This article was last updated on January 18
I have received variations on this question over the last few years and when I saw this article in the WSJ I had the answer to my question. The national average fee for 2014 returns will be $273, according to a survey by the National Society of Accountants. This fee is based on filing for the basic and most common form 1040 plus Schedule A (for itemized deductions such as mortgage interest and charitable donations), plus a state return. This year’s average fee is 11% higher than two years ago, the last time the survey was conducted.
But the rates vary greatly by state and complexity of the return. As the graphic below shows rates also vary significantly by region with the north-east and pacific having the highest average rates for professional tax preparers. The mid-west has the lowest rates. This regional variation in rates is correlated to income levels and complexity in state tax rules. E.g. California and Pennsylvania have among the most complex state tax rules.
A lot of people of course have more complicated tax returns than just a Form 1040 and the NSA provided a breakdown of the cost of filing additional tax components/forms. You can add these up to get an estimate of the average cost of filing your return and see how your tax professional compares.
$174 for Schedule C (business)
$115 for Schedule D (investment gains and losses)
$126 for Schedule E (rental income)
$158 for Schedule F (farm)
$634 for Form 1065 (partnership)
$817 for Form 1120 (corporation)
$778 for Form 1120S (S corporation)
Another tip from the survey: You could save over $100 if you are organized with your tax return documents, since the survey found that professional tax preparers charge an average fee of $114 for dealing with disorganized or incomplete records.
And finally, one of the biggest benefits of going with a tax professional is assistance during an IRS audit. But this costs money and the average hourly rate for a tax professional is $144 to help respond to the IRS audit.
If all this sounds expensive and you have a straightforward tax return then I recommend going with a leading tax software provider which can easily handle and guide you through a standard return at a much lower cost (and free in some cases).