to which many tax preparers belong.

In addition, Consumer Reports recommends that you choose a preparer who offers these advantages:

• At least seven years of experience
• An office that is open year-round
• A clientele similar to you. If you own a small business, hire a small business tax firm.

Advantages of Hiring a Tax Professional

According to the IRS, about 60% of individuals prefer professional tax preparation over DIY solutions. There are four main reasons for this:

Human interaction

Many prefer to work with another human when dealing with money, taxes, and the government. This is most probably because those things are not exactly warm and fuzzy and they are often intimidating, especially when the situation is complicated.

Year-round advice

Tax preparation is just part of the package. Professionals can help you respond to information requests from the IRS, negotiate payment options if you owe more than expected, and create a tax plan to save on taxes in the future.

IRS help

Tax attorneys, CPAs, and EAs are allowed to represent you in tax court if you get into trouble. Firms like H&R Block and others offer various levels of help, from explaining how your returns were prepared to accompany you to an audit to guaranteed services that cover fines and penalties resulting from any preparation errors. Considering how expensive some tax mistakes can be, many consumers like the peace of mind provided by professional preparation.

Time savings

Tax preparers deal with tax returns all day, all year. You do it once a year, and the time spent learning all the updates and forms can be extensive. Tax professionals are more efficient and can save you a lot of time.

However, not everyone wants to pay someone else to do their taxes. If you’re a committed DIYer and are comfortable with tax preparation software, you can do your taxes yourself in an evening or weekend and save the fees.

Advantages of Online Tax Preparation

Those who prefer to do their own taxes are in the minority, but it’s a sizable minority – about 40%. Many prefer to do taxes themselves because it’s faster, cheaper, and private. The advantages of online tax preparation are:

Affordability

You can prepare and file your taxes for free or at a very low cost with many highly rated, online subscription services or downloadable software products.

Speed

Eight in 10 taxpayers get their tax refunds faster by opting to e-file and have their refunds directly deposited into their bank accounts, according to the IRS. In addition, you don’t have to gather up your documents, make an appointment, drive to an office, go through an interview, and then return to the office to review and pay for your return. You just download your software, complete your return, and file online.

Privacy

Most online services allow you to complete the forms directly or work through an interview format, answering questions and allowing the program to populate the return. So you don’t have to talk to a human about your money if you don’t want to.

How to Save Money on Tax Preparation Fees

However you choose to do your taxes, there are a few ways to save money.

1. Get your paperwork together. Separate your expenses, income, receipts, statements, etc. Label clear plastic bags and toss receipts into them all year. Add them up and staple the tape to each bag so the preparer can just fill in the appropriate blank.
2. Do your research. Request a few quotes from reputable providers to make sure you’re getting a fair deal.
3. Don’t pay for more firepower than you need. A simple return may qualify for free preparation from VITA or at least a discounted rate from a chain preparation firm. You probably don’t require a tax attorney for just a simple 1040 without itemizing or other schedules.
4. Ask about discounts and promotions. According to the Association of Tax Professionals, 86% of preparers offer a free consultation for prospective clients and/or one of these other discounts:

• family or friends of a tax preparer
• family or dependents of a client
• students
• senior citizens
• new clients
• returning customers
• advertised coupon
• discount for a past service error
• filing before a specific date
• charities or non-profits
• pro bono work
• vocation or affiliation (veteran, clergy, police, etc.)

Frequently Asked Questions