The average cost of tax preparation is $100 to $500 per return. Most taxpayers spend an average of $220 for professional tax prep and filing services. Prices vary by location since some states do not have a state income tax, which reduces the time spent preparing a return. Other factors that affect the cost of tax preparation include the complexity and neatness of your tax return, the type of professional you hire, and their qualifications and billing method.
A non-credentialed seasonal tax professional or an enrolled agent is typically cheaper than hiring a certified public accountant (CPA) or a tax attorney to file your tax returns. Enrolled agents are former IRS employees or have passed a three-part comprehensive IRS test.
A tax consultant is a financial professional who provides advice on tax planning and compliance. They help you understand your tax obligations and develop strategies to minimize your tax liability. They ensure you are filing your taxes correctly and on time and represent you before the IRS or state tax authorities if you are audited or have a tax issue.
A tax preparer is a bit different. They help individuals and businesses gather their documents, prepare their return, and file it with the IRS. All paid tax preparers must have a Preparer Tax Identification Number (PTIN) to file tax returns each filing season.
Paying for a tax consultant is worth it if you have a complex return or have had previous tax problems. If you run a business, buy a house, manage multiple rental properties, or are self-employed, you will likely benefit from the expertise of a tax consultant.
Tax advisors and preparers can save you time, ensure your return is done correctly, find itemized deductions to reduce your tax liability, and protect you in the event of an audit or issue.
Since the introduction of the Tax Cuts and Jobs Act of 2017, tax preparation fees are no longer deductible on personal taxes in the United States. However, self-employed individuals and business owners can still deduct their tax preparation and consultant fees as a business expense. This includes fees paid for tax planning, compliance, or audit representation.
Note that you can only deduct the cost of tax preparation fees that are directly related to your business or employment. For example, if you hire a tax consultant to help you with your personal taxes, you will not be able to deduct the cost of the consultation.
Be prepared to ask these important questions when selecting a tax consultant:
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